OPERATION
GOOD SAMARITAN
The Case of the Chameleon Con
11/24/04
California
con artist John Franklin Harrell knew how to run
a racket.
First,
he concocted a clever investment scheme, built on
a series of bold lies told by himself and his associates.
Their
pitch went something like this:
…
"We have access to a secret $1.6 TRILLION trust
fund linked to a direct descendant of Mormon Church
founder Joseph Smith." NONSENSE. No such fund
ever existed.
…
"The funds in the trust will be 'released'
once an insurance company is created. Then, it will
be converted into insurance policies. Investors
will be guaranteed a 100 percent return every year
for 99 years." MORE TALL TALES.
…
"The investments are totally secure. The risk
is 1,000th of one percent. Nobody has lost any money."
SOUND TOO GOOD TO BE TRUE? Well, it was.
Then,
there was a tug on the heartstrings to seal the
deal: "We'll take some of the millions
in profit and earmark it for humanitarian projects."
What
kind of projects? Well, depended on who
was getting conned:
...
Religious investors were promised a biblical
theme park, a Christian radio station, and faith-based
scholarships.
... Philanthropists heard about a series of "social
development centers" that would cure
the ills of society, helping everyone from single
mothers to the jobless.
... The sick were guaranteed miraculous
cures for autism, Parkinson’s, and cancer.
To
pull off his con job, Harrell had a cult-like
following of more than 20 hucksters who helped pitch
the scheme across the U.S. Over time, some became
suspicious that they had never delivered on a single
promise or reported a single dollar in earnings
to the IRS. But Harrell kept them quiet by renting
them fancy cars and nice places to live.
And
who fell for the ruse? Sadly, more than
100 hard-working Americans from coast to coast,
who poured over $30 million (for some, their life
savings) into the scam.
Enter
the FBI, the IRS, and a joint investigation called
Operation Good Samaritan, which unraveled
the plot and its players. In March '03, agents arrested
Harrell and seven associates. Two months ago, agents
in California, Utah, and Mississippi arrested seven
more associates. Three more later turned themselves
in. The charges include money laundering, mail fraud,
conspiracy, tax evasion and false returns.
The
moral of the story? Be wary of investments
that claim to be risk free and promise incredible
rates of return. And make sure they're offered by
licensed brokerage firms. For more red flags, see
our Common
Fraud Schemes.
Links:
San
Diego FBI press release | White
Collar Crime page
