The 500-Pound Con Man
On December 6, 1986, Alex W. Herbage, an English “financier,” was extradited to the U.S. by use of a flatbed truck, scissor lift, and military cargo plane. Over a seven-year period, the 535-pound man had conned over 3,000 Americans of over $56 million through phony investments by mail.
The Crime
Starting in 1978, Herbage was at the top of a major international financial empire that he created and controlled. Using the IMAC Economic and Financial Review, a newsletter he published, he lured Americans to join and invest in several British and Cayman Island companies under the name "Caprimex Group".
Investors would send applