Matthew Cox | Inside True Crime Podcast - FBI Agent Confronts a Fraudster | $350M FRAUD

Episode Date: December 7, 2023

FBI Agent Confronts a Fraudster | $350M FRAUD

He was able to get these corporations to take money that had been donated to them, give it to him, so that this anonymous donor would match it and return double back to them. You can't get in unless you have a million dollars. You know, saying things like that make people really want to give me money to this. You've committed this fraud. You're scared to death and you're depressed and going out and committing more fraud so you can buy a bigger car or more clothes or a fancy trip makes you feel good for a little bit.

We're here to talk about fraud cases and some of the fraud cases that you've worked. Is there anything specific you think would be interesting? Well, I, in my career, and again, I was in the FBI for 26 years, and the majority of that time, I was assigned to an economic crime squad, where I worked all kinds of frauds like advance fee schemes, embezzlements, business-to-business telemarketing fraud and Ponzi schemes. So there's a lot, you know. I have covered some of it on my podcast, you know, just breaking it down.

Luckily, with some of the actual subjects of my cases, you know, I've gotten them to come on to talk about the investigation. So it's up to you. Now, I did, like you, have one of my cases on American Greed. whether you're a subject or you are an investigator. I mean, as a person that talks about fraud, I mean, that is like, you know, the high level to have one of your cases on American greed. So we can talk about that one.

Okay. Which one was that? Now, that was a Ponzi scheme. That was a $350 million Ponzi scheme that occurred in Philadelphia, because that's where 24 of my 26 years in the FBI spent in Philadelphia. And his name was John Bennett. And John Bennett was a fundraiser. He actually worked for charities, a lot of them, Christian-based charities, in order to bring more funding to those organizations. He taught their leaders, you know, how to fundraise. I mean, he had his own business doing this. And it was legitimate business. But at one point, he was having some

financial difficulties. And I think that's what's really interesting that a lot of people don't understand. Most Ponzi schemes are not a, I guess you would call it a predatory type of fraud. They're situational. Something happened in a legitimate business that caused the person, the business owner, to do unethical behaviors that turned into criminal fraud behaviors. I've actually said that many times because people will say, oh, that person, you know, he's a con man, he's running a scam. It's like, wait a minute, 99% of these started off as just a legitimate, you know, investment scheme, you know, and scheme in a good way, not, no, scheme.

you people hear a scheme they think bad i mean where you know it's a financial scheme that was maybe it was working for years i knew a guy that it was his was working for four or five years and then he had a bad quarter and then another bad quarter and then he he just started blatantly lying because he thought if i start telling people that they we had a bad quarter and that we lost money they'll pull their funds right and the whole thing will fail and i don't want that so i'm just going to fudge a couple of quarterly reports and I'm going to make it back. And then, of course, it doesn't. They make worse and worse, more and more risky decisions that go bad. And before you know it, it's just a complete Ponzi scheme. Yeah, exactly. It's a situational motivation that caused

them to go in that direction. That doesn't make it right or give them an excuse. But that is how they got into the trouble. Instead of throwing up their hands and says, okay, this business is failing, let's just move on. They try to make it work by, as you said, you know, doing things to get in more money, to get in more investors. And the things that they do is lie, you know, lie and deceive. And that's the definition of fraud. When you get something of value, whether it's money or some, you know, a house or whatever, based on deceptions and lies. And that's when it becomes a fraud. When you know that what you're saying is not true, that, you know, you are making up stuff or leaving out things in order to convince people to give you money.

That's a fraud. Right. And what was the person, you said it was a $300 million fraud? Yeah, $300 million Pondi scheme. So I can tell you from the very beginning how it happened. He was having some financial trouble. What was his name again? I'm sorry.

John Bennett. Bennett. And the name of his company was the new era, the foundation of new era philanthropy. Okay. And again, it was real at the beginning. He was helping people, you know, helping organizations obtain money. and funding, funding. And, I mean, that's good work.

Right. Good work. But he got into some financial trouble, and he realized that the way he could get some money in was that he went to some of the donors that he worked with, some of the philanthropist, and he told them that he had an opportunity, that he had someone that was willing to match their donations. So if they wanted to send in, matching funds are legitimate. your corporations and companies how often does that happen but i i hear you right but companies and corporations match their workers donations all the time right but this is yeah but this is a anonymous uh philanthropist

who is willing to um match the donations of you know like-minded rich people you know who who he wants to also help and so he convinced uh four or five people just it was a really short little scam that he was putting together because he was desperate and he needed money. He actually had overdraft a bank account and he was trying to return that money to the bank. And so he's able to convince a couple of, a few people, four or five people to give him, I think it was like 2,000 or 2,500 each. And so once he got that money and was able to get his bank account straight, you know, he told the people that, you know, that's anonymous donors.

were going to match the funds and he was going to give it to their favorite charity. Well, they enjoyed it so much that they told more people. And more people came to him and they wanted to have their donations matched. And again, I can't give him any excuses, but he kept doing it. He loved his ego, just loved the fact that these rich people, these donors were coming to him. saying I want to be involved in this I want to have your anonymous philanthropist match my funds too and he kept doing it and he kept doing it and we all know what upon right well did he ever I mean did they ever say hey wait like you're saying they're going to donate to their favorite charity

then they should have been able to see their donations being matched but there was one little thing about it in order to make sure that this that this that that the corporation, the company, the nonprofit that you were donating to, was going to use this for special events and special funding. He was going to hold on to it for six months. So you give him your donation. Okay. Once a philanthropist, the anonymous donor, sees that, you know,

the money is there for six months, then he matches it. Then the nonprofit gets your fund. funding. And of course, later, six months wasn't long enough because he needed to generate more of money. And so he held on to your money for a year. And it wasn't $2,000 or $2,500. It was $50,000 or $1 million. And he branched out not just from donors and rich philanthropists, but now he went to institutions. Like, and I've got to look this up because I don't want to name a name that is wrong. Like the American Red Cross, the Salvation Army, United Way, juvenile diabetes, the Franklin Institute, the Free Library of Philadelphia, the Philadelphia Orchestra.

