May 3 (Bloomberg) -- Ingrid Robinson said she died Nov. 16, 1998, the day her only child overdosed on heroin in a Manhattan apartment. So nine years later, the single mother said, she had nothing left to lose when a lender cheated her out of $10,000 saved to create a legacy for her late daughter, Michelle.
Since then, she doggedly pursued the company that deprived her of that dream, emptying her bank account and courting foreclosure. In March, Robinson finally got what she called “Justice for Michelle.” Andrew Bogdanoff, 67, the founder of Scottsdale, Arizona-based Remington Financial Group, was sentenced to 18 years in prison for orchestrating an advance-fee scheme that defrauded 1,900 people out of more than $26 million.
The Remington scheme is one prosecutors had heard of before: a lender advertises loans in newspapers and through brokers, potential clients are asked to provide thousands of dollars for due diligence, and then the lender disappears after getting the deposits. Remington claimed that it had arranged more than $5 billion in financing for commercial properties and had offices in Phoenix, Boston, New York and Los Angeles.
“Once you’ve lost everything in your life that has any meaning, you don’t care,” Robinson, 68, said in a phone interview about federal legislation she is seeking to deter similar scams. “I was a mother on a mission. There was nothing they could do to me because I was already dead.”
Bogdanoff is housed at the federal detention center in Philadelphia. William Cannon, his court-appointed attorney, didn’t respond to phone and e-mail messages seeking comment on the case.
Four others also pleaded guilty and a sixth was convicted in the scheme, which duped people looking to start small businesses and real estate ventures across North America. Bogdanoff’s 26-year-old son, Aaron, was sentenced yesterday in Philadelphia federal court to two years of probation and ordered to pay $142,000 on a related tax-fraud charge, U.S. prosecutors said.
What made Remington unusual was that the fraud continued for so long, said Assistant U.S. Attorney David Axelrod, who prosecuted the Remington executives. The almost 20-year-old company had been operating without triggering suspicion, Axelrod said.
The type and number of people involved made the case stand out, too, he said.
“They were very careful with their documents making sure to have a lot of legalese,” he said. “They made sure they didn’t say there was a guarantee, so once a victim didn’t receive funding it wasn’t easy to prove that victim was defrauded.”
For every Remington, there are thousands more companies just like it operating on the fringes of small business, said Dan Kristie, a retired Federal Bureau of Investigation agent who worked with Robinson to make a case for prosecutors.
In his 20 years with the FBI, Kristie, 62, said there were several investigations of advance-fee schemes similar to Remington. He can’t recall another prosecution.
“The evidence was always lacking to support a criminal conviction,” Kristie said.
That’s where Robinson came in. Over the course of several years, she painstakingly documented wrongdoing by Remington, enlisting the help of Kristie and others to track the company’s alleged investments and identify other victims.
In March 2008, she compiled a 92-page document titled “Stop Remington Financial Group Coalition” detailing questionable practices of Remington and BlueStone Real Estate Capital Group LLC, an investment firm Remington started in March 2007. Neither company still exists.
“Ingrid was very helpful in keeping the pressure on and explaining her story and providing contact information for other victims of the fraud,” Axelrod said.
Bogdanoff and others were charged in a 2012 indictment with wrongdoing over a period of six years. From 2005 to 2011, Remington duped people into paying fees by issuing fake letters of interest stating it had a lender or vendor seeking to finance their projects, prosecutors said.
Remington charged fees in two stages: as much as $10,000 for initial document collection and business plan analysis, and $15,000 for additional analysis, including on-site inspection of potential projects. Once the advance fees were paid, the company would cite problems with the project when financing didn’t materialize, prosecutors said.
After her daughter died at 28, Robinson said she fell into a depression that led to a stint at a mental-health facility. Afterward, she sought to gather funds to honor Michelle’s memory, refinancing her home in San Anselmo, California, near San Francisco, and in 2006 buying an acre of land about 94 miles (151 kilometers) north in Clearlake, California, for $550,000.
She planned to call it “Michelle’s Diamond” and build townhomes and retail shops on the property.
She said she was introduced to Remington through Vantage Real Estate Solutions in Tustin, California. Vantage hasn’t been accused of any wrongdoing or charged with a crime.
“My original request was just for a bridge loan of $100,000 but they loved the project so much, they wanted to fund the whole deal of $5 million,” Robinson said of Remington.
She said she wired $10,000 to Remington through Vantage, which took a 30 percent cut.
Vantage officials didn’t return a call seeking comment on Robinson. Jeffrey Hakim, the company’s president, didn’t respond to an e-mail seeking comment on its role in referring Robinson to Remington.
Months later, with no funds in hand, Robinson contacted Bogdanoff. He referred her to Matthew McManus, his counterpart in Philadelphia, after telling her that he could “no longer waste his time speaking to me because he was running a billion-dollar company,” Robinson recalled.
