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How investors can do their homework and avoid investment fraud
Texas securities regulators hampered as they investigate investment fraud
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In late October 2006, Melissa Marie Ramon introduced people to a man she said was Scott Scrabanek of New York City, according to two who met him. Whether that is his real name is unresolved.
He was said to be CFO of a secretive Paris company called JaxTrece that made loans to nonprofit organizations. It seemed to be a lucrative business. Investors earned average annualreturns as high as 51 percent, according to a company document. Scrabanek appeared in Houston with Ramon, where he made a show of examining the ceiling and pipes of a potential office, the sources said. He was about 6 feet tall, slim, pale, in his 50s or 60s. Curiously, in early October, Ramon sent an e-mail to an Austin actors group: She was seeking a male actor in his 50s or 60s with a New York accent to make an appearance at what she said was a Houston fundraising event. Another document filed in a lawsuit and said to have been found in Ramon’s computer describes Scrabanek’s back story down to his children’s names and his residence (the Time Warner building in New York City), and details his attitude: "typical Jewish New York . . . doesn’t really care about anyone but yourself, snotty and stuck up." Some now wonder whether the man they met was actually an actor earning $500 an hour to play a part in what the Justice Department says was an investment scam that defrauded investors of millions of dollars.The vogue term is a "mini-Madoff." New York financier Bernard Madoff has become the poster boy of fraud for the depth, duration and audacity of his $65 billion Ponzi scheme. But for every Madoff there may be hundreds of smaller investment sharks prowling the waters. The swindler who used fake oil wells to take in $65 million. A fraudster with a Malaysian latex-glove con that cost 7,000 investors $145 million. A deaf man accused of targeting the deaf in a $4.4 million scheme. An ex-con accused of diverting money to pay for a 29-foot cocktail cruising boat he called Summer Inn, while an investor lost money to pay for cancer treatment.By virtue of its size, population and reputation as a go-go state rich in oil, Texas seems to be home to more than its share. Locally, from Mansfield to Mineral Wells, Colleyville to Cleburne, the scammers are ready with a warm smile and a heck of a deal. It can take years for investors to realize that they’ve been burned.Occasionally, authorities do spot and stop schemes before investors even know they’ve been had. Earlier this year, a Texas securities investigator went undercover to nab a company running ads promising investors big returns by cashing in on dead people’s life insurance. But more often, regulators and the guys with the badges and guns play wait and see. Authorities react to complaints or tips after fraudsters have flown under the radar for years — like one Texas swindler whose oil well con lasted for eight years.Investor Dean Antonakos of Augusta, Ga., lost at least $111,000 by putting money into Texas oil wells after being convinced that "new technology" could get dry holes flowing again. He was also lured by the ability to write off up to 85 percent of his investment from his taxes in the first year.
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