J is for Judgement

gonna do? Everybody around here knows the guy went to jail. Day he comes out they're ready to invest again. What makes these cases so hard to prosecute is the victims don't want to believe they've been deceived. The victims all become dependent on the crook who's cheating them. Once they invest, they need him to be successful to get their money back. Then, of course, the con man always has last-minute excuses, stalling repayment and dragging his feet. Case like that is a bitch to prove. Lot of time the DA can't even get corroboration."
    "I really don't understand it when smart guys get into stuff like this."
    "If you look back far enough, you could probably see it coming. You know, old Wendell's got a law degree, but he never passed the bar."
    �Really. That's interesting."
    "Yeah, he got into some trouble just out of law school and he ended up letting the whole business drop. He's just one of those guys: smart and well educated, but he had a bad streak that showed up even then."
    "What kind of trouble?"
    "Some prostitute died in the course of rough sex. Jaffe was the john, pleaded down on a charge of man-slaughter, and got off on probation. It all got hushed up, of course, but it was ugly stuff. There's no way you practice law with that in your background. Perdido's too small."
    "He could have gone somewhere else."
    "He didn't seem to think so."
    "Seems weird somehow. I haven't been thinking of him as the violent type. How'd he get from manslaughter to fraud?"
    "Wendell Jaffe's sly in more ways than one. It's not like the guy lived in a four-thousand-square-foot house complete with swimming pool and tennis court. He bought a nice three-bedroom tract house in a good middle-class neighborhood. He and his wife drove American cars, the stripped-down economy models and not like new ones. His was six years old. Both of his sons went to public schools. Usually, with these guys, what you'll see is a pattern of conspicuous consumption, but Wendell didn't do that. No designer clothes. He and Dana didn't travel much or entertain lavishly. From the point of view of his investors -- and this was something he was quick to assure them -- he poured every penny right back into the business."
    "What was the gimmick? How'd they pull it off?"
    "Well, I did a little digging when I heard you were coming down. From what I understand, it was pretty straightforward. He and Eckert had about two hundred fifty investors, some of them putting up twenty-five to fifty thousand dollars apiece. CLS took fees and royalties off the top."
    "On the basis of a prospectus?"
    "That's right. First thing Jaffe did, he bought a shell of a company and renamed it CSL Inc."
    "What kind of company?"
    "This was trust-deed investment. Then he made headlines with the purchase of a one-hundred-two-million-dollar complex, which he announced he had sold six months later for a hundred eighty-nine million. Truth was, the deal never went through, but the public didn't know that. Wendell hands his investors this impressive-looking, unaudited financial statement showing assets in excess of twenty-five million dollars. After that, it was a piece of cake. They'd buy real estate and show a paper profit by selling it back to another of their shell companies, inflating the value of the property in the process."
    "Jesus," I said.
    "It was a typical Ponzi. Some of the people who came on board early were making out like bandits. Returns of twenty- eight percent on their initial investment. It wasn't unusual to see them turn around and invest twice that sum, cashing in on the bonanza of CSL's financial savvy. Who could resist? Jaffe seemed to be earnest, knowledgeable, hardworking, sincere, conservative. There was nothing flamboyant about the man. He paid good salaries and treated his employees decently. He seemed happily married, devoted to his family. He was a bit of a workaholic, but he managed to take occasional time off: two weeks in May on his annual fishing trip, another two weeks in August when he took the family camping."
    "God, you really do know this stuff. What about Carl? How'd he fit into this?"
    "Wendell was the front man. Carl did everything else. Wendell's talent was the hustle, which he did with the kind of low- key, drop-dead sincerity that made you want to pull your wallet out and give him everything you had. The two of them put together various real estate syndicates. Investors were told their money would be held in a separate account, devoted exclusively to a