He was able to get these corporations to take money that had been donated to them, give it to him for six months to a year, so that this anonymous. donor would match it and return double back to them. And so he just, he just had the gift of being able to talk to these individuals who were known because of their ability to raise funds for these major Philadelphia organizations. Well, I was going to say also, I'm sure what, what helped him is that he had legitimately been doing or been, you know, in this field for whatever it was, five or 10 years or however long he'd been functioning. So it's not like, hey, this guy popped up.

Nobody's heard of him. No, no, he's been here for, he's been doing this for 10 years. So it seems very legit. I, there was a, one of the Ponzi scheme guys that I met. He had run a legitimate business for 15 years, um, investing. in silver and so when he became a Ponzi scheme and he ran his Ponzi scheme for 10 years he'd been around for 15 years so everybody was like by that point he was on the city council he like everybody knew him in town people had invested he'd never lost their money so everybody's singing his

praises so when he went straight Ponzi scheme there was there was no doubt it was yeah he was his his credibility wasn't in question. No. And nobody bothered to do their own personal due diligence. Right. Because this institution, you know, made a bunch of money off of this and this one did. I need to get involved. I mean, it was almost like Madoff where people were begging, organizations were begging him to be a part of this foundation of philanthropy.

They wanted to participate in, and he turned some people away at the beginning, at the And, you know, he was taking anybody he could. But nobody bothered to do their own checking, you know, their own research. They just depended on the social proof that it was working. So-and-so got a big fat check. Right. And so, you know, that's exactly what happened in this particular case. But as we know, you know, there is no Ponzi scheme that can last forever because there is not enough money.

in the world that is going to keep a big Ponzi scheme afloat because the only way that you can keep it going is to get more and more investors so that you can pay the old investors back with the money that you get from the new investors. And so that's why the turns became longer that he was going to keep the money and the amount of money that you needed to get into the program became larger because he was trying to get as much as he could to keep this Ponzi scheme afloat. Your $2,000 isn't going to help me stay afloat. It's $50,000 minimum.

Yes, yes. No, you can't get in unless you have a million dollars. But what's funny is that that type of, that, you know, saying things like that and those types of restrictions make people really want to give me money to this. It's exclusive. Oh, yes. You know, I want to be a part of that, you know. Yeah, that's how it worked.

And the only reason that it fell apart at the time that it did, I mean, eventually would have anyway, was that he had actually taken out a loan from Prudential in order to, because it was getting tight and he needed to pay some of these people back. And so he had taken out a loan. And at some point when that loan wasn't being paid, Prudential called it, you know, the margin call. We want our money back. You've got to pay us. And at that point, the lawyers and attorneys came in and told them, you know, you're going to have to file for bankruptcy. So that's how I and the FBI found out about this because it was on the front page of the Philadelphia Inquirer that this famous charity foundation had filed for bankruptcy. So how did it end up?

Is it just that the reporters were watching the bankruptcy file? or did someone contact them and say, hey, I gave this guy $200,000. He's held it for 18 months and he told me this and now he's in bankruptcy. I think there's a scam. I think it was a combination because, again, these were huge institutions in Philadelphia. And embarrassing enough to the newspaper, they had maybe like a month before, had a whole article about how great he was. you know and all the good work that he had done that's embarrassing and so once the bankruptcy was

filed they did the right thing they went right back in to say hey wait a minute yeah we made a mistake yeah we made a mistake and and they really started they're doing some digging on their own and so once we saw that article on the front page of the inquirer I went into my supervisor, you know, because, you know, I'm an ambitious agent. And then I said, I'd love to work this. You know, I love to see if there's anything criminal here. You know, the implications were that it was. And then I went over to the U.S. Attorney's Office and met with the attorneys over there.

And we put together a team. It was one of those cases where you needed a team. So there was actually myself and two other agents working on this and two attorneys, federal prosecutors working on this case, and with financial assistance and things like that, all working on this case to try to figure out what the hell happened. So how does that start? Do you first go out and order subpoenas, or do you first go out and try and locate some, you know, the victims?

Do you try and get like a, you know, like word of mouth first and try and, you know, and then kind of like, you know, island hop your way through the process? or do you already know we can subpoena these? Well, I guess you have the bankruptcy filing, which is perfect. Exactly. You've already got a blueprint. Yes, we already have.

And the SEC, the Securities Exchange Commission, were working on it also because this was supposed to be an investment. We all now know that it wasn't an investment. You know, it wasn't something. They thought it was something that they should have been monitoring and had been registered in the first place. but it was really a scam, so it became, it went from a possible civil case with the SEC to a criminal case, you know, with the FBI and the Justice Department.

And so, yeah, we were lucky because they had filed for bankruptcies, so all of the business had been closed and taken over by the bankruptcy court. All the records were there. We still had to do just for legal purposes. We still had to file subpoenas and search records, but they were all there. All we had to do is just walk into the office and pull up the file cabinets and look in the files. And we actually worked that case in his office, took over the office because the files were already there. They were already organized.

