Nation - California Long-running Ponzi scheme preyed on the elderly

By Paul Elias Associated Press Writer SAN FRANCISCO (AP) -- During the week, Roberto Heckscher was a socially awkward accountant who drove a Saturn and kept an office above a flower shop in a quiet neighborhood. On the weekends, he transformed into a high-rolling casino "whale" who enjoyed VIP treatment worthy of a sheik. He managed to keep this double life secret from most -- especially the hundreds of mostly elderly and working class who invested their life savings with him -- until the night of June 8, 2009. That's when he swallowed 90 sleeping pills and lay down to die. One of the longest-running Ponzi schemes in U.S. history had finally collapsed. Heckscher survived his suicide attempt and is in county jail waiting assignment to a federal prison. U.S. District Court Judge Susan Illston sentenced him to 20 years in prison for duping at least 290 investors out of at least $50 million over a period of 30 years. While infamous swindlers such as Bernie Madoff and Kenneth I. Starr stand out for preying on the vanities of the rich and famous, Heckscher's scam is notable for the patient, methodical way in which he squeezed so much money from investors of mostly modest means. Many of the victims were clients of Henry Irving, a well-respected neighborhood tax guy in the city's foggy Sunset District, who hired then-17-year-old Heckscher in 1973. Five years later, Irving was on his deathbed and sold the business to Heckscher. Many of Irving's clients stayed with Heckscher at the encouragement of Irving's son, Daniel, who lost $1.7 million in the scheme, according to court documents. Daniel Irving also feels responsible for another $2.3 million he encouraged his mother, sister and several other family members and friends to invest with Heckscher. Heckscher used the respected accounting business to insinuate himself into a tight-knit neighborhood of modest homes and crowded Catholic churches, even though he was born in South America to Jewish parents who fled Nazi Germany. He was quirky. His San Mateo home was noted for the porcelain statue of a Rotweiller standing next to porcelain dog droppings at the top of his second-floor landing. But he was also known for working the scoreboard for both the San Francisco Giants and 49ers when both played at Candlestick Park. No one suspected that Heckscher was interested in anything more than his clients' well-being as he consistently pressed them for increased investments. "I did not lead an extravagant life," Heckscher, 55, lamented in his suicide note, pleading with investors to forgive him. "Every dollar I made went to pay interest and debts." But the veracity of that presumed deathbed claim was belied by his high-roller status in gambling venues. On one trip to Las Vegas, with Daniel Irving invited along, Caesars Palace employees dressed in their ancient Rome costumes greeted him at the airport as he deplaned from a private jet. Casino executives dined with them at five-star restaurants and they stayed in the swankiest suites. Federal investigators and others testified that the junket was typical of Heckscher's secret life. Heckscher "concocted an elaborate scam ... in large part to fuel a secret, second, sordid life of gambling in the casinos of Las Vegas, Lake Tahoe and Atlantic City," Assistant U.S. Attorney Timothy Lucey wrote in court papers arguing for a lengthy prison sentence. Irving, who considered Heckscher his best friend, said, "How he manipulated that many people for that long is phenomenal." Many of his investors are now losing homes, businesses and putting off medical treatment and are cursing themselves for trusting Heckscher like a family member. "My days are bleak," Evelyn Fahnbulleh, who lost $187,000, told the judge last month during a three-hour sentencing hearing, in which the pudgy Heckscher stared at the floor while former clients lined up to castigate him. "I'm destitute. Penniless. I just feel hopeless." Some of his victims are desperately hoping that authorities will find bank accounts and other valuable assets hidden by Heckscher, who was revered for his math acumen. Several have filed lawsuits seeking to recoup their losses. "He has stashed some away," said property manager Ralph Geissler, who lost $2.75 million. "He is too shrewd a person and too on top of things not to have done so." The judge appointed an investigator to dig into Hecksher's holdings. The judge scheduled a July 29 hearing to discuss victim restitution. Heckscher and his attorney insist that most of the money is gone, inevitably lost when the swindler finally failed to recruit fresh investors to keep up interest payments to the old clients. Heckscher said his secret life as a high-roller and Wall Street player had a small effect on the scheme's collapse. "Stock trading and gambling were contributors to the present situation, but increasing and continuing interest payments were the main reason for the inevitable end results," Heckscher continued in his suicide note. His lawyer, Jim Reilly, argued that Heckscher was able to keep the scam going for so long because he lived a frugal life. "What typically causes these things to quickly implode is that the people doing it run around buying expensive houses and all that," Reilly said. "Roberto didn't do that." Reilly put Heckscher's gambling losses at between $3 million and $5 million and said that the majority of the money was returned to investors over the decades. In Reilly's accounting, he estimated that between 100 and 200 early investors with Heckscher actually profited and that Heckscher was paying about $300,000 a month in interest payments. Reilly said the scam collapsed when several investors demanded a combined $3 million in principal returned last summer. Irving was one of the few investors who knew something of Heckscher's gambling life. He said he accompanied Heckscher on four trips over the years, and that the VIP treatment he saw afforded Heckscher by Caesars stood in sharp contrast to the first trip, in which he'd paid a little more than $100 to board a bus with senior citizens to play the slot machines in Tahoe. "I'm extremely angry and upset with what he did and I can't comprehend it," Irving said. "But I still love the guy." Published: Tue, Jun 15, 2010

––––––––––––––––––––
 Subscribe to the Legal News!
 https://test.legalnews.com/Home/Subscription
Full access to public notices, articles, columns, archives, statistics, calendar and more
Day Pass Only $4.95!
One-County $80/year
Three-County & Full Pass also available