Billion-dollar fraud and Ponzi schemes | 60 Minutes Full Episodes

if it hadn't been for Bernie maid off the most famous white color criminal in America right now would probably be Mark dryer if that name's not ringing a bell it's because Dryer's 400 million Ponzi scheme was blown off the front pages by made offs arrest just a few days later but the case is no less fascinating the highly respected attorney who ran a big Park Avenue Law Firm was initially arrested in Toronto for impersonating an officer in a pension fund in what's been described as perhaps the most bizarre arrest in the history of white collar crime but unlike Bernie Midol Mark dryer agreed to talk to Vanity Fair magazine and to 60 Minutes in his only television interview I thought if somebody would ever interview me in a program such as yours it would be for something good I've done not something humiliating I've done this isn't the way you wanted to be on 60 Minutes no nor was this the way that Mark dryer wanted to make his final appearance in federal court as a defendant in his own fraud case when we first interviewed him last spring he was a prisoner in his own Penthouse with a GPS monitoring device on his ankle detained by private jailers whose $70,000 a month fee was being paid for by Dryer's 88-year-old mother with his assets Frozen or confiscated by the court all that remained of Dryer's $40 million art collection were the hooks on the wall how did you end up becoming a crook I uh can't remember the moment in which I decided to do something that I knew was wrong I had an ambition that I needed to feed I think I fell into the Trap of wanting to be more successful than I was but you were successful I was but I really wanted to distinguish myself I wanted to you know I wanted to be as important as I thought I was deserved to be with the grees from Yale and Harvard Law in the ego of a successful trial lawyer drer told friends he was going to become a billionaire he started his own Law Firm that he said would revolutionize the business of law he was going to hire the best attorneys pay them top dollar and keep all the profits for himself as the firm's only partner the idea for the law firm was very viable but it needed much more money to get it off the ground than I anticipated much more so that wasn't very well thought out I had a good idea but a very bad business plan and the plan was about to get much worse with his Law Firm a money pit and drer tapped out he began approaching hedge funds with a cockamamy scheme he thought might save his dream drer told the hedge funds that he was representing a billionaire real estate developer who was looking to borrow hundreds of millions of dollar to embark on some new projects the developer dryer said would issue short-term promissary notes guaranteeing interest rates of between 7 and 12% well above Market rates and it seemed like a very good deal the only problem was that the Real Estate Mogul who was supposed to be borrowing all this money Sheldon solo didn't know anything about it nor did he know that drer his former lawyer was fabricating financial information about his company and keeping the loan proceeds for himself so you convinced hedge funds to lend money ostensibly to Mr solo your former client and in fact the money was going to you yes so you came up with phony financial statements fony audits Forge documents for Mr Solo's company yes how did you do all that how'd you get that stuff well I invented it you invented it I mean stationary yes from the audit firms how did you get that I was able to obtain their their letterhead from either direct either from correspondents that I had received for them or perhaps from the internet I don't recall what was your biggest deal uh 100 million somebody just gave you $100 million and never bothered to check with your supposed alleged client to make sure that this was on the up and up right but I don't know I guess I heard a long time ago too that um the more money you look for the fewer questions people ask sometimes the obvious flaw in Dryer's scheme was that he would eventually have to pay off all the promissary notes plus interest if he wanted to stay out of jail and in the end the only way he could do it was by selling more notes to new investors so you were digging yourself into a hole yeah very much so you know you start with something that you think is manageable and small you know it's wrong but you think you can fix it and you and you can't get out of it it became quicksand I had to keep meeting obligations that grew bigger and bigger clearly all along the way if there was a way for me to have gotten out of it I I would have done it drer says he used most of the $400 million he stole to expand his law firm and to finance a lifestyle designed to create the illusion that he already was a billionaire there was the $1 million Oceanfront compound in the Hamptons an art collection that included a Picasso three matices and 12 Warhols and then there was the 120t yacht Seascape with a full-time crew of 10 all mortgaged to the hilt how much did you pay for the yach uh $18 million and for this apartment uh $105 million you enjoyed the good life I did it was clear to me that the more you showed people you didn't need money the easier it was to attract money so having the trappings of success was a very important part of the plan to raise his profile drer co-hosted annual charity events with former New York Giant star Michael Stan that attracted top-name performers like Diana Ross John bonjovi and Alicia Key and then there were the extravagant office parties where drer himself sometimes performed in this town you have to really be something you know you don't succeed quietly in this town perhaps and I I I think I succumb to that by 207 drer LLP occupied 10 floors of a Park Avenue building employed more than 250 lawyers around the country with high-profile clients like Bill Cosby Andy petett Maria sharova and Justin Timberlake what no one but Mark drer knew was that the rents the salaries and the expenses were all being subsidized by fraud I recognized in the last couple of years that what I saw as a $20 million mistake had grown