Fool's Gold

Our intrepid correspondent follows a scheming ex-con to Mexico in search of treasure. They find bupkus.

His friend's recommendation piqued his interest, and soon he made the trip to Fort Worth, to the Cornerstone office.

During that day and a half he was in Fort Worth, Sanders sensed that Reeder was eccentric, but he dismissed his concerns. "I've known a few financial geniuses, and they were pretty weird guys." Reeder had told him that he'd get a 10 percent return every month, that he had 27 companies. But when pressed about their whereabouts, Reeder was vague. "I asked him specific questions about the locations and the volumes of some of the warehouses supposedly containing these products we were contractually helping him purchase to resell, to split the profits. And he started getting pretty nebulous about that," says Sanders, who ended up being the largest investor in Cornerstone.

Sanders says that when he asked an employee the reasons for Reeder's reticence, the person said, "Gary keeps all that stuff really close to himself, because if he divulges it, he would be afraid that he would get scooped on some of the deals."

Here's Gary Reeder. He's a thoughtful kind of guy. He thinks a lot about God and money.
Peter Calvin
Here's Gary Reeder. He's a thoughtful kind of guy. He thinks a lot about God and money.

"Unfortunately," says Sanders now, "I was willing to accept that."

In the months ahead, he gave $50,000 to Reeder's Cornerstone. In return, he got a few gold and silver coins, but most important, he got the profit checks--the $5,000 a month he was promised. By November 1999, after receiving about five checks in all, he was so convinced that Reeder was trustworthy, he forked over another $300,000. Just days later, Cornerstone was seized. Since then, Sanders has recovered only $150,000.

In the past few weeks, he has filled out a questionnaire the FBI sent him about Cornerstone.

For a time after the seizure, Sanders was willing to give Reeder the benefit of the doubt. But not now. "Gary's a convicted felon," he says now. "He needs to be locked up behind bars forever in a psychiatric institution. I'm deadly serious."

Sanders' experience doesn't surprise Mike Quilling, the SEC's receiver.

"I can tell you that Gary in our very first conversation threatened me with physical violence," he says in his office. "His comment was, 'I'm going to kick your ass. You're a whore; you're a chicken; you're a pansy; you've got no spine.'

"Make no mistake," says Quilling, "Gary is not a dumb man. Gary is as street-smart as you'd ever want to find. He got his education in the penal system, and you don't grow up in prison and not learn something."


When I recently visited Reeder at his spacious apartment, he told me he'd done nothing wrong with Cornerstone.

Perhaps that explains why, when he reads aloud a gut-wrenching letter from an older woman who had invested in Cornerstone and lost everything, there is not a shred of guilt in his voice. "We have lost our retirement, our home, and a hope for a better life for our children," the woman wrote. "What makes it harder for me, Gary, is that I begged my husband not to take all our money and put it into Cornerstone...I have never bought one new dress or coat in the whole duration of our marriage."

Reeder insists that had the government not seized everything, the companies under the Cornerstone umbrella would have generated more than a billion dollars this year. And to prove his point, he's sent letters to former clients, urging their support for a class-action lawsuit he wants to file against the government, and, for good measure, the Star-Telegram and Channel 5.

The clients have responded, many sending him money.

"I'm going to get right up in the government's face," Reeder says. "In no time, I'll be making $1 million a week."

Once again, though, the details have changed. Kenneth is out again. The Nigerian, he says, had disappeared. For two weeks, he didn't know where he was, until the day Kenneth showed up at his office and told him that he had been in Mexico for two weeks with an old Cornerstone client of Reeder's and that with the latter's help, had secured rights to some mines.

Kenneth, contacted by the Observer, tells a different story--that Reeder misrepresented the mining operation to his clients, that he breached a confidentiality agreement, that they were never really partners because Reeder didn't live up to his end of the deal: providing capital. "Gary fabricates things in his mind," Kenneth says.

Whatever the case, Reeder says that he's dumped Kenneth for good, that he has a new mining project in Arizona. And wouldn't you know it? he says, "There's 1,000 times more gold there."

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