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Friends of broker duped, too

They swapped lunchtime stories nearly every workday. They attended dinner parties and barbecues with spouses at each other's homes. They shared gambling vacations and camped together.

Jeff Smith even vouched for Tony Daniloo's character when a creditor called seeking references when Daniloo wanted a new BMW, Smith said.

But their relationship changed when Daniloo's greed deeply hurt mutual friends, Smith said. And Smith now is making plans to attend his former friend's sentencing for swindling several millions of dollars.

"I was so ecstatic about him getting caught," Smith said. "I'm literally making a scrapbook of all the articles."

Many were published before and after the law caught up to the mortgage broker in December 2004. Daniloo had been living the high life on dirty money, he finally admitted four months ago in guilty pleas to 122 felony counts.

A federal judge is expected to hand down a prison term of about 10 years Wednesday in San Francisco.

Smith, of Ceres, said he joined a Pleasanton mortgage firm that employed Daniloo's wife, Nansi, in 1998, when the Daniloos lived in Tracy. They routinely ate lunch with a group of coworkers and formed a circle of friends joined by spouses.

"We were best friends," Smith said. "Tony is a damn good schmoozer and he talks a damn good game. He makes you feel comfortable, like he's on your side."

Suspicion sets in

Smith said the Daniloos once showed up for a camping trip with a new MasterCraft ski boat. And they treated the group to a weekend in Reno, Smith said. He didn't hesitate when Tony Daniloo used him for a character reference.

"No one could figure out how he was spending all that money," Smith said. "It didn't make sense."

Daniloo once talked about an elderly woman he had befriended, who had deeded him her property and gave him a sport utility vehicle. "Nobody does that," Smith thought, he said. Authorities eventually determined she was among dozens of victims.

The friendship became strained when Daniloo tried a "bait-and-switch" while refinancing Smith's Ceres home, he said. It ended, he said, when several mutual friends complained that Daniloo had taken advantage of them in similar deals.

One couple in the circle, Veronica and Perry Gaa of Tracy, won a $45,000 judgment that Daniloo never paid. He had promised lower payments in a home refinance, but the couple's monthly payments instead jumped from $2,200 to $3,200, according to the Gaas' lawsuit.

"That really hurt them," Smith said.

He said he was skeptical when Daniloo, who had moved to Turlock and opened DreamLife Financial in Modesto, began making headlines with generous philanthropic pledges.

"How can that be, when he's screwing all of these people out of their money?" Smith said he asked himself at the time.

The headlines soon were followed by Bee reports of the Daniloos' spotty legal and financial history, including bankruptcies, liens, accusations of fraud in several lawsuits and lying about Tony Daniloo's education.

Arrests soon followed at their $1 million home in Turlock — registered in the name of Nansi Daniloo's sister, a 24-year-old student. And authorities seized five luxury vehicles, three of them worth more than $90,000 each.

Smith started clipping news items, he said.

"I was so glad to see he finally got caught."