McManus was convicted in February for his role in the scheme. No sentencing date has been set. He faces at least 15 years in prison, prosecutors said.
By the time she was sent to McManus, Robinson had begun researching Remington and had found a handful of victims. One, Gene Teigland, helped her put together a list of “failed” Remington deals.
Teigland, a former film producer from Minneapolis, alleged that he paid Remington $7,895 as an advance payment for a $20 million loan for five movies plus distribution. Teigland had been through a similar process before landing an investor for his film “Arnolds Park,” a thriller released in about 20 U.S. theaters in 2007.
Remington “had a lot of proof” that made it seem credible, Teigland said. The company was backed by Republic Bank in Philadelphia and a commercial broker who steered business to Remington was a director for the Better Business Bureau in New Jersey, Teigland said.
Meg Kane, an outside spokeswoman for Republic’s parent company, Republic First Bancorp Inc., declined to immediately comment yesterday on the company’s relationship with Remington.
Robinson and Teigland assembled a victims group that included a hotel developer, a Canadian business owner and a former mayor. Alleging they had been duped out of thousands of dollars, the group sued in California state courts.
Edward Struiksma, 67, a former acting mayor of San Diego, said he reached an agreement with Remington for a partial refund. The company paid him about $300 a month for about a year, he said in a phone interview.
Struiksma, who ran San Diego briefly in the mid-1980s, said he paid Remington $25,000 in fees in 2006 and failed to receive the promised $8 million to $10 million needed to fund a 1,100-acre master-planned community in central California.
After getting the money, Remington “started coming up with requests for studies costing a couple hundred thousand dollars,” Struiksma said. With no loan in sight, the economy tanked and the project languished, he said. He had given up on Remington until receiving an e-mail from Robinson.
“She put a tremendous amount of her life and effort into this,” he said. “She deserves a lot of credit.”
The FBI raided Remington’s Scottsdale office on March 15, 2011, taking boxes of files and computers. Bogdanoff called home, telling his then-wife Cynthia Lackner that the raid was a mistake and that his “little company” wasn’t doing anything wrong. By the time of the raid, the couple had cut back on luxuries, traveling less and eating in more, Lackner said.
The couple had married in October 2007 after meeting through a mutual friend, Lackner said. A honeymoon in Spain was followed by trips to Budapest and Prague, and they had homes in Denver and Scottsdale. Lackner said life was good until newspaper reports of a federal probe of Remington in June 2008.
Bogdanoff dismissed allegations that the company had swindled more than 100 prospective buyers, without giving any real explanation, Lackner said. Bogdanoff would lament that he was there to “help people” and desperately wanted loans to close, Lackner said. She left him the month after the FBI raid.
“I thought to myself, ‘My God this is such a nightmare.’ All I wanted to do was save myself,” said Lackner, who said she didn’t attend Bogdanoff’s sentencing and hasn’t spoken to him since August 2012.
Lackner, who lives in Denver, said she felt compelled to reach out to Robinson about two years ago to find out about the woman whom Bogdanoff had blamed for the federal investigation. The two struck up a friendship and now talk by phone frequently. They’ve never met in person.
Robinson attended Bogdanoff’s sentencing in March, spending two days in Washington and Philadelphia before returning to the home she’s lived in for more than 30 years.
Her daughter is buried in a cemetery she can see from the backyard. Years of lawyer fees and court costs have depleted Robinson’s savings and the land that would have been the site of Michelle’s Diamond is near foreclosure.
Robinson is pressing for statutes making third-party commercial brokers financially responsible for the misdeeds of companies to whom they refer clients. She met March 26 to discuss the issue with representatives of lawmakers including U.S. Senator Dianne Feinstein of California and Congressman Matt Cartwright of Pennsylvania, both Democrats.
Cartwright’s office is researching possible legislation and ways to deter bad behavior, spokesman Shane Seaver said.
“It’s a tough issue with these commercial brokers because most of the time they’re doing what they’re doing in good faith,” Seaver said in a phone interview.
Tom Mentzer, a spokesman for Feinstein, didn’t return a call seeking comment on the meeting.
If brokers had money at risk, companies such as Remington would have fewer chances to victimize customers, Robinson said. She said she hopes to create a database of commercial lenders and brokers, making it easier to turn over a list of reoccurring offenders to authorities.
Robinson, who was a fashion buyer for boutiques and small department stores, compares herself to Erin Brockovich, the former legal researcher whose activism against chemical contamination inspired a 2000 Hollywood movie.
“We were not the rich guys looking to make money on our money,” she said. “There are hundreds of companies like Remington and they all get away with it because nobody pursues them. Well, I’m the Erin Brockovich of financial fraud.”
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