into a mistake of a few hundred million dollar and then I did some increasingly irrational things because I wasn't thinking clearly crazy things yeah desperate yeah last fall all as the financial crisis set in drer was holding hundreds of millions of dollars in loans that were about to come due and everyone wanted their money back when drer was a month late on a $100 million loan payment the hedge fund that was owed the money demanded a face-to-face meeting with Executives at Sheldon Solo's real estate operations here at his office building in New York with reality closing in dryer Enlisted the services of a former client Costa kovich to impersonate the president of solo operation then he commandeered a conference room in Solo's office for a meeting with a hedge fund in hopes of getting a loan extension and you conduct this whole charade right there in the middle of of Solo's business yeah do you think you were going to get away with that yeah you did actually didn't you yeah were you nervous I should have been nervous but um I don't know I um I wasn't very nervous I don't get the sense that you're a very emotional person I think I am um I uh didn't plan anything I was going to say on this interview other than not to lose my emotions but it's not going to do me any good to literally cry over it when I ask you about the the emotion I mean here you are walking into a former client's office perpetuating this scheme right in his office that's called that's not emotion you know I mean do I have yes can I am I can I be very tough Under Pressure yes so was I able to go into Mr Solo's office and pull off that charade without falling apart yes did I think I could do that yes because I had done things that required nerves of Steel before but it doesn't mean that I'm not emotional about what I did I clearly remember when I left that office thinking I had done something really crazy and foolish it was bizarre I mean he was impervious to the idea of being caught attorney Gerald Shel who would represent drer during his legal proceedings and plea negotiations with the US government said the facts of the case were beyond the reach of a sound bite he was a a solid lawyer and and there are a number of Judges who told me that Mark D was probably the best lawyer that has ever appeared in front of him and all of a sudden out of the blue it's like something went off the tracks do you have any idea what it was you know he was fighting his own demons in his own mind hadn't achieved what he uh uh was expected to achieve and and he wanted to just grab for it but he grabbed for it in in a in a profoundly sick Way by December of last year both investors and investigators had grown suspicious of drer and his luck would eventually run out in Toronto where he pretended to be a lawyer for a teacher pension fund in order to Swindle a hedge fund out of 33 million that was the first act I done where I knew I was going to get caught and just couldn't help myself I just wasn't thinking clearly drer had collected a business card from the lawyer he was claiming to be but the man he was supposed to meet with sense that there was something wrong what made him suspicious do you think you know he had acted diligently and he made some phone calls which I think led him to be suspicious I knew as soon as he walked in that he was suspicious but I still did it the police in Toronto were called and drer was arrested for impersonation when he returned to New York 5 days later he was apprehended by the FBI on charges of Fraud and money laundering to the complete and utter astonishment of the New York Legal community and to the employees of his own Law Firm when we heard the news uh we thought it was a joke at first there were 10 floors of attorneys and boxes but a lot of people started to resign immediately they just walked out the door okay next up these are the black ptron fra leather bucket style cheers 10 days after Dryer's arrest the law firm bearing his name had declared bankruptcy and 600 people were looking for work the day we met Attorney Joanne rapuano and longtime office manager Tory lond the firm's furniture and office equipment were being sold off by the court to pay off the creditors mostly hedge funds and their investors who are not likely to see much of the missing $400 million okay now we have the paper shredder if this paper shredder could talk how much of the paper shredder $25 B put it up now like being here truly tragic you know you watch something get built you think you're part of something on its way up then all of a sudden you see it being carded out the front door 1,000 opens it up $1,000 B to open it up it's just disgraceful we are victim I have no job I have no medical after today I'm done so now what do I do start my career all over I don't want to compare you with made off but one of the questions that people ask about maid off constantly is how could he do this how could he walk around living this life spending all this money never showing a crack in the facade and there's some similarities but how did you deal with that I was doing a lot of things at the same time I was engaged in a fraud which took a lot of energy to sustain but I was also running a law firm a legitimate Law Firm other than obviously the obvious fact that it was funded illegitimately I was a practicing lawyer I was handling my own cases in court which took a lot of energy I almost didn't have enough time to dwell on the elephant in the room which was the very you know the the the crime I was engaging with to keep keep all this up he has plenty of time to dwell on it now after entering his guilty plea Mark dryer has begun serving his 20-year prison sentence in Illinois he wanted everyone he Hur to know that he was profoundly sorry and for someone so obsessed with his own image and what people thought about him his punishment is just beginning I've lost everything I own I've lost my business I've obviously lost my reputation I've caused my family um obviously enormous unhappiness and I have nothing do you have any friends no mhm uh doesn't seem so of all the problems facing the United States right now none are more important than Health