And so for several months, we took over his office as we went through those files. He has to know this. Oh, yeah, he knows it. Yeah, he knows it from the very beginning. And a lot of fraud cases, especially when you're talking about a Ponzi scheme, people know that they're being investigated because we learn about it when, again, the Ponzi scheme starts to fail. So now victims and investors are screaming and yelling and they know that, you know, the gig is up. as they would say. Did Bennett ever come to you before that and say, look, I want to talk or did he just wait and hope that you guys said, oh, there's nothing illegal here? He did not

initially come and talk, but, you know, I'm sure you've heard of the word proffer. Right. Yes. And so he did proffer towards the end. And for your audience, you know, a proffer is when a subject It comes in and lays everything out for the prosecutors and the investigators with the understanding that nothing that they say will be used against them if they tell the truth. Right. It just allows the investigators to skip a few, you know, hurdles and just get to the information right away. So he came in and he did proffer. The strange thing about this case, which I think makes it even more unique, you know, first you had the fact that it's a charity, you know, it's a charity Ponzi scheme that makes it different. But the other part of it is that he, here's this person that's supposed to be a good man. And I guess he could not bring himself to admit that he had committed a fraud. And so he pled. No contest, which is basically saying, hey, I understand that the FBI has gathered all the evidence to prove, they think they've gathered enough evidence to prove that I am guilty.

I am not going to admit to my guilt, but I will plea. No contest. Yeah. Like, do you get acceptance of responsibility still? I don't believe he did. I mean, you're right. How can you when you're saying, I'm going to go ahead and not take you to trial, but I don't really believe that I did what you.

I mean, how can. So here's what that kind of reminds me of is I've talked to, you know, U.S. attorneys, and I've spoken with lawyers and many, many doctors. and a lot of times what they'll say is you'll get these doctors from these pill mills in and at least with a drug dealer, he comes in, sit down, he knows he was breaking the law. He was selling Coke, he's been doing it a long time or heroin, whatever it was, and he knows I'm a criminal, I was breaking the law. He said, but you would get these doctors in and sit down, and it would be 30 minutes to an hour

just trying to convince them that they'd broken the law. law because they're like I came in the guy caught he had a he had whatever his knee hurt he said this the MRI said this I filed you know I gave him this much prescription that's the most I can give him he was in a lot of pain what how was I supposed to know he was doctor shopping or he was a drug addict you know we gave him the pills he was taking them like they would they it would be like an hour where they're like what are you doing like you were breaking the law you were you were everybody that walked in and and had a a nose sniffle You were giving him the max prescription you could give him.

So it's funny that he would walk in because it seems like to me it's obvious. He knows he was lying. He knows there was no anonymous donor. He knows he lied to get the contributions. Why would you think you weren't committing a fraud? Oh, wait a minute. He didn't know there were no anonymous donors. He was delusional.

That's what he tried to say. That is his. rationalization. He was delusional, and he thought he was meeting with anonymous donors. He thought that they were matching. That is the preposterous excuse that he brought, and he stuck with it all along the way. Did they call you on the phone? Did they call them on the phone? Were their text messages? Oh, yes. He was meeting with them. And that was... What's their phone number? Let's call them. Well, first of all, I said we didn't go to trial, but we actually had a sentencing hearing that lasted a week.

Oh, wow. Okay. Okay. The long time. Sentencing hearing that lasted a week. I was able to testify in that and show what, you know, I found. We also had an agent who was a CPA on the team, Brian Cosgrove. And, you know, he did a lot of the financial, you know, flow charts. and everything to show how the money went.

And one of the biggest things was, you know, just he did pay taxes, but he, the interest payments alone should have been huge if you had all of these millions of dollars sitting in an account, you know, supposedly escrow account for, you know, a year. But he had very little money because the money never stayed there long enough. And so we were able to show all of all of this. You know, my responsibility was to talk to the victims. And what you just said about trying to convince a doctor or somebody that they, you know, had committed a fraud,

my job was as difficult trying to convince some of the victims that they were victims. The one thing about fraud case is that it's totally different than any other type of criminal case. It's like if there's a bank robbery or a drug investigation, you're already, know the crime has occurred. Now you're just trying to prove who did it. But in a fraud investigation, you first had to prove that a crime occurred, that this fraud was not a civil matter, that it wasn't a business disagreement, that it wasn't a contract negotiation that went wrong. You had to first prove that it was a fraud, that it was criminal before you can then go on with your investigation of who committed that fraud. They're very complex cases. I loved

working them. And if I was able to go through a file cabinet and find an incriminating document, I was thrilled. You know, this is so exciting. When there's other agents who would rather stick a needle in their eye than to have to go through, you know, a box of documents. I loved it. I was going to say, do you think that the victims might have been, well, you know, first of all, that's a different kind of victim that you're looking at because these are people that were giving charitable contributions. They weren't really expecting anything in return, right? Well, and I know, I know that there is, I hate to victim blame, but in some situations, your victims aren't as innocent. And actually I wrote one of my crime novels, I fictionalized this story, and I labeled it, I titled it, Greedy Givers.

