by Mike Vogel
Updated 4 yearss ago
» They never got Victor Incendy. In Boca Raton in the late 1980s, he created publicly traded Cascade International, a women’s fashion retailer. Unfortunately for Cascade’s 1,500 investors, many of its 200 locations didn’t exist. The fact that some were real, says bankruptcy trustee Kenneth Welt, only made the scam more convincing. Incendy fled in 1991, and Cascade investors’ $170 million in equity was wiped out. Incendy’s wife, Jeannette, and other execs went to prison. Incendy remains a fugitive.
» David Paul was the high-flying chairman of CenTrust Bank, Florida’s largest S&L at the time it became one of the largest failures in U.S. banking history, costing taxpayers $1.7 billion. Paul, a bigwig in the national Democratic Party, philanthropist and society leader, pleaded guilty to racketeering, allegedly stealing millions from CenTrust and hiding financial troubles from regulators. His excesses proved to be small time relative to the bar later set at Enron and the like, but he wound up serving more than a decade, going free in 2004.
Glenn W. Turner
» A sharecropper’s son with a harelip and an eighth-grade education, Glenn W. Turner turned a few thousands dollars into hundreds of millions. He flew by Lear, built a castle in Seminole County, wore flashy red suits and challenged the thousands who came to hear him speak to “Dare to Be Great.” He once said, “My product was positive attitude.” One of the inventors of network marketing, he sold beauty supplies and later motivational materials. He ran afoul of regulators, adjusted his practices, tried again. Lawyers argued endlessly over whether he actually violated the law. Eventually, he was jailed in Arizona for nearly five years, getting out in 1992. He’s now 74 and semi-retired in Lake Mary.
ESM Government Securities
» When Fort Lauderdale’s ESM Government Securities went under in 1985 with $300 million in losses, it took with it Ohio-based thrift Home State, ESM’s largest customer. That in turn sank Ohio’s deposit guaranty fund. Ohio’s thrifts had to shut down while trying to get federal deposit insurance, the largest closing since the Great Depression. The trouble started years before when ESM lost $1-million on a trade and “convinced themselves they could trade out of it — common problem,” says Miami attorney Thomas Tew, the bankruptcy case trustee. Home State owner Marvin Warner, once Jimmy Carter’s ambassador to Switzerland and a part-owner of the Tampa Bay Buccaneers, spent more than two years in jail and then moved to his Ocala horse farm. He died in 2002.
» High school dropout Victor Posner became a real estate millionaire in Maryland before moving to Miami Beach in 1954. An early LBO and hostile takeover artist, he was part-industrialist — Sharon Steel, Royal Crown Cola, Arby’s, Salem Corp., Graniteville, NVF — part-philanthropist, part-louse. He pleaded no contest to tax evasion and fraud for jacking up the value of a donation to a college. He died in 2002.
» “In every con, you need a little real.” So said mastermind Kenneth Thenen, who got 10 years for his Aventura-based Premium Sales, a $500-million scheme so convincing that lawyers and accountants quit their jobs to raise money for it. Premium’s legit business was supposed to be earning 40% returns buying grocery products where they were priced low or were slow to sell and diverting them to markets with high prices. Instead, it took in new money to pay old investors. The pyramid collapsed in 1993. Thenen was released in 2005.
James Alderdice [Photo: Sun Sentinel]
International Gold Bullion Exchange
» “You have four or five beautiful women at the reception desk. It’s a sign,” says Miami attorney Thomas Tew. In 1979, two brothers with unsavory pasts, William and James Alderdice, founded the International Gold Bullion Exchange in Fort Lauderdale, for which Tew was called in as securities and bankruptcy counsel, to take advantage of the opening of gold sales to the retail public. The brothers eventually employed 1,000. “By the time I’m 50 or 60, I’m going to be one of the group of men in charge of this planet,” William once told the Miami Herald. He didn’t live so long. He was murdered while out on bail by a man he met in jail. James got 10 years. More than 14,000 investors filed claims. Of the $200 million taken in, less than $2 million was recovered.
Jung Bae and Yung Kim
Jung "Jong" Bae Kim
» As the operator of the KL Financial family of hedge funds, working from glitzy offices in West Palm Beach, Jung “John” Bae Kim racked up impressive results quarter after quarter. In one day’s trading on the maker of the BlackBerry alone, KL turned a $22-million profit. Investors piled in, putting up $195 million from 2000 to 2005. But KL was faking reports, including counterfeit clearing firm statements. Losses were huge. “The proverbial house of cards,” said U.S. Attorney R. Alexander Acosta. Kim was sentenced in July to 18 years in prison. Kim’s brother Yung Kim got six years. Both have been ordered to pay $78.5 million in restitution. Receiver Guy Lewis has recovered $6.5 million for investors.
Trans Continental Airlines
» Louis J. Pearlman found fame — and lived the high life — promoting boy bands ’N Sync and Backstreet Boys. After being spotted in 2007 in Bali while on the lam, he found prison. His Trans Continental Airlines, at 25 years and at least $500 million, is one of the largest and longest-running Ponzi schemes in Florida history, according to the state. The fake air charter and travel services company even had a phony accounting firm to vouch for it, says Soneet Kapila, bankruptcy court trustee. Pearlman’s projected release date is 2029. “I’m an optimist,” he told the Orlando Sentinel as his scheme crumbled.
Eduardo and Hector Orlansky
» In 1994, Eduardo Orlansky and his brother Hector created E.S. Bankest, with the Miami-based U.S. banking unit of Portugal’s Espirito Santo Bank. The business was supposed to be financing accounts receivable. Instead, the brothers were backing young companies, hoping for a windfall when the firms went public. They were “making up the receivables,” says receiver Lewis B. Freeman. Investors lost $164 million, but Espirito Santo made them whole. Espirito Santo reached a settlement with the law firm involved. Auditor BDO Seidman went to court and lost big — $520 million. It is appealing. Spokesman Jerry Walsh says, “BDO Seidman has a history of successfully reversing damages like this.” Eduardo and Hector got 20 years each.