Tuesday, April 14, 1998 | 10:28 a.m.
Kenneth Dymmel and Thomas Ehlrich didn't know each other until they met by chance March 30 in front of the offices of the Sterling Group on Maryland Parkway in Las Vegas.
They were looking for Eric Stein, who headed the Sterling Group. After talking a while, they found they had a lot in common. Specifically, both had invested hundreds of thousands of dollars in the Sterling Group -- and they wanted to know what happened to their money.
Dymmel and a group of investors headed by Ehlrich last week sued the Sterling Group and several individuals associated with it in Clark County District Court, alleging the company swindled them out of close to $500,000. The suit alleged Sterling was conducting a Ponzi scheme in which established investors were paid with new investors' funds.
Also named in the suit is Stein and 10 other individuals associated with the company as well as the owners of a San Diego firm that raises capital for young companies.
And Ehlrich and Dymmel aren't alone. Las Vegas attorney Robert Graham, who is representing Dymmel and the group of investors, said his clients' losses may be just the tip of the iceberg.
He said about 50 other investors have come forward.
"I expect the majority of them [investors] will be elderly," Graham said. "I think now we're looking at over $30 million in investments."
Graham said some of the Sterling investments were qualified as IRAs, meaning investors' retirement funds were at risk.
According to the suit, investors would buy television advertising time. The Sterling Group was to use the time to advertise "inexpensive impulse items." Investors would receive a portion of the sales as a return on their investment.
Initially, investors saw a positive results. Dymmel said he realized a 50-percent return on two investments in the fall of 1997. He rolled about $150,000 back into the investment.
"Everything was right on time and as promised," he said.
Ehlrich, who became aware of the company while working for a San Diego-based firm that raises capital for companies on a commission basis, said he had such a good experience he formed a separate company to invest in the enterprise.
Elrich's former employers at the San Diego firm, Michael and Denyse Anderson, are named as defendants in the suit along with their company Financial Growth Consultants doing business as Sterling Marketing Group.
Eight Enterprises, the company formed by Ehlrich, invested $250,000 in November 1997 and several of its investors staked another $105,000 in the Sterling Group that December.
Dymmel and Eight Enterprises expected a return on their most previous investments in January, but that never happened. Throughout February Ehlrich contacted the company. At one point, he said he was assured by Stein he would be repaid. By March 26, however, a message on the Sterling Group's phone allegedly said the company was re-structuring and would re-open March 30.
Ehlrich said he visited the company's address at 4634 Maryland Parkway March 30 and found no one with the company there. What he did find was two other investors who were trying to recoup their money, of which Dymmel was one. Between the three investors who encountered each other at the chance meeting, close to $500,000 had been invested.
The suit says the investors have been unable to locate many of the principals of the company, including Stein. Calls to the Sterling Group's Las Vegas phone number were not answered Monday. The Andersons were not in their San Diego office Monday afternoon.
The suit seeks damages, an injunction against the Sterling Group's operations and the appointment of a receiver to oversee the company.
archive
