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For Couples Who Defraud, Money Is an Aphrodisiac: Susan Antilla
Commentary by Susan Antilla
July 3 (Bloomberg) -- Next time you grouse to your mate that you're the one who always takes out the garbage, consider the lengths Debra Ryan went to for the man in her life.
With just days to go before boyfriend Samuel Israel III was due to turn himself in for 20 years in prison on June 9, Ryan helped him pack his belongings and attach a motor scooter to the back of his getaway vehicle, a Coachmen Freelander RV.
Israel, who turned himself in to police in Southwick, Massachusetts yesterday, had pleaded guilty in 2005 to defrauding investors of more than $400 million in his Bayou Hedge Fund. Ryan, an interior decorator, was arrested June 19, after she told law enforcement officials that she had helped Israel prepare to flee.
Hey, would Bonnie have done any less for Clyde?
There's always a story behind the bilking of investors and other breaches of securities laws. Sometimes that story involves couples in love. Often, though, the aphrodisiac of choice turns out to be money.
Love was a casualty when a Wisconsin dairy farmer was charged with bank fraud for scamming a local bank into loaning him money for cows -- and, as it turned out, for cars and a Harley-Davidson motorcycle too.
A jury found the farmer, Michael R. Lamarre, guilty. His wife, Carla, pleaded guilty in a related case. Then Michael Lamarre told a federal appeals court that, with his second-grade reading ability and low IQ, he was too dumb to commit fraud. Thus, the brainier Carla must be the most culpable.
No Chivalry Points
That didn't fly with the court, which noted that Michael Lamarre had been smart enough, even without his wife's coaching, to juggle several false Social Security numbers, use an assumed name when it served his purpose and improperly endorse a bank check to himself. Lamarre ``will win no awards for chivalry,'' the court wrote, affirming the husband's conviction.
Happily, other couples faced accusations of wrongdoing without conspicuous damage to their partnerships.
On Valentine's Day, the hopeless romantics at the Financial Industry Regulatory Authority (Finra) filed a complaint against husband-and-wife stockbrokers John E. and Kathleen M. Mullins. Finra said the New Jersey couple bilked at least $393,595 from a 97-year-old client who lived in a nursing home until her death on Feb. 2.
Finra said John Mullins used the money for $3,000 in department store gift certificates, $4,654 in groceries and $11,000 in gift certificates from the Four Seasons Hotel, among other treats. The oenophile broker also purchased a $177 bottle of wine using the debit card of the client's charitable foundation, Finra said.
Wall Street Ring
Lawyers for the couple have asked Finra to dismiss the case. Norman Arnoff, lawyer for John Mullins, says his client was ``sloppy'' about following certain brokerage industry rules but did not mean to hurt the customer, who had signed a statement affirming that she had given the money to the couple ``as gifts.''
Wall Street's deal world, of course, is fertile fodder for breaking the law, and that hasn't gone unnoticed by wedded conspirators.
Christopher and Randi Collotta were at the center of an insider-trading ring that was busted in March 2007. While a compliance officer at Morgan Stanley, Randi passed on confidential information about deals to husband Christopher, who subsequently shared it with a friend in exchange for part of the profits.
`His Final Days'
At their sentencing in October 2007, both received probation and home confinement, and Randi got off with only 60 days of jail time, on nights and weekends, because she convinced the judge to consider her husband's struggle with cancer and heart disease.
``My greatest fear is that I may not be able to care for him during what could be his final days,'' Randi Collotta told the judge.
She later asked the court to let her replace the jail time with additional home confinement. On June 16, a district judge told her she had to go to jail.
The list goes on, even verging on the grisly: A Colorado man and his wife went to prison after the man killed his mother and buried her in the back yard. They pawned her property and endorsed her Social Security checks.
Another husband and wife embezzled government payments from a disabled couple, leaving them to pick food from neighborhood trash cans.
Extramarital Affair
Sometimes, the romance of fraud -- don't be alarmed, now -- strays outside the marriage.
James J. McDermott Jr., former chief executive officer of the Wall Street investment firm Keefe, Bruyette & Woods, pleaded guilty to a single count of insider trading in June 2001 and was sentenced to five months in prison for passing illegal inside information to Kathryn B. Gannon, a porn actress with whom he had an extramarital affair beginning in 1996, according to court documents.
While McDermott cheated on his wife, court documents say Gannon, who went by the screen name Marylin Star, ``was simultaneously having an affair'' with another man -- and even shared McDermott's tips with him. What? You mean it wasn't love?
Money, not love, ``is a bigger turn-on for more people,'' says Hannah Shaw Grove, a partner at Redding, Connecticut-based Prince & Associates Inc., which researches the behavior of wealthy people.
Be careful whom you break the law with.
(Susan Antilla is a Bloomberg News columnist. The opinions expressed are her own.)
To contact the writer of this column: Susan Antilla in New York at santilla@bloomberg.net
Last Updated: July 3, 2008 00:01 EDT
