You Can't Cheat an Honest Man - James Walsh [52]
An iceberg is an apt image for the scam. In a little more than a year, Taylor attracted about 6,000 investors who handed him more than $50 million. That’s an average of more than $8,300 each. At its peak, the Better Life Club was taking in something like $2 million a week. And Taylor was traveling to cities all across North America, conducting what he called “wealth-building seminars.”
Of course, none of the money went into 900 numbers or advertising. A large part of the money went back to investors in the form of payouts, but Taylor kept enough for himself to buy a million-dollar home, several expensive cars and trust funds for his children. “In one way, the name of the scheme was true enough,” says a federal investigator who looked into Taylor’s operation. “It just should have made full disclosure. It should have been called the Better Life for Robert Taylor Club.”
In September 1995, the SEC filed suit against the Better Life Club and Robert Taylor. It claimed that his investors had lost at least half of the $50 million they’d invested. Taylor didn’t put up much of a fight. His lawyers helped him reach a plea bargain—and he received a relatively light three-to-five year sentence for wire fraud. A series of civil lawsuits followed, which effectively bankrupted Taylor; but not even this served to faze him.
Considering how many Ponzi perps return to their conniving ways after jail stints, Taylor’s cool approach to his legal problems may not be so surprising after all. Quite a few of the people familiar with Taylor—both as investors and investigators—say he’s charismatic enough to make money promoting a new con when he’s completed his prison term.
Religion Works Well as an Affinity Hook Next to ethnic or racial groups, the most effective—and most disturbing—affinity hook is religion.
Los Angeles con man Rodney Swanson used Emmanuel Evangelical Free Church, the suburban Burbank enclave to which he belonged, as his network for recruiting investors into a real estate Ponzi scheme.
Swanson looked the part of a successful California real estate mogul. In his late forties, he had the features and physical attitude of a blandly handsome television actor. He lived in posh San Marino and drove a big Mercedes sedan. But what really made Swanson believable was that he didn’t seem very excited about his business.
The thrill of pulling a con comes in pressing the envelop of credibility...putting a twist on the pitch that closes the sale. This can make the perp all the more believable, though it risks collapsing the entire premise.
It’s a fact of life in upper-middle-class Los Angeles—and in most places—that successful people are often ambivalent about their work. Swanson played to this trend. He was, at least initially, more excited talking about his children and his weekends with his family than about real estate. His fellow congregants saw the proof of Swanson’s priorities: He was a regular at church baseball games and in the choir on Sundays.
This was just the soft sell leading up to the hard sell.
Gradually, Swanson talked to friends from church about investment opportunities. He had deals on commercial properties waiting to close. He had trust deeds on prime land looking for investors. He had spots open in limited partnerships.
Swanson actually had a motley collection of minority investor positions and heavily-mortgaged properties. He manipulated and finessed new investments and title transfers so that his investors believed they were getting something for their money. Word spread through church circles that Swanson was making good investments for people.
And he made his early interest payments and distributions on time— with the money he was bringing from new investors.
Swanson kept the scam going for at least two years. It was the perfect Ponzi scheme: It started out with a few investors and less than $100,000; as time went on, people started coming to Swanson—offering money to invest.