Care President Obama says Rising costs or driving huge federal budget deficits that imperil our future and that there is enough waste and fraud in the system to pay for healthare reform if it was eliminated at the center of both issues is Medicare the government insurance program that provides Health Care to 46 million elderly and disabled Americans but it also provides a rich and steady income stream for criminals who are constantly finding new ways to steal a sizable chunk of the half a trillion dollars that are paid out each year in Medicare benefits in fact Medicare fraud estimated now to Total about $60 billion a year has become one of if not the most profitable crimes in America we caution you that this story May raise your blood pressure along with some troubling questions about our government's ability to manage a medical bureaucracy if you want to find Medicare fraud the first place you should look is South Florida where we were told it is pushed aside cocaine is the major criminal Enterprise here it's a quiet crime no Sirens or gunfire the only victims are the American taxpayers and they don't even know they're being ripped off FBI special agent Brian Waterman who we rode with for several days told us the only visible evidence of the crimes are the thousands of tiny clinics and pharmacies that dot the low rent strip malls you don't even know they're there because there's never anyone inside no doctors no nurses and no patients this office number should be manned and answered 24 hours a day this tiny medical supply company build Medicare almost $2 million in July and a half a million dollar while we were there in August but we never found anybody in and our phone calls were never returned say they're currently on the other line oh well do they want you to hold sometimes they don't even have offices we went looking for a pharmacy at 7511 Northwest 73rd Street that build Medicare $300,000 in charges it turned out to be in the middle of a public warehouse storage area they've already told us that there's no Offices here there no businesses here in fact they're not even allowed to have a business here Waterman is the senior agent in the Miami office in charge of Medicare fraud in Kirk orra I a top justice department prosecutor oversees half a dozen Medicare fraud strike forces that have been set up across the country this one operates out of a warehouse at a secret location in South Florida and includes investigators from the FBI Health and Human Services and the IRS there's a healthc care fraud industry where people do nothing but recruit patients get patient lists find doctors look on the internet find different scams there are entire groups in entire organizations of people that are dedicated to nothing but committing fraud finding a better way to steal from Medicare is the Medicare fraud business bigger than the drug business in Miami now I think it's way bigger what changed the criminals changed sophistication they figured out that rather than stealing $100,000 or $200,000 they can steal $100 million we've seen cases in the last six8 months that involve a couple of guys that if they weren't stealing from Medicare might be stealing your car you know we were the king of the drugs in the'80s we're king of healthcare fraud in the '90s and the 2000s man what did they tell you but it's not just Miami in March the FBI arrested 53 people in Detroit including a number of doctors and charg them with billing Medicare more than $50 million for Unnecessary medical procedures and in Los Angeles the City of Angels Medical Center recruited homeless people off the street to fill their empty beds offering them cash and drugs plus clean sheets and three squares a day while billing Medicare tens of millions of dollars for their stay we have to understand this is a major fraud area United States Attorney General Eric Holder has taken a crime that's been in the backwaters of law enforcement and made it a top priority at the justice department why do you think it's been so attractive for the criminals because I think it's been pretty easy um I think that they have found a way in which they been able to get pretty substantial amounts of money with not a huge amount of effort and at least until now without the Poss possibility of great detection with much fewer risks much fewer risks um you you'll see some of these people and they'll say you know there's not a chance that you're going to have some other drug dealer shooting at you um the chances of in being incarcerated were lower uh the amount of time that you would spend in jail um was smaller all of which is is different now you're waking up every day making 20 30 $40,000 every day almost literally and you're like wow I mean I just won the lottery let's call this guy Tony that's not his real name and obviously not his real face but before he was ratted out by a friend and brought down by the FBI he was making Wall Street money running a string of phony medical supply companies out of this building they were theoretically providing Wheelchairs and other expensive equipment to Medicare patients how much money did you steal from Medicare about $20 million 20 million yes was it easy real easy and you're not exactly a criminal mastermind no no not really it's more like common sense that's all you need here did you actually ever sell any medical equipment no no just have somebody in an office answering the phone like if we're open for business and wake up in the morning check your bank account and see how much money you made today you didn't have any medical equipment you didn't really have any clients either did you no all of it was fake all of it was fake yes and you would just fill out some invoices and some forms and send them to Medicare and that's it and 50 know 30 days you'll have a direct deposit in your bank account I mean it's it was ridiculous it's smell like taking candy from a baby according to the FBI all you have to do to get into this business is rent a cheap storefront office find or create a front man to get an occupational license bribe a doctor or Forge a prescription pad and obtain the names and ID numbers of legitimate Medicare