From: Tony Berkman (tberkman@rcn.com)
Date: Sun Sep 10 2000 - 10:26:07 PDT
From the New York Times
No link, because there is a premium charge for archived articles.
I particularly like the part about the banks being "in the New York area or
the Florida area, probably.'' Of course the cash in tin foil is pretty
amusing as well....
Wads of Cash, Gossip, Then Fraud Charges
By PAM BELLUCK with JO THOMAS
Money has never put in much of an appearance in Mattoon.
Folks eat in places like Gill's diner, circa 1940, where the
all-you-can-eat walleye special (two sides included) goes for $4.99. They work
at factories like the Lender's Bagel plant, sponsor of the
annual Bagelfest, the town's biggest event.
So more than a few eyebrows began arching when a handful of
people in this small central Illinois town suddenly seemed to be sitting
pretty. A deputy sheriff wound up with a new boat, a
Harley-Davidson and numerous antique cars. A struggling construction contractor
bought dozens of shiny new trucks.
A retired electrician started offering people interest-free
loans to build nice houses and start new businesses: the sparkly Bluebird
Diner,
Our Own Original Bakery, Jimmy John's Sandwich Shop, Auctions
Buy Us.
At one point, rumor has it, the post office handled a package so
full of cash that it actually burst at the seams.
''When people start buying property with cash, opening
businesses with cash, when they have only a job that pays minimum wage, well,
then you start to wonder,'' said Mayor Wanda Ferguson, a
65-year-old former donut shop worker.
This week, federal law enforcement officials gave foundation to
a few years of Mattoon gossip. They charged 11 Mattoon residents and 8
other people in a bogus financial investment scheme that, the
authorities say, hoodwinked more than 10,000 people around the world out
of more than $12.5 million. Most of those charged in Mattoon
were longtime residents, including the deputy sheriff, a former police
officer, a minister, a lawyer and businessmen.
As prosecutors describe it in a 91-page indictment, the scheme
was orchestrated by a 66-year-old retired electrician, Clyde D. Hood,
who started a sham investment fund in 1994, representing himself
as an international banker who had worked for several Fortune 500
companies. (In court on Thursday, Mr. Hood said he could not
remember the names of the Fortune 500 companies but thought they were
in ''the New York area or the Florida area, probably.'')
The fund, called Omega Trust and Trading, promised a 50-to-1
return on each investment and couched its campaign in Christian terms,
with phrases like ''keep the Lord's warehouse full.''
Money flowed in from people in all 50 states and countries
including China and Australia, prosecutors said, with some investors following
quizzical instructions to wrap their cash contributions in tin
foil.
In Mattoon, prosecutors say, Mr. Hood laundered the money by
setting up businesses with acquaintances or giving them interest-free
loans to build upscale homes or buy cars.
''It makes you feel bad, like I worked all my life and I'm
driving this old truck,'' said Joe Utley, 56, a custodian at Washington
Elementary
School, who like many others in Mattoon, population 18,500,
heard about the fountain of money but figured it was best to steer clear.
''You see all these buildings going up. Why are all these things
happening here, where there is nothing much that goes on?''
Lawyers for the defendants, who face a variety of money
laundering, conspiracy and fraud charges, say they are not guilty. Stephen R.
Ryan, a lawyer for Mr. Hood, said the charges were ''based on
misinformation and or misinterpretation of the information that they have.''
He declined to elaborate.
In an especially odd aspect of the case, Mr. Hood and two of the
other defendants have apparently tried to assert that the United States
government does not exist. As a grand jury was convened, they
mailed papers to prosecutors, court clerks, Mattoon police officers, the
county sheriff and the United States Supreme Court stating that
''any judicial proceeding, determination, ruling, order, decree, entry,
penalty, fine or arrest warrants which issues from these
'courts' is null and void.''
Investigators also found identity cards with pictures and
signatures of Mr. Hood and another defendant, Arlene Foust Diamond, a
63-year-old real estate and insurance agent from Los Angeles,
who solicited investments for Omega. The cards identified Mr. Hood and
Ms. Diamond as ''ambassador and minister of justice for the Free
State of Eden.'' Prosecutors said Ms. Diamond tried to use her card to
claim a kind of diplomatic immunity and get out of submitting
handwriting and fingerprint samples to the grand jury. Mr. Hood testified in
court on Thursday that he signed the card as a joke.
Prosecutors said that they had found bank accounts for Mr. Hood
and Ms. Diamond in Dubai, and accounts for Ms. Diamond in Belize
and other countries.
Mr. Hood and his wife, Patricia Ann Hood, 64, are also charged
with filing false tax returns. According to the indictment, the Hoods
claimed only $9,919 in total income for 1995 and $11,222 in 1996.
Mr. Hood, a big man with leathery skin, pleaded guilty to
criminal damage of property and burglary in two separate cases in the 1970's.
Born and reared in Mattoon, he worked for various factories,
farmed and fixed radiators.
Yet Mr. Hood represented himself to Omega investors as ''one of
only seven or eight persons worldwide who had the knowledge,
expertise and capability to conduct these secret
multimillion-dollar trades,'' the United States attorney's office said.
In February, the Securities and Exchange Commission warned
investors not to participate in schemes in which con artists exploit
suspicions about the government and financial institutions. The
schemers tell investors that there is a secret banking system open only to
the very rich and providing huge returns but that they can
participate if they pool their money with someone who has an ''in.''
In the Mattoon case, investors in all 50 states and a dozen
countries sent cashier's checks and money orders after being told that the
money would be invested in foreign bank debentures, prosecutors
say. They were promised that each $100 would net them $5,100 in
275 days, and that if they ''rolled over'' the $5,100, they
would receive $255,000.
Prosecutors say that for years, Mr. Hood had an investor phone
line with recorded messages saying the payoff was just around the corner
and blaming the delay on bankers or the government.
Omega investors never made any money, prosecutors say.
Linda Stark, of Apple Valley, Calif., said she invested $1,600
in 1998 and thought she would receive $5,100 for every $100 in two
months. Ms. Stark said she knew about 20 other investors, most
of them Christians like her.
''I hold no animosity,'' she said of Mr. Hood and Ms. Diamond.
''It saddens me they have to sit in jail. Their lives are spoiled by their
greed.''
In Mattoon, people watched the sprouting of places like the
Bluebird Diner, made from three shiny silver trailers. ''When they built the
Bluebird Diner, we thought they must have been doing better than
we thought,'' said Shelli Kaczmarek, a manager at Gill's. ''Me, my
husband and 3-year-old paid $20 there for breakfast. I can feed
my whole family, all four of my kids, on that here.''
Stuart Chris Engel, a construction contractor whose business is
accused of funneling $6 million of Mr. Hood's money, prospered
overnight.
''We're not like New York, where a construction company with a
fleet of 40 or 50 new vehicles'' could suddenly flourish and ''people
probably wouldn't think that much about it,'' the police chief,
David O'Dell, said. ''We're a small town. It was just obvious.''
Not everyone in Mattoon has come down hard on Mr. Hood and his
accused co-conspirators.
Melissa Yates, a secretary at Our Own Original Bakery, which
never became a bakery but served as Mr. Hood's office, said, ''All I
know is that he has done a lot for this community. He has helped
hundreds of people around here, even strangers.''
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