Lloyd Rubin: Wanted, Especially Alive

Lloyd S. Rubin's life reads like a Graham Greene short story. The scene is the steamy, corrupt Panama of General Manuel Noriega. One day in the mid-1980s, Rubin, a portly American in his 50s, steps off a plane. In no time, he is ensconced in opulent offices, complete with an imitation jungle brook. He proceeds to filch millions from visiting countrymen, despite repeated complaints to the U.S. embassy. He tools around in a wine-colored Jaguar. Even after Noriega falls, Rubin continues to con with impunity. He seems untouchable...but is he?

In June, 1991, Rubin travels to Thailand with his new Panamanian wife, Rachell Constante. They drive to a dusty village, where Lloyd is admitted to a drug rehabilitation center run by Buddhist monks. Constante returns to Panama alone. Some weeks later, a New York judge hearing a fraud case against Rubin gets a Thai death certificate in the mail. It states that Rubin died on July 26 at the rehab center and was cremated. As translated, the cause of death is listed as "complication disease, unhealthy." He was 60.

Lloyd Rubin apparently was no more than a bit player in Manuel Noriega's vast and various schemes. But within his own little niche of the financial underworld, Rubin was a legend. What Ivan Boesky was to insider trading, Rubin allegedly was--and probably still is--to the advance-fee loan scheme, in which cash fees are extracted from the gullible in exchange for loans promised but never made.

In most Greene-like fashion, Rubin's mysterious demise is not the end of his story but the beginning. Six months after the Bronx-born expatriate vanished, the U.S. State Dept. is still refusingto certify his death. The Thai policeare investigating, as is the FBI's Hong Kong office. "Either he is not dead, or he did not die in the circumstances described," says an American diplomat.

Those circumstances are fishy indeed. W.O. Krittayaporn Thamarom, the Thai police officer who signed Rubin's death certificate, recently told a BUSINESS WEEK reporter that he never saw the body. And the monk in charge of the crematorium at the Thramkrabog Rehabilitation Center insists that no foreigner has been cremated there since 1990. Rubin had been staying with Kuang Haeng, a monk who supposedly cremated him. Haeng declined to answer questions about Rubin.

People do die at Thramkrabog, a well-regarded facility that specializes in cold-turkey treatment of narcotic addicts and draws some 2,000 patients annually, including a fair number of Westerners. Typically, treatment begins with a religious ceremony, followed by repeated doses of a medicine that induces violent vomiting. In his application, Rubin said he had come to kick a 38-year tobacco-smoking habit. Asked the reasons for his addiction, Rubin wrote "business pressures and problems."

While it appears quite likely that Rubin faked his death, exactly what prompted him to disappear is unclear. For an advance-fee scammer, this is a great time to be alive. The combination of recession and credit crunch has loosed an advance-fee epidemic in America. In 1991, many Better Business Bureaus around the country report getting more complaints about phony loan come-ons than anything else.

On the other hand, Rubin did not lack for enemies. The FBI has been on his trail for years. And whether Rubin is dead or alive, scores of his embittered former "clients" are eager to get their hands on his estimated $20 million in assets. Two dozen companies have lodged complaints against Rubin with the U.S. embassy in Panama.

BRAVADO. Besicorp Group, a U.S. solar-energy company, is pressing ahead with a $135 million securities-fraud suit in U.S. District Court in New York. In 1985, Besicorp paid Rubin a fee of $65,000 for a $9.3 million private placement that never got off the ground. Rubin, who was acting as his own lawyer in the four-year-old case, blamed Besicorp for the collapse of the financing.

Most advance-fee promoters are small-time operators, operating sight unseen from "boiler rooms." By contrast, Rubin grandly styled himself an investment banker, complete with luxurious offices staffed with a dozen employees. In naming his firm Morgan Gundy International, Rubin might seem to have appropriated two of the most august names in North American banking, Morgan Stanley & Co. and Wood Gundy Corp. But in a rare newspaper interview, Rubin insisted he was inspired instead by "Morgan, the pirate who burned Panama in 1571, and the sea gundy, an aquatic animal" that lives off the coast of Panama.

Working through a shadowy network of finders, Rubin lured capital-strapped entrepreneurs, mainly Americans, to Panama and dangled before them multimillion-dollar securities financing. Charging an initial $49,500 to cover expenses, he rang up additional fees as financings dragged on. Former Rubin employees estimate he drained about $10 million from some 200 victims all told.Rubin made creative use of Panama's corpmrate secrecy laws. But his success was also a product of showmanship, financial sophistication, and, above all, political connections. Mario Rognoni, who was General Noriega's Commerce Minister, had ties to Rubin, as did Julio Harris, currently chief of state to President Guillermo Endara.

Although Rubin apparently never completed a single financing, he was thoroughly versed in the mechanics of underwriting. He overwhelmed prospective borrowers with application forms, worksheets, and fee agreements indistinguishable from the real thing. But later, clients would inevitably miss a deadline or run afoul of the Panamanian securities commission, and Rubin would exercise his contractual right to cancel the financing and keep the expense money.

Rubin developed his advance-fee techniques in Colorado, managing to stay one step ahead of the law. In the late 1970s, he negotiated a "deferred prosecution" with state authorities, by which he avoided indictment by promising in effect never to do again what he did not admit to doing in the first place. About the same time, he testified under a grant of immunity in a related federal case. By the time a federal grand jury began investigating Rubin in 1984, he had moved to Panama. He never was indicted.

RENEGADE. In 1987, Rubin resurfaced in the Denver newspapers--as a crime-buster, of all things. A man seeking a loan had called on him in Panama City, carrying $2.6 million in bearer bonds stolen from a Denver bank. Rubin took possession of the bonds and got in touch with U.S. authorities. After the man was arrested, Rubin personally delivered the bonds to the FBI.

The FBI had begun investigating Rubin himself by 1988, if not earlier--but without much gusto. Some of Rubin's former clients and ex-employees complain that bureau agents asked them only a few cursory questions or didn't interview them at all. Tomas Cabal, who briefly worked for Rubin before turning investigative reporter, was among those underwhelmed by the FBI's questioning: "Their attitude was, `Well, if this guy does all the work for us, maybe we'll do something."'

Cabal, who has written extensively about Rubin, theorizes that the disappearance was prompted by his unmasking last spring by articles in Panamanian newspapers and The Wall Street Journal. Then, too, Rubin's political position in Panama had eroded since Noriega's capture. In addition, Rubin may have been unnerved by the prospect of a trial in New York. Cabal suspects that Rubin has shifted his operations to Costa Rica, where he remains very well-connected politically.

If Rubin is alive, the weakest link in his scheme would seem to be his wife. A lawyer, Constante was handling Rubin's legal affairs even before their marriage. It's not clear whether she was a participant in her husband's latest intrigue or a victim of it. Constante did not return BUSINESS WEEK's phone calls.

To date, Constante, 38, has failed to persuade the U.S. consulate in Panama to stamp Rubin's will. Without a consular stamp certifying his death, it will be difficult for Constante to gain title to her share of the estate. While Constante may find widowhood increasingly frustrating, no doubt it suits her husband's purposes to inhabit indefinitely the legal limbo between life and death.

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