patients you can build the phony charges to there's a whole industry of people out there that do nothing but provide patience when you say provide patience that's what do you mean I'm just talking about lists of patients people's names Social Security numbers addresses and date of birth with those four things you can build for a patient in order for Medicare to pay you need to have a Medicare patient where do you get those there'll be people that sell you a list of maybe $10 per patient and I'll buy a th000 10,000 maybe at a time and then you just fill in that patient's name and you send it and then I'll use the same patience with the same company then the next company I use the same patience and keep using them and they'll pay for the same patient every time once the Crooked companies get hold of the patient list usually stolen from doctor's offices or hospitals they begin running up all sorts of outlandish charges and submit them to Medicare for payment knowing full well that the agency is required by law to pay the claims within 15 to 30 days and that it only has enough Auditors to check a tiny fraction of the charges to see if they're legitimate if they're not it's usually people like 76-year-old Clara Mahoney who catch them she began to notice all sorts of crazy things turning up on her quarterly Medicare statements back in 2003 things that Medicare paid for on her behalf and that she never ordered never wanted and never received what kind of things oh air mattresses a wheelchair um urine bag for my leg was getting so I didn't want to open up the uh the explanation of benefits because uh you know it's like oh no not again Mahoney who says she hasn't been sick in 30 years began calling Medicare to tell them that someone was ripping them off but the only responses she received were letters saying that someone was looking into it the bogus charges are still turning up on her statements and I continue to report and I I kept saying can't you flag my account you know I'm not getting any equipment or supplies nothing so how many years have they been looking at it six years once criminals like Tony get their hands on usable patient numbers they try and charge Medicare for the most expensive equipment possible which requires having access to a list of Medicare codes and what were some of the best codes artificial limbs electric arms electric wheel chairs um I mean a regular patient you can put them on two artificial legs and an artificial arm and they'll pay for it and that's what happened to former federal judge Ed Davis he was one of those patients who started getting charges on his Medicare statement for artificial limbs I looked at it and it had charges for prosthesis and I knew I had my arms did you get the left arm and the right arm on the same bill both arms same bill yeah and you obviously have two good arms the same ones I've had for over 70 years didn't anybody in Medicare check to see if any of these charges were valid sometimes they'll do but by the time they did it it was too late too late yeah we already made three 400 500,000 on it and then we will never send them nothing back and then in 30 days they'll send an inspector to your office and by that time it's all closed down it's all closed down so they would pay first and audit later yes there's something I don't understand I mean you're saying essentially people just fill out the phony paperwork they send a bill to Medicare and they pay it that's why you have companies that can run for 60 and 90 days and Bill for ridiculous things because there are very few checks and balances to even determine whether these things a were medically necessary B were ever given or C even physically possible for a patient with the kind of conditions they have the FBI calls it pay and Chase and riding around with them we saw plenty of examples this tiny Pharmacy in aioa strip mall went from billing Medicare $113,000 in May to billing nearly a million dollar a month later this place build $800,000 in the month of June correct it's a pretty small place by the time we were there in August the FBI says the owners had already burned the company shut it down and moved on to another operation we were here last week it was uh there was stuff on the shelves the business still had a name on it you can still see from where the tape is that someone just took this off to understand just how Preposterous all of this is the FBI says that this tiny little store collected six times more money from Medicare in June than the largest Walgreen Pharmacy in the State of Florida quite an achievement since neither the FBI nor the proprietor of the bingo parlor next store ever saw a customer coming or going what's the deal with a pharmacy I've never seen people only twice no customers no customers it's always been locked we obviously had a few questions to ask of the people at Medicare and requested an interview with the person in charge of preventing fraud that turned out to be Kim Brandt medicare's director of prog progr Integrity we went around with an FBI agent and a woman from Health and Human Services they took us to storefront after storefront after storefront billing three or $400,000 a month and they were completely empty nobody there I mean how did they get away with that we're as frustrated by that as the law enforcement officials that you went out with and in fact our primary focus over the past two years has been to tighten our enrollment standards to make it so it's much harder for people like that to be able to get in the program and to be able to commit that kind of fraud look I I I I'm sure that you're aware of these problems but it doesn't seem like you're doing a very good job I don't mean you personally but I mean the the government this is still like a huge problem in getting worse right well it really does come down to the size and scope of the Medicare program and the resources that are dedicated to oversight and anti-f fraud work one of our biggest challenges has been that we have a program that pays out over a billion claims a year over $430 billion and our oversight budget has been extremely limited about that there is little dispute Medicare