Because these people that were donating, these philanthropists, there was a little, a bit of evil. ego involved in it, you know, because they weren't just anonymously giving money to their charities. You know, the reason that they lost, they invested so heavily is because they wanted people to see how much money. Oh, yeah. You know, maybe even get their name on a building, you know. Um, so there is a little bit of greed and ego involved in the victims, of this type of, you know, Ponzi scheme, this charity Ponzi scheme. Do you understand what I'm saying? Yeah, I understand. Yeah, they definitely, there was a, there was definitely a benefit to them. I was thinking, hey, I'm giving $100,000. And they never expected anything in return. So did they feel

victimized? No, because the money was gone. I was giving it. Oh, they felt, oh, there was some that had to be convinced that John Bennett had committed a crime because he was such a good man and they believed in him. But once they realized that their charities, if they had still had money in the Ponzi scheme, once they realized that that charity was not going to get that money, yes, they felt victimized, especially those who came in at the beginning because, and I know you know this term of clawback. Right. Right. So some of their, their nonprofits and their institutions that they had donated to made out big and maybe had gotten $2 million, $3 million out of this scheme. Well, the court says, hey, hey, yeah, court says give it back. Yeah, court says give it back. You know,

this was a fraud. The money that you got from John Bennett from the foundation was fraudulent. gained. And so you cannot benefit from this fraud. And so whatever money you got, you've got to give it back. Do you know how difficult that is to do if that money is now tied into a new building, you know, a new curriculum, salaries, the people that you've hired, you know, the expansion that you've done to your organization? Yeah. I recall that this one Ponzi guy, he was talking about how they one of his one of his investors who'd invested like a million dollars and but had gotten like three or four million out of the Ponzi and when they went to him to claw back he hired an attorney he fought and they came up with an agreement like he didn't pay back the four million he ended up

negotiating a less than half that to repay you know and then there were other people that they put in a hundred thousand they got out four hundred thousand they sold their primary residence like they didn't even put up a fight they were ready to i'll sell this i'll sell this i'll sell this like so they were really double victimized oh yeah yeah yeah you know and he and i remember we were talking he was like it's funny because the one guy who could have paid the money back he easily could have given him four million because this guy's worth probably 30 million dollars he said he could have given he fought and paid back less than two million he said but people that that legitimately this was like their retirement fund they had paid off

they had a half a million dollar house they had paid off they had you know they they suddenly started selling stocks they took out loans on their homes they everything to try and pay back the three or four hundred thousand dollars and he's like and they they didn't have it her but they didn't put up a fight either right yeah and that's a lot of people don't realize that in burning made off scam almost all of the victims got their initial investment back because of claw back. I think they got at least 85 to 90 cents on every dollar back. Now, they thought, of course, they had invested and had got and had, you know, a boatload of money in the bank. Right. They didn't get that back, but they got their initial investment back. And so as far as

the court was concerned, they were made whole because they didn't deserve the money that they thought that they had gained, you know, through the investment because it was a scam. It was a fraud. Right. I was thinking maybe some of the people didn't think they had been victimized because maybe they were embarrassed. Oh, absolutely. I know that there was a, have you ever heard of the Angola scam? Angola scam. It's all it. You probably heard of it like when I explain it. So it was, there were like, I'm going to say three or four inmates in Angola State prison. And this is prior to the internet. This is pre, internet. They had put an ad in a newspaper, in a newspaper that was called like out and about

or something, which was a gay news, not a gay, it was like a gay publication. And it was saying that they were, they were a gay male that was locked up in, you know, like a 90 day drug rehab center. And he was a 22 year old, you know, handsome gay male looking for a pen pal, looking for seeking an older, distinguished male. So they would, and they were running all this through a lawyer. So they start running, and it's funny because John Grisham wrote a book called The Brethren that talks about the scam, but I actually had seen a documentary before I even read the book. And they copy the Angola scam in John Grisham's book.

So, which is a great book, by the way, one of my favorites. I don't think I've read the, I read a lot of his books. I just read the new one that came out that's. supposed to be the sequel to the firm. Oh, really? Yeah. It's called, I can't believe. I just can't remember it.

But I just read it last week. And it's a little disappointing, but never mind. Well, so anyway, these guys are, so they start getting letters from, from older men. You have to remember, this is back in the 80s, early 80s. So they're getting letters from men that are established men that are married with children. So if you were, if you were a 50 year old man that had some means, but you had no wife or children, they threw the letter out. They didn't respond. If you weren't, though, they would send, they had a photograph of an inmate that was like 22 with his shirt off, you know, and they would send the photograph.

And then they would start writing letters from this married man in the 80s when it was, you know, and he's married, has children. And they would start, they would spark up a correspondence. And before you know what, this guy's talking about how he despises his wife, how his children are this, you know, unappreciative, you know, all these horrible things. They start talking dirty in the letters. This guy can't, he can't talk on the phone, not for 60 days or something. You know, they had a whole plan. Right. And they would get these guys locked in.

And then they would eventually get contacted by someone on the street who would say, look, here's copies of your letters. We're going to send all these letters to your family. Or you can send X amount of dollars to this offshore account, and they got like half a million dollars in the 80s from prison. And when the FBI investigated it finally, because they ended up being a murderer and a whole bunch of other things, not related to them, but one of the guys got out and actually ended up killing somebody. And when they're talking to him, he says, listen, I'm going to tell you about a scam. He's trying to get out of it, get less time or something. downward departure right well when the FBI comes in and they start contacting all the victims they were like 90% of the victims refused to cooperate they're like no I don't want

anything to do with it I don't want to talk about it because they were in a you know in a vulnerable position and they didn't want anything to do it they said literally they could only get out of let's say whatever 40 or 50 men that had given money they got maybe four and they said those men were terrified so I I was yeah I was think about that it's It's embarrassing to be taken. People immediately think you're stupid if you gave money. And the truth is, is that I've always noticed that when I've talked to fraudsters, is that it's really not stupid people that give to these. Because especially if the scam makes sense, if the scheme makes sense, like, you're right. If you, if you give me this much money and you do this with this and this happens and this happens, I will get this much back. And that makes sense. The problem is. And he proved it. I mean, he had people that had gotten that matching money from the anonymous donor. So once, you know, those people got their money and they went out there, again, social proof saying that, yeah, he said this and it worked.

