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This week’s cover story in the Paper Version of Unfair Park covers complaints from a series of investors around the world who say they placed millions of dollars with a group of Dallas men, expected huge, nearly instant returns, and never saw their money again.
The series of investments detailed in court documents, emails and interviews with the Observer were to be handled by Allan Clark, who spent a couple years in federal prison for his role in a scheme to defraud a Texas savings and loan bank, and Jack Wilemon, a disbarred Fort Worth attorney.
Former Dallas County probate Judge Joseph Ashmore Jr. was offered as the upstanding face of the investment in each case, and investors say they wired their money into Ashmore’s trust account. Here on Unfair Park, we’ve already mentioned complaints from a couple of those investor groups.
Along the way to writing the story, I spoke with Jeff Matthews, president of the Dallas chapter of the Association of Certified Fraud Examiners, to hear more about common warning signs for bogus investments and why it seems like so many have popped up in Dallas in the last few years.
Matthews told me that’s in part because Dallas weathered the financial crisis relatively well, and partly because people are finally starting to get smart about high-profile frauds. “As an investor, you may be a little quicker to pull the trigger on accusing someone of misappropriation if you’ve seen these things before,” he says. “Go back to 2004. That’s before Madoff; that’s before [Mexia-born Ponzi scheme architect Allen] Stanford; that’s before a lot of the big cases that’ve cropped up.
“For the most part, folks are going to be more skeptical than they were a few years ago,” Matthews says. A deal with shifting terms, references to offshore accounts, urgency to close a deal in a hurry — he says these are all warning signs. “I don’t know a whole lot of brokers that beat down the phones at midnight with legitimate deals,” he says.
The most basic rule to follow, he says, is not to invest in anything you don’t understand. And always make sure you’re able to get an accounting of where the money’s going to go.
While some schemes hire a big-name accounting firm to make an investment look legit, he says a well-respected figurehead can accomplish the same thing. “You’d think the same thing, there’s no way he’d ever associate with something that was inappropriate. And chances are, he didn’t know what he was getting into,” Matthews says. “Certainly he didn’t sign up for something that was going to go that direction.”
Often, Matthews says, these operations don’t start out as Ponzi schemes, but as legitimate oil and gas projects or securities trades. When costs get out of hand, operators scare up more money to try and keep the deal alive and can end up sinking in even deeper.
“A lot of times, these folks that are engaging in the Ponzi scheme are familiar with one another,” he says. “When you have that kind of relationship, sometimes you can let the familiarity, the comfort, cloud what otherwise would’ve been skepticism.”
Matthews says the feds are targeting Ponzi schemes aggressively now, especially in Texas after Allen Stanford. “Even though something may start out small, there’s no telling what it could grow to,” Matthews says. “We’ve seen a $10,000 investigation grow into seven, eight million bucks. You just never know if it’s the tip of the iceberg.”
