You Can't Cheat an Honest Man - James Walsh [49]
Oxford Capital was started by Samuel Forson, a native of Ghana who’d grown up in Brooklyn idolizing business tycoons like J.P. Morgan. He completed his MBA at St. John’s University in the early 1980s and eventually worked his way up to sales manager at First Investors Corp., a mutual fund marketing company in New York. But selling IRAs wasn’t aggressive enough for Forson.
Oxford Capital focused its sales effort on recent immigrants to the United States, usually from the West Indies, living in the New York area. The company had been founded and was run by immigrants and people of Caribbean heritage. They stressed the importance of community support when convincing potential investors to hand over money.
Forson used company money to support a lavish lifestyle. Like so many Ponzi perps, he seemed most comfortable spending money. Among his purchases: a $730,000 apartment on Riverside Drive in Manhathis purchases: a $730,000 apartment on Riverside Drive in Manhat a-month Jaguar sedan (this was a nontraditional move for a perp— away from the usual Mercedes Benz) and a rack of $1,500 suits from Barneys.
When Forson married Yvonne Thomas, who’d started out as a clerical employee at Oxford Capital, their reception was held at the Plaza Hotel near Central Park. The newlyweds arrived at the hotel in a horse-drawn carriage.
The scheme began to unravel after one experienced investor questioned the statements she’d received from two mutual funds supposedly purchased through Oxford Capital. When the statements didn’t make sense to her, she contacted the funds directly and learned her accounts, which should have contained more than $100,000, had been cashed out two years earlier—in 1989.
The funds then contacted securities regulators, triggering an investigation that began in September, 1991.
The collapse of Oxford Capital was ugly. Many of the people who’d invested money were far from rich swells who could afford the loss. A New York subway conductor who lived in a working-class Queens neighborhood ended up losing almost $47,000. (Worse still, two friends that she convinced to invest with Oxford Capital lost another $35,000.) A secretary and recent immigrant from Jamaica, lost $46,500 which she had been planning to use to complete her college degree.
Forson’s lawyers argued that Oxford Capital intended to make good on its debts—and could have if the company had had more time to work out its bad investments. One of the lawyers pointedly blamed regulatory agencies and prosecutors for frightening investors into demanding their money back. “It was a run on the bank, in simplest terms,” he said.
The Manhattan D.A. took a harder line. Forson and several of Oxford’s top executives faced criminal charges of larceny and running a corrupt enterprise. Each faced up to 25 years in prison. “Basically, it’s a Ponzi scheme,” said one of the assistant district attorneys prosecuting the case. “It didn’t start that way, but it rapidly became one.”
In the prosecutors’ scenario, Forson ran Oxford Capital as a legitimate but unsuccessful money management firm for about two years. At that point—sometime in 1989—he concluded that he could attract more money if he padded his returns with capital that was supposed to be invested in safe vehicles like CD’s and T-bills and in minority-owned or Caribbean-based companies.
What followed was a series of disastrous investments, which were obscured by the Ponzi payments.
Oxford Capital invested in a modeling agency, a fashion design firm and a sports talent agency. They all lost money. Perhaps the most egregiously bad deal was Forson’s attempt to buy a Nigerian freighter carrying fertilizer which had been stranded in the waters off of South America because of a complicated international trade dispute.
Forson needed $800,000 of Oxford Capital money to spring the freighter full of manure. Part of the money would go to honest bribes back in Nigeria—the rest would go to taking title on the contents