It happened. Yeah, it is. It's the credibility of Bernie Madoff. Like, it doesn't matter. You've got people screaming and hollering. And it's like, yeah, but John gave him money. He's been getting money back. Sally gave him money.

It worked. He's been investing. for 20 years like why wouldn't i want a piece of that right you know who wouldn't but you know it so it's not stupid people that get bought by these these scams these are intelligent people they're just you know they get but i think i think that the statistic is that like only five percent of the people who get caught in a fraud or a scam reported you know very few people report it they they say to themselves you know well there goes one you know, I was stupid and they just keep, you know, moving on.

Right. They don't report it because they're shamed that they were defrauded. But we all know how charming, you know, con artists are. So what happened with Bennett? What did he end up getting? Well, he ended up getting 12 years. And that's pretty good for a fraudster, especially who had, you know, of these, you know, famous people and, you know, sending in letters at the sentencing hearing

on his behalf because he had had years of doing good work. So I think we won it 28, you know, years and the judge gave him 12. So I don't know. He's out by now, but I don't know what happened to him, what he's doing now. He was not totally innocent because, you know, a lot of People were trying to say he was trying to do good work. Yeah, but he took about $4 million, $5 million of that money and spent it out himself. You know, he bought himself, he bought himself a house, he bought his daughter a house, he bought a Lexus, he bought her one. You know, so he was traveling all over the world, you know, taking these, you know,

trips, you know, in order to, you know, prove his, you know, philanthropy, you know, so he was spending other people's money I was going to say Elizabeth Holmes you know ultimately was trying to do good work that doesn't mean you know doesn't mean she shouldn't have to go I'm she got what 13 years I'm shocked yeah shocked she got only got 13 years like it's not like it was an accounting error now you're blatantly lying to people deliberate deliberate deliberate fraud right and it's not like over the course of them it wasn't over the course of a month yeah this is years years years But, I mean, when it comes to white-collar crime, anything over 10 years is pretty significant.

Right. Pretty significant. Yeah. I got 26 years. Yeah. I mean, I saw that. But you, I never remember. I actually listened on my way back from Florida when we met.

I listened to your whole story. It was like six hours worth of your videos. I just got playing one after another on the book. plane waiting in the airport so yeah so it was a fascinating story yeah what's funny about that is that all people will ask you know like you know the like do you think 26 years was you know too much like I do think 26 years you did 13 or 18 I did 13 okay but you know they're like well what do you think you should have got I was like I don't know like you know I go back and for sometimes I think 10 I should have probably got 10 but then I think you know like

I don't know even if that was enough because it's not, it's really the fact that I had already been given a slap on the wrist. Yes. Does that make sense? And that, that's, I remember, yeah, you had gone once before. Yeah, well, I didn't go to prison the first time. I just got three years probation. Oh, okay. But to me, you know, throw the book at him the second time.

Yeah, I kind of, and then that's the other thing. I committed another scam, and then I didn't take responsibility. I took off on the run, and then I continue to commit scam. So it's like, okay, now listen, bro, like even I have to go, ooh, was 10 years enough? Like, all right. So let me, I was a psychology major in college. So let's let, can we go into that a little bit? Because I know that when it comes to fraud, they talk about three things.

They talk about opportunity, they talk about necessity. Now, was it, opportunity? Oh, outside pressure. So this is why people commit frauds. They have an opportunity. They have an outside pressure, whether it is they're divorced or they're an addict or they're having financial problems. And then they have a rationalization.

So I was going to say justification. Yeah. Okay. And they justify it to themselves. All right. So in your case, with the bank frauds and the mortgage frauds, can you break down that opportunity, pressure, and rationalization? Well, I feel like my opportunity was that I knew the system and I knew there were multiple, you know, let's say fractures that, you know, that I could take advantage of. Like I knew there was definitely, the system was definitely flawed for

someone who worked on the inside and understood it. Now, even when I got in trouble and was removed from being, you know, the owner of the business, I still had access to the, to that inside track or that, you know, those people were still willing to help me and work with me. So the opportunity was there just because I had the knowledge to take advantage of it. And then I, I would say that, you know, the outside pressure was that, you know, first it was that I needed the money. Initially, I needed the money and I was broke and I was desperate and I didn't want to go backwards. I didn't want to be embarrassed. And, you know, does it make sense?

Like, you know, there were all these, there were all these external pressures to make money to feed. Was it more a status that you had had money and now you didn't have as much and you wanted to maintain that status? Yes. So it was a pressure maintaining a status? And I also really didn't want to disappoint my father. Okay. make sense like my father for the first time in my life was proud of me so that that that for some reason meant the world to me uh and then i would say the you know i you know i justified it because i thought

you know like i'm smart there are these flaws i can take advantage of them and i'm going to i'm going to take this you know i'm going to take money from banks like nobody's going to get her that was the well first first it was it was easy it was like i'm getting someone into a house like you deserve to be in that house and yes you made 50 000 last year and if you'd made 55 you could qualify i'm changing a zero to a five it's not a big deal the person has always paid their rent it's going to be fine and then it becomes oh this person she was only 30 days late she caught it up before and if she had never been 30 days late she would get the loan and that's not right and i'm sure she's going to be fine. I'm going to get her into that. So you justify, but then it became,

you know, that, that got larger and larger. Then when I ran just a straight scam, it was like, the bank's going to lose $100,000. What does it matter? It's Bank of America. It's not like they're going to miss it. They've already, I used to say this all the time. When they calculate, when the actuaries calculate their interest rate and fees and payments, they've already accounted for fraud. So the money's already available. somebody has to benefit I mean, what a what a, what a, what a wreaths.

It wouldn't be right. Leave it there. So I did that. Somebody has to commit the fraud in order to make it balance out. It was almost like Bank of America had an account waiting for me. They're like, look, if you can access it, the money's there. So and then of course when I eventually when the, when the FBI is coming and I go on the run, my justification was like, look at me. I'm adorable. I can't go to prison. I can't. It's not going to be good. I saw Shawshank. And the guy that played, you know, Andrew Dufrein was like six to do. Like, I'm not going to stand. I can't, you know, I didn't know what camps were. I didn't know what a camp was, what a low was. I didn't realize they'll put me in a place where it's basically just like a rough high school. You're going to be okay, you know. And so, you know, it just can, it was just such arrogance on my part. And I,

I actually said this the other day is like every bad decision I've ever made was based on my ego and just arrogance. You know, it really boils down to that. So, you know, which is something, obviously, that doesn't go away. Right. I constantly. So how do you channel that now? Because you still are you. Yeah.

You know, you're, you know, I hope you're not still committing different frauds. So how are you channeling? that ego, that status pressure, you know. Well, I think even if I joke about stuff like that, I get this look from my wife. That's one thing. It's the, don't even, don't. I'm not visiting you in prison. Like, that's not happening.

I love your Patreon commercial or whatever you want to be. Yeah. Oh, I love it. I laughed and laughed and giggled or giggled and giggled. But that's the question. I always, in these situations, in these frauds, I have always said it's about greed. But as I've gotten older and I've talked to more people who are, you know, are in the fraud investigating business, I realize at a lot of times it's something more than greed.

It is, and this doesn't necessarily apply to you, but it is loneliness. it is imposter syndrome it is you know feeling not worthy and wanting to feel good about themselves it's depression

it's a lot of things that give that give fraudsters the rationalization of I deserve this or I need this to make myself feel better especially when it comes to people that embezzle money

you know that's still the moment I disagree I'm going to interrupt. Okay. Oh, so you're on board? Oh, absolutely. Every single thing you've said is, is because I, you know, initially I said, you know, well, I needed the money.

Okay, well, wait a minute. You were behind on your bills. You know, the first time I committed fraud, I was probably a month behind on my mortgage payment and I was a couple months behind on my car payment. And literally like Ford's saying, look, we're going to have somebody come get your car. So I needed this loan to close. So first I said, hey, I need. need the money. Okay. And then you do and you close a couple loans and you get, you know,

and all I was getting was a broker fee that I wouldn't have normally gotten. Right. Okay, well, now you've got the money and then you're continuing to do it. And then eventually you get 50 or 100,000 in the bank. Okay, well, now you've got a hundred thousand. You can stop now. You've got a question. Nobody knows a fraud. Nobody knows these loans have any fraud in them. You're good. Why am I still doing it? And then you're doing it. Why? Because everybody sees you're driving a brand new car and you're doing great and you're buying, oh, I got, oh, no, no, I got dinner. I got dinner. No, I got it. And you're going on vacation and you're, you're wearing nice clothes. And then you get a nicer house. And then you, so, you know, you don't want to back up. You don't want to go backwards.

It's imposter. Hey, I'm an imposter because I am now living the life of a successful person that I'm not really that person. Right. Another thing that, an agent that I was talking to about this brought up, is that when you commit a fraud, you're fearful. And a lot of times you continue because continuing makes you even temporarily feel better. So you've committed this fraud. You know you're going to get caught and you're scared to death and you're depressed and going out and committing more fraud so you can buy a bigger car or more clothes or more clothes or a fancy trip makes you feel good for a little bit. You know what I was going to say?

And this isn't even the money because when things like this would happen, I had $300,000 already. So I don't even need to do it. I'm just gathering money at this point. And I've said this before. I'm sure people will have heard me say this, that I used to joke around. And it's that there is no better feeling in the world than to walk in

to Bank of America, hand them a fake ID, fake income docs, fake bank statements, have them, you know, pull your credit on your, on your fake identity, and have them hand you a check for $250,000 and thank you for ripping them off. I mean, you genuinely walk out of their like, you feel like James Bond. Yeah, I did this. I got away with this. I'm the greatest person in the world because... That money didn't change anything, by the way.

You just deposit it and you keep on going because all my bills are paid. I have money. I'm going on vacations. I have several couple nice vehicles. I've got an amazing condo. That $250,000 didn't change anything. It was the feeling that can I... I think if I do this and this and this, I bet I could borrow $250 on that house.

Okay, I'm going to go satisfy this mortgage. I'm going to do this. I want to get this. and then it's the planning and then seeing it happen and then you're and you're giving people money that don't you know like you're somebody asked me for 10 grand of course I'm a big shot they asked for 25 to help him with it of course no problem what does it matter yeah I'm a good person yeah right exactly look at what I'm generous and kind I am to others I'm a good person That's part of the rationalization.