has just three field inspectors in all of South Florida to check up on thousands of questionable medical equipment companies clearly more auditing needs to be done and it needs to be done in real time why is it taking Medicare so long to figure out they were being scammed I think lack of resources probably um and then I think people I don't think necessarily thought that something as well intentioned as Medicare and Medicaid would necessarily attract um frauders but I think we have to understand that it certainly has the Obama Administration is providing Medicare with an additional $200 million to fight fraud as part of its stimulus package and billions of dollars to computerize medical records and upgrade networks should help Medicare catch more phony charges but Tony who has just begun serving his 12year prison sentence says there's no shortage of people in my Miami waiting to take his place how many people in Miami were doing this I say at least 2,000 people at least 2,000 3,000 companies well presumably some of them are going to be legitimate I say less less than 5% less than 5% yes if I went to the phone books and looked under medical equipment suppliers 95% of the companies would be phony yes sir there's no greater desperation than to be told that you or your child has a disease for which there is no hope many people with incurable illness look forward to the promise of stem cells stem cells have the potential to turn into any kind of cell and in theory they could repair damaged cells though scientists tell us that we're years away from realizing that dream there's no stem cell miracle today so conmen have moved in to offer the hope that science cannot just look online and you will find hundreds of credible looking websites offering stem cell cures in overseas clinics two years ago we began investigating stem cell charlatans we worked with patients suffering from incurable diseases and we discovered conmen posing as doctors conducting dangerous medical experiments you know Mr Stow the trouble is this sh Aon man our report started a federal investigation since that story we've been digging into the rapidly growing trade in fake stem cell cures and we found something even more alarming illegal stem cell transplants that are dangerous and delivered to your doorstep their scams that often Bu The Desperate out of their last dollar of savings and their last ounce of hope I know you're tired at Adam and Brandon suser are 11-year-old twins Adam has cerebal py his brain was damaged by a lack of oxygen before he and his brother were born he's confined to a wheelchair he needs assistance with all his daily living activities from uh cleanliness to feeding to clothing Gary and Judy suser have searched for anything that might improve on the Judgment handed down by Adam's doctors the sentence of being a quadriplegic the sentence of being totally blind the pronouncement by physicians that we should put him away those were the things that his regular doctors were telling you correct we we were being advised literally to put him away he's going to destroy your life so back in 2003 the susers took a chance on the theory of stem cells Adam was three they brought him to a doctor in Mexico who injected stem cells with no idea whether they would work we both decided that that in the severity of his condition that um we'd have to try it apparently there was no harm and no Miracle the progress that he made after that was minimal at best and therefore we didn't see any good coming out of it today people like the susers can find hundreds of sophisticated websites offering stem cell treatments for every hopeless disease I see how people are prayed upon by ERS in charlatans and people who have a special child don't need any more expense don't need any more heartache and don't need any more false promises they need the truth and they need hope out a boy to help us learn the truth about the illicit stem cell industry the susers agreed to work with us in an investigation of one stem cell laboratory we focused on stem tech labs of Ecuador because it offers cures for cereal py and a long list of 70 incurable diseases the website claims a modern-day medical miracle and says we are FDA registered apparent approval from the Food and Drug Administration the founder and director of stemtech labs is an Alabama doctor named Dan Eckland we've been tracking Dr Eckland 4 months hello is Dan Eckland there please in October we asked the susers to contact Dr Eckland Ecklund sent them a letter which offered the Blind and paralyzed atom the possibility of an improved level of Consciousness improved ability to see to speak to stand and walk what can stem cells really do today we asked a scientist who's doing some of the world's most advanced studies in stem cells Dr Joan ctsb I believe stem cells have a lot of promise but we are way at the infancy because real stem cells are very difficult to control as therapy I personally think we're 10 years away from seeing real cell therapies that are working and are safe but I do believe it will come Dr kurtzberg is a physician and the chief scientific officer of a stem cell research program at Duke University she advises the federal government and is the co-director of this multi-million dollar laboratory which works with stem cells harvested from umbilical cord blood Dr csur told us there is no evidence yet that stem cells can treat cerebal Psy some of the diseases that we see stem cell cures offered for on the internet include multiple sclerosis there are no stem cell cures yet for multiple sclerosis L Garrick's disease I wish there were but there are not you know I wonder how often it happens that you have to tell a patient I'm sorry there's nothing nothing we can do and then they come back to you two days later and say well I see all these cures on the internet I get many of those calls and emails and see many of those patients but it's very dishonest to mislead people when there's nothing you can do but there's a lot that can be done for Adam suser at least according to Dr Eckland who spoke to the susers from his lab in Ecuador say hello to Dr Dan Adam hello Adam can you see him