You Can't Cheat an Honest Man - James Walsh [50]
In a common tactic, Forson’s defense lawyers argued that Oxford Capital investors were blinded by their own greed—choosing not to notice that the outfit was offering a no-risk 100 percent annual return on invested money. This, they argued, was a deal that anyone could see was too good to be true. One investor responded a little too readily, voicing the fears that drive so many working class people into the arms of Ponzi perps. She admitted that Oxford Capital investors were greedy, “if being greedy means that poor people can do the same thing that people on Wall Street do.”
The defense attorneys also tried another standard argument. They claimed that the real villains of Oxford Capital were out-of-control salespeople who lied to investors in order to boost their commissions.
But the Oxford Capital sales force was given specific directions in its efforts. Salespeople were told to target their own ethnic groups, as well as relatives and friends. “That’s another thing that roped me in,” said one burned investor. “I trusted [Forson] because he was West Indian.”
Misplaced Trust in Ethnic Loyalty
Immigrants are vulnerable to affinity scams because culture shock and language barriers can make their new lives overwhelming. For the same reasons immigrants buy native-language newspapers and rent homeland videos, they feel compelled to put money with former countrymen.
“It’s a familiar tongue...it feels solid,” says one investor who was burned in an affinity scam directed at Eastern European immigrants to the United States during the late 1980s. “But it’s not. If anything, you need to be more careful about fellow [immigrants] who want to invest your money.”
In the summer and fall of 1991, Taiwanese businessman David Tsao advertised in San Francisco’s Chinese-language newspapers for “employees” in each of his three California companies: Pacific Percentage Inc., East Ocean International and Green Tree Investments.
Tsao, who’d come to the United States in 1989, offered salaries and trading commissions totaling $1,600 per month, but only after applicants made initial investments of about $16,000 with the companies.
The pitch was unlikely—but Tsao was charismatic. With a big Mercedes and three houses in the Bay Area, he impressed employees and potential investors as a man of means. He was in his early forties (which seems to be about the median age of Ponzi perps). His businesses supposedly included a travel agency, a real estate firm and several other ventures. And he made efforts to fit the classic—and some might say stereotypical—profile of a rich Asian entrepreneur.
While he boasted about his business ties to Taiwan, Hong Kong and even mainland China, Tsao was vague about specifics. He talked about his passion for high-stakes gambling, at one point telling potential employee/investors that he’d recently lost $3 million at the tables in Las Vegas.
He also claimed that he was an accomplished commodities trader. This was the reason he directed so much of his effort toward speculation in the commodities markets—particularly trades in Standard & Poor’s 500 stock index futures contracts. (If nothing else, this image was consistent with a man who’d show millions of dollars of action in Las Vegas casinos.)
Tsao told employee/investors that his dream was to buy a vast tract of land in China, where he would build new homes for his friends. This was the sharp point of his affinity hook—an appeal to the ethnic Chinese impulse toward the homeland. It worked well. Almost 300 employee/investors, most of them recent immigrants, signed up in San Francisco. Another 120 or so were recruited in Tsao’s southern California offices.
The homeland scenario also made Tsao’s employee-investors