Isn't that fascinating? Because again, I used to, when I was doing the work, I just chalked it up to just pure, pure, pure, what's the words? Pure greed. Yeah, pure greed. And now I realize there's so much more to it. And, you know, I think about the people, and I don't know if you're going to agree with this,

so I know you'll stop me if you don't. But being a fraudster, doing cons, it is very similar to people that are cheating on their test at high school, or cheating in their marriage, or, you know, cheating, just being cheaters all along. It's that same personality that rationalizes that bad behavior that may be unethical and takes it to the next degree where it becomes criminal. But it's a flaw that allows good people in some situations do bad things

when others, you know, have that, that check where they say, oh, you know, I've reached that line and I'm not crossing that line. Right. And I, you know, I've always said, like, you know, under the right circumstances, is anybody will commit a crime. My bar is just much lower, you know. And I think that, but, but what, what's funny is, you know, my initial crimes, think about it, it was like first changing a W-2.

I'm thinking that doesn't hurt it. It's not hurting anybody. She gets a loan. She should probably kind of gone into another lender and got it, you know, whatever. And this borrower gets it and this one and this one. And then that becomes, okay, well, I'm going to run a scam. And the banks don't even know they're being scammed and they're losing money anyway that they that's already accounted for and okay fine but then when i kind of went on the run you know now

i'm finding homeowners and i'm renting your house assuming your identity borrowing three or four mortgages in your name identity fraud right right and then i'm taking the money out and i'm leaving then you don't have a clue like you the only mistake you made in life was you crossed my path. That was the only thing. You're living your life. You're a CPA. You're a doctor. And what I always told myself was, was, oh, it's not a big deal. They'll make a few phone calls and it'll be taken care of. They'll fix it. They'll get paid back by the title insurance company. Not a big deal. He's a lawyer or he's a doctor. He's got plenty of money. He's not going to be hurt. He doesn't have to repay this because he doesn't. The title company will pay it or the bank will be out the money.

it's not going to cost him but a few a few phone calls but and the truth is some of these guys went out they had to make mortgage payments because the house isn't rented anymore or the house right I'm not making the owner of finance payment and they still have a mortgage even though I satisfied it they still owe it the new mortgages they don't owe but they have to go hire an attorney why does he have to hire an attorney because he is a doctor and he works 70 hours a week right He doesn't have time to try to clean that mess up. He doesn't have time to even to figure out how to even fill out the form. So he gives $10,000 to an attorney.

He makes a bunch of mortgage payments. They have to then file a suit for quiet title. Those banks and mortgage companies and lenders have to agree to satisfy those loans. All of these things have to happen. So this lawyer or this lawyer loses six or seven grand. This guy loses five grand. This guy loses $15,000. So, you know, is $15,000 to a doctor, a lot of money?

I don't know. But I'll tell you what, it doesn't matter if you're a millionaire. If I don't have to pay $15,000, I don't want to lose. Nobody wants to lose $15,000. No. And nobody, and I'll bet you what was worse than the $15,000, is the stress of what's going to happen. And being, and think about it, and feel. violated, right? Like, someone breaks into your house and steals your TV. Yeah, okay, the TV

sucks, but I don't, the idea that someone broke into my house and now I don't feel safe, like, right, right, anything to do. But as a fraudster, like, I never allowed myself. I very quickly shrugged it off to, oh, he's rich, he'll be fine. It's not a big deal. What did you think or what did you say to yourself that made it okay when you went into a community and purchased all of these properties at inflated prices and then left and now you have people who are underwater, you know, with their with their mortgages because soon the community, the property values are corrected are, if they don't ever get corrected, you now have price people out of a community. that they normally would have been able to afford, and now they can't.

So there's, there's really a lot, when, when I was listening to you, you know, talk about that part of, of your mortgage scam, I thought, yeah, this really has ripples all through the community. Yeah. And, you know, but once again, it's, it's, you know, you shrug it off and it's like, oh, you can't, there's nobody specific you can point to that said, I couldn't buy a house in that neighbor. In a way, I could say, hey, you know, I definitely, you know, maybe I helped it because now these people have the ability to borrow, you know, helocks on loans because there's

equity that didn't really exist. Or maybe they're now able to qualify for a loan on a house. It's very nice to you. Right, right. I'm doing your favor, you know. And so, you know, you can, like, to me, I could justify it, you know, the pendulum can swing the other way in my justification and it's not that I thought about that a lot anyway because there are no specific victims you can say overall you victimize an entire community yeah but can you pick one person that I victimize it's like well no I can't pick one for exactly so we're good so for me I justify it and I move on and as a fraud store as a con man you have to be able to justify that you know to sleep at night right oh yeah it's easy for me to justify that just like you'll see some FBI agents or

prosecutors, you know, they end up making you sound like a monster that you, as a fraudster, feel like, I'm not a monster. I didn't specifically do these things. Like, I never, it never entered my mind that this was going to be the result of that. I thought they'd make some phone calls and it would get fixed. And you do in your mind. It's not till later when you're sitting in a prison cell and maybe, you know, like for me, I'm writing a memoir and I'm really thinking about it.

I'm like, man, that, that doctor didn't do anything to deserve this. This guy did all the right things and made the one mistake of crossing my path, you know, and now he had to fork over $10,000 or $15,000 and the headaches and the phone calls and the stress. And I was like, man, that was a jerk, you know, that was a real, you know, excuse my lame, that was a dick move, you know, but at the time I never, I didn't think about that. You know, you don't wow yourself to think about that. Now, I guess if you allowed yourself to think about it, then you wouldn't be able to do it.

And that would cause you even more mental pain because you feel that you need whatever it is, the gratification you get are the money that you get from committing the fraud. And as an investigator, you know, I get to see both sides of it because, you know, I'm having the opportunity to interview the victims and also the subject. And I will say this, I never met a fraudster or conman that I didn't like. You know, they're really good, yeah. They're all adorable, just like you, you know. I would meet these guys in prison and you talked to them.