doc Dr ean's only examination of Adam came by teleconference eckan didn't know we were watching you think it would help him you know make him improve I think it's likely to help him yes I would say 75% chance that it that he would have a noticeable Improvement eckan proposed four treatments costing a total of $20,000 the susers asked eckan toat treat Adam near their Florida home again my concern would be the legalities of it he's right to be concerned it would be a felony to use stem cells in an unapproved therapy or to sell them for export to the US that's why we were surprised to see this on many websites a shopping cart we clicked on Eckland stem Tech lab's cart and with no medical or scientific credentials we bought 20 million umbilical cord stem cells for $5,000 shipped to America we had the cells sent by the highest medical standard Duke University suggested we use something called a dry shipper cooled with liquid nitrogen we sent the dry shipper to stemtech stemtech sent the Frozen cells to us and we forwarded them to Joanne csur a computer chip inside our package verified that the cells were properly Frozen all the way Dr kurtzberg analyzed the cells for comparison look under the microscope healthy umbilical cord stem cells look like this the cells we got from stem Tech had disintegrated so these are the cells you purchased and they are dying or dead we see all of these dead and disintegrating cells and essentially cellular debris mhm are there dangers of injecting that into someone there are huge dangers if you injected that into someone's blood or spinal fluid because all these little fragments and debris would get trapped somewhere in the bloodstream and could cause a stroke or in the brain could cause an inflammatory reaction this could actually do harm yes this could do a great deal of harm remember the susers asked Dr eckan to treat Adam in the US and last month he got out of a van to meet Gary suser at a Florida hotel where eckan planned to do the transplant we dug into Dr ean's background and we found things that he hadn't told the susers this is the document in which the state of Alabama revoked his medical license in 2005 the State Medical commission said Dr Eckland admitted that he prescribed Controlled Substances to a patient with whom he was having sex prescribed Controlled Substances to a patient who he knew was a drug addict and had sexual experiences with young female children we also track down his laboratory in Ecuador not exactly the state-of-the-art facility claimed in his website the hotel room Gary suser and Dan Eckland headed for was set up with a number of cameras that were tucked out of sight suser excused himself Ecklund was expecting to meet Judy and Adam the Blind and paralyzed 11-year-old in whom he intended to transplant stem cells cells from his lab that sold us the dangerous biomedical junk instead we came in Dr eckan I'm Scott P with 60 Minutes oh great how are you today I am uh surprised we've been working with the susers on a story and and I want you to know that we're being recorded and I wanted to ask you about the treatment that you proposed for Adam what would that be the treatment that he asked about was for stem cells human stem cells and you think they're applicable for cereal paly uh yes I have seen them be effective in cases of cerebal py how does that work exactly well stem cells contain uh excuse me here no one knows exactly okay but some stem cells do contain and give off chemicals which cause other cells to repair themselves in the letter that you sent the susers you described possible effects for adom which could include improved ability to see improved ability to speak improved ability to move arms and legs you believe those things are possible I do what is your training in stem cells my training in stem cells was I studied for about six years going over the literature and then I started producing stem stem cells in my lab you're self-educated self-taught mhm have you published any research no frankly Dr Eklund you have nothing to base your results on there's no clinical trial there's no there's no blind study there are no medical papers published that doesn't make any difference you know you say it doesn't make any difference that you haven't done these studies I would imagine Studies have been done in other countries I would imagine it would make a big difference to the susers the studies have been done in other countries these are not published in the United States because they cannot be published in the United States where is this seen in the medical literature anywhere in the world if you did the things that you describe in this paper you would win the Nobel Prize no if I did the things that are described in that paper it would not be published it would be suppressed and you wouldn't see you wouldn't hear about it eckan told us breakthroughs with stem cells aren't published in scientific journals because of a conspiracy of drug companies and governments that he had trouble defining that's when we told him we bought cells from his lab when your cells are delivered they're functioning living stem cells yes we purchased some stem cells from stem tech labs 6 months or so ago and had them delivered to uh Duke University which did tests on the stem cells and they determined that the stem cells were dead well they must not have handled them appropriately then you're thinking that you handled them appropriately but the stem cell Laboratories at Duke University did not that would be my assumption yeah I don't think that there's any chance they were um damaged in shipment we asked Dr kurtzberg to listen to ean's theories uh yes I have seen them be effective in cases of cerebal poliy this is pretty scary actually that he would be saying these things that he would would be leading them on this way because what he's talking about is very dangerous is this a con Dr ugan No it's not a con I have taken the stem cells myself would I take the stem cells if I thought that they were a Comm no putting them in an 11-year-old boy is an entirely a different matter that's why I uh took care to explain the remotest possible difficulties which have