Florida’s wealth a magnet for con men

Press, 24 March 1984, Page 32

Florida’s wealth a magnet for con men

By

STEWART RUSSELL

of Reuters through NZPA FORT LAUDERDALE

Southern Florida with its sunny climate and reputation as a holiday playground is gaining a new and more menacing reputation — as a magnet for con men. Prosecutors allege that in the last year, well ovef SUSIOO million ($154 million) has been milked from thousands of investors by just three firms based in Fort Lauderdale.

There seems to be no single reason why Fort Lauderdale, a resort town just north of Miami, should become a fraud centre, but as one detective said: “Bad guys like sunshine, too.” ■

“There is also easy access to offshore banking (in the Caribbean), easy access to drugs and what some perceive as a lax attitude toward criminal prosecution of white collar crime because of the priority given

to violent crime,” said a senior official in the State Comptroller’s Office. To change that perception, the authorities have moved in the last few months to close more than 40 dubious precious metals firms and telephone sales operations mainly in oil and gas lease frauds. In one recent case, hundreds of people sent their savings to a company called the International Gold Bullion Exchange until its two owners filed for bankruptcy last year owing, by various estimates, SUS4O to 70 million.

The bullion that investors thought was being held for them in the exchange vaults could not be found. Some 600 investors who sent almost SUS 6 million (?9 million) to another Fort Lauderdale precious metals firm, also now defunct, received a total of $U525,000-$4l each - in a recent court-ordered sharing of assets.

The rest of the money taken by Universal Precious Metals has not been found.

Although there is a popular idea that criminals are attracted by Florida’s many pensioners trying to augment their income, the local con men generally go after people in other states to complicate possible prosecution.

Florida has an abundance of skilled salesmen who learned their trade in land sales or other local enterprises and are attracted to work in high-pressure telephone sales centres, known as “boiler rooms,” where they can earn up to SUSIOO,OOO ($NZ154,000) a year in commission.

Working from a “boiler room” in Fort Lauderdale late last year, salesmen known as “yaks” promised prospective investors that they would secure valuable oil and gas leases offered by the Federal Government if they purchased “advisory service contracts” from a

firm called Eagle Oil and Gas.

The leases are distributed by lottery. No-one has a better chance than anyone else of winning a lease and there is no guarantee it will prove to be valuable.

Before the state authorities stepped in with a ceaseand desist order which was rapidly followed by Federal charges of violation of mail and wire fraud statutes, clients were duped out of SUSS6 million ($B6 million), a grand jury alleged. The names of prospects, known as “mooches,” are usually obtained from responses to advertisements in legitimate publications. A former “yak” who testified to a Senate sub-com-mittee in 1982 said that people who had been conned once were prone to be caught again trying desperately to make up for earlier losses.

“I would say half the people I have done business with have been burned before,” the salesman said.