There was this guy, Andrew Levinson, and I could just listen to him forever. I was just like, well, then what happened? Tell me stories. They're so good at it. That personality, they have to develop a personality, a pleasing. personality in order to convince people to trust them. I mean, and, you know, it's nice. I probably have missed out on so many great opportunities because I'm so skeptical. You know, it's like, yeah, okay, right. No, no, thank you. I'm not investing. No, thank you. I'm not interested. Because I don't even want

to hear it, you know, because I've seen, you know, how things can go wrong. And so I just dismiss things and don't take part. But I can see how, you know, someone can be convinced. And, of course, that's where you get the word con from. It's, you know, it's being able to, you know, convince confidence and convincing somebody to do something that normally, if they had thought about it for just a little bit longer, they wouldn't have taken that action.

Right. Can I ask you a question? Have you followed the Sam Bankman-Free? Yeah, I'm reading it. I know we're all waiting for the sentencing now. That'll be really interesting to see. What do you think his sentence will be? You know, while it's one of those things you really don't know.

And his was another example, I think, that we talked about, where his fraud was more situational. You know, it wasn't predatory. He didn't go out to scam people, but once he got into the situation where things weren't going right and, you know, I don't know if it's true that he was over his head and, you know, I just don't know anything about finances, you know, but it didn't start out that way. But once it did, he did nothing to stop it. And again, getting all of this press, you know, getting, you know, all this associations. with all these other big-name billionaires, I had to go to his head, and he didn't want to lose that status.

But as far as what I think he's going to get, I don't know. We'll go with Elizabeth Banks. Holmes. Elizabeth Holmes. And say 13, 15 years. He stole, it's a lot more money. I know.

I think. Yeah, and I think he has some more enhanced. I think, you know, there was, there was kind of changing the, you know, changing jurisdictions who evaded, you know, capture. Like, he's opening these things in different countries, these, these exchanges. I think, you know, I definitely, well, Elizabeth Holmes got sophisticated means. I think, I mean, I, me and another guy was talking to, another fraudster. We were, he was saying the same thing you're saying. He's like 10 years.

And I'm like, he's like, he's a roughly 10 years. And I said 20. He goes, no way. And he starts talking about the guidelines and this and that. And I'm like, I'm telling you it's way more money. They're going to put a bunch of victims on the, you know, like most of the people that invested in Theranos for Elizabeth Holmes, like I don't like those were like institutions. Like I don't, you know, I think people, crypto people put money into FTX.

And I think that there are people that they're going to be able to say, hey, I put $60,000. and that was my life savings. And I'm 60 years old and or... Yeah, but it's very seldom that you see white collar crime people get a lot of time. And sadly, I think that the judges who make those final decisions, I mean, you do have your guidelines and things like that. But I think at the end, they see this person differently than they do your murderers and your drug addicts and, you know, your...

Or, you know, you're young. He's young. Yeah, and they'll look at that. They'll probably look at, you know, his race and his background. And they'll add all of that out as this, you know, poor, you know, kid, you know, has already suffered the consequences. Oh, my God. Yes. You know, yes.

And I think he's going to end up, yeah, I'm going with 15 years. 15, okay, I'm going with roughly 20. So maybe it's 21, 22 years. maybe it's 20 maybe it's 19 i don't know i'm gonna go right like the only because i i knew a guy that had he had like a really only had a 57 million dollar Ponzi scheme but you know it was pitched as you know like a hundred million dollar Ponzi scheme because you know because you know he had

people that were supposed to get back money but really was 57 million he had taken it and he got 19 and a half years and and he you know he pled guilty he you know so he got 19 and a half year and he was in his 60s and I've seen tons of these guys and you know he went to trial you went to trial that's not good idea what do you think and then he took the stand himself and they're like oh you said this is what happened well we have this email oh well we have this text message we have this one we I know I did not have an opportunity to read about what he said on the stand how he rationalized.

Because when you take the stand, that's what you're doing. You're rationalizing your behavior. The other thing he did was he tried to say, I forget the name. I should have looked it up. This is the second time I've referenced it. It's a professional where you rely on a professional. Professional reliance, I think. Where they, he said, he was trying to say, I relied on my lawyers.

And of course, you know, they've got all these emails that show the lawyers really. It's really. It's really bullshit. Like, that's not what your lawyer said. You know, it's in, you didn't take your, you know, that's not really what happened. He's like, oh, my lawyer said this. And I thought, okay, well, no. So anyway, okay, so let's say you're saying, you're saying 15 and I'm saying 20.

We'll see what happens. So the podcast is FBI retired case file review. And I am very proud that this last week I posted my 300th episode and my guest. was the current FBI director, Christopher Wright. Okay. So that's big time. So I want to make sure if anybody's interested in what the FBI is all about, I have somebody at the very top who can speak with authority

about what's going on with the FBI today. So that's episode 300. I also have crime novels that I are based on actual true crime or inspired by actual true crime, fraud and corruption cases. And then I have my bestselling book, which is called FBI Miss and Misconceptions, a manual for armchair detectives, where I go through 20 cliches about the FBI in books, TV, and movies. And you can check out all of that at, you can check out all of that on my website, jerrywilliams. Hey, I appreciate you guys watching the interview. Do me a favor. the subscribe button if you aren't already subscribed hit the bell so you get notified of videos

just like this also all of jerry's links are going to be in the well actually i'll just put we're going to put her website link in the description so check that out please consider joining my patreon leave me a comment i respond to a lot of the comments and i really appreciate it thank you see you