never been reported without any medical studies that have been published in major major journals that have suggested that stem cells have any efficacy you keep going back to this point that they are not published in in major ethic in major medical journalist I'm telling you it is the standard of the world I do keep going to that point I'm telling you that they are not going to be public lished in this country because when someone does try to do it then they have 60 Minutes come and visit them and I think that's enough for me thank you we don't know where Dan Eckland went but we do know the whereabouts of the two conmen who were the subjects of our first stem cell story two years ago in that investigation we worked with patients Steven Waters and Michael Martin who suffered with ALS also known as Lou Garrick's disease they were promised miracles from Lawrence stow and Frank Morales who offered a $125,000 stem cell therapy what get me out of a wheelchair yeah yeah absolutely our story launched a federal investigation and last week Morales and Stow were indicted the indictment alleges they made $1.5 million with stem cell fraud if convicted they could face 20 years in prison the patients who helped us Steven Waters and Michael Martin lost their lives to ALS last spring we will continue our reporting on the stem cell fraud tomorrow on our brand new morning broadcast CBS This Morning the ancient wisdom that there's a sucker born every minute has been especially pertinent given the financial disasters of the past few years so it's time for a short and painless test are you sometimes just too trusting do you invest in things you don't really understand are you also a bit greedy then you too could be suffering from Pigeon fever pigeons just so you know are what conmen call their victims after a year of Revelations about Bernard mof who cheated investors out of billions you might think Americans have wised up fat chance prosecutors and regulat tell us that even in this age of skepticism Ponzi schemes like made offs are thriving one regulator even calls it ponymonium why are there so many pigeons around we asked a few people who should know as a student of con games and deception were you at all surprised by the Bernie ma off scam would you be surprised if I told you that I predicted it for starters we approached Ricky J America's for most card sharp actor slight of hand artist a man with an encyclopedic knowledge of conman past and presid he told us of a talk he gave seven years before made off's fall beware of someone well established in the industry a lecture on financial fraud to a gathering of police officers in 2001 I would also be aware of someone who will rely heavily on an affiliation with an investor group be it religious ethnic or Geographic he was describing made off to a tea I think these elements will make the market right for any sort of pyramid or Ponzi scam Ricky Jet and that is pure Bernard moff it's pure Bernie made off but can I tell you another element of the con that I actually made this page on Photoshop last night and put it into this bullet and I did that to prove a point and the point is head you got me good you set it up by saying that I was a student of cons and that I'm knowledgeable in that area and so you allowed my supposed expertise to make you believe this is true this magazine is true I really have lectured to this group of police against confidence crime everything is true except for this page which I slipped in last night so what's what's the moral trust no one we wouldn't want to live in a world where we couldn't be conned because in effect we would then be living in a world where we M Trust did or refus to trust anyone so this is the price we pay and pay we have in the wake of the made off Scandal Ponzi per walks have become a marathon Texas Finance year Alan Stanford accused of a 7 billion doll Ponzi scheme Minnesota businessman Tom pet convicted recently of a $3 billion scam and Park Avenue lawyer Mark dryer Mastermind of a mere 400 $100 million Ponzi scheme that landed him first on 60 minutes and then in federal prison I thought if somebody would ever interview me in a program such as yours would be for something good I've done not something humiliating I've done despite the downfall of the dryers and the made offs Ponzi operators large and small are busier than ever knowing we're all capable of greed misplaced trust and something else I think it's anxiety it's anxiety that you're losing out that other people are doing better than you are Steven Greenspan is a University of Colorado Professor who writes and lectures on gullibility warning audiences that not reading the fine print or buying something on a tip from your brother-in-law are bad ideas and that older people are particularly vulnerable to a friendly pitch from a con man in most of the Great Moments of gullibility in history the perpetrator seems to Target a particular group correct yes there have been Mormon pzi schemes targeting Mormons or fundamentalist Christians uh made off uh mostly was aimed at Jews because he was a prominent Jewish philanthropist so yes there is this affiliation aspect of it because we tend to trust our own kind here in 1919 is Charles Pony self-styled Financial wizard loafing at his Boston mansion with his lovely wife and proud adoring mother Mr Ponzi himself promised fellow Italian immigrants he could make them Rich trading in postal reply coupons sort of the prepaid phone cards of the day Ponzi went to prison and died a popper I went out looking for trouble I found it but his name lives on for the fraud he made famous the basic concept is robbing Peter to pay Paul you have a fund of new money coming in and you use the new money to pay the old investors but at a certain point that has to stop gullibility is at the very core of this correct I mean absolutely I mean history is filled with examples Mr Jay's library is replete with documents about cons scams and hoaxes of all kinds amazing animals and the cilis was often featured on circus lots and eventually people realized that the cilis was a baboon wearing latero celebrated conmen in including count Victor lusy uh this is an original wanted poster of the count one of the things he did in France was that he was able to sell the Eiffel Tower for scrap metal and he was able to do it twice which which is which is sort of wonderful Mr Jay reports that over the years people really have tried to sell the Brooklyn Bridge as well as Nelson's column in troler square in London and in another cautionary tale still unfolding pigeons were both the investor and the investment arand galra who called himself the pigeon King convinced hundreds of American and Canadian Farmers there was good money to be made raising the birds for food and everybody we talked to said this guy was he was on the up and up nobody had a bad word to say about him anywhere that we could find so Aaron and Jolene Humber Ohio Farmers signed up they've had such tremendous demand for the live Birds the pigeon King assur investors that pigeons would replace chickens in every Po in America and the world he'd sell you breeding stock and buy back The Offspring soon barns across the Midwest in Canada were filled to the rafters with birds and high hopes he was building his herd building the flock he had he had have so many hundred of thousands of birds a week to to supply his production but to some including the Attorney General of Iowa it sound sounded like a Ponzi scheme Iowa and three other states barred the pigeon King from doing business and shortly after the humberts bought in Pigeon King International declared bankruptcy the humberts Lost $300,000 most of it borrowed money we've contacted everybody in the states we could think of and you know from elected officials to FBI to our local prosecutor and everybody says yeah obviously there's something wrong here it was a scam but to prove it is going to be very difficult GTH declined our request for an interview Canadian police now say he was running a Ponzi ski do you blame yourselves at all to a point we just didn't find the the red flags popping up so we tried it and then we lost went to Vegas and put it all on red we would have had a lot more fun at least in Vegas you know the odds always favor the house elsewhere even the most sophisticated Among Us can be had for instance our gullibility expert Steven Greenspan who after writing a book on the subject discovered he lost $400,000 of his retirement money to who else Bernie maof was it embarrassing for you two days after I had the first book copy in my hand I found that out well it was painful obviously and the fact was Greenspan had never even heard of made off the hedge fund managing his retirement money had simply reinvested the 400,000 with madeof I don't even think I read the perspectus I trusted the people I was turning my money over to and I've always done that and it's usually work well except in this one case what did your wife say to you when you confessed that you'd lost part of your nest egg I told you so cuz I tried to stuck her into it and she said I don't think so what made her suspicious maybe it was the word hedge fund which brings us to Wall Street in the financial meltdown of 2008 poking through the wreckage many experts believe the root cause was a perfect storm a monsoon of gullibility colliding with a tidal wave of greed this was a massive Ponzi scheme and it's the biggest crime against the American am economy in our lifetimes in fact ever jenet tavakoli is an analyst specializing in derivatives the Exotic financial instruments at the heart of the Meltdown she argues that the bad mortgage loans that fueled the crisis were repackaged by investment Banks sliced into increasingly complex derivatives and resold to other investors even though the underlying mortgages were often virtually worthless you had very various Traders buying each other's products to artificially keep the prices up so that the bubble didn't collapse not only that but the mortgage derivatives being traded were so mind-numbingly complicated nobody understood them fully certainly not the pigeons the buyers at Banks mutual funds Pension funds and insurance companies who wound up holding a bag full of worthless paper these guys are smart guys they're all graduates of the finest business schools in the country correct if they were gullible they're sophisticated investors so they can't really go back to the investment banks that sold them this product and said we've been had because they held themselves out to be experts in these kinds of Securities all of which proves that whether you're on Wall Street or Main Street brain power is no defense against conmen in fact smart guys maybe the biggest suckers of all as someone who does slight of hand for a living to me the ideal audience would be scientists or Nobel Prize winners who are incredibly smart in their one area and often often not always have an ego with them which says I am really smart so I can't be fooled no one is easier to fool so Morley I'm going to play you one hand of blackjack with certain propositions that make it too good to be true and so determined not to be ConEd by him again I sat down for a Friendly Card Game with Mr J you win all ties the rules were all stacked in my favor I got 20 he showed a nine meaning I thought it was impossible for him to win and God the only thing that could beat you would be as if I had a 12 or something oh which I do you see I have I have the 12 of clubs so I have 21 to you're 20 but there's no such thing as a 12 of clubs right wrong not only did Mr Jay manipulate the cars somehow to get the ones he wanted he was also dealing from a deck used in certain Ry games that includes 11s 12s and 13s this pigeon had been had again and the other real element of a con is that I told you this was too good to be true anyone should stand clear of something that's too good to be true because it never is never is

Channel: 60 Minutes

Views: 1,175,402

Keywords: 60 minutes, billion dollar scam, ponzi scheme, Marc Dreier, ricky jay, ricky jay card manipulation, morley safer 60 minutes, steve kroft, stem cell therapy, stem cell fraud, fraud, crime, true crime, con artists, bernie madoff, financial fraud

Id: GM06mYPSYpE

Length: 56min 50sec (3410 seconds)

Published: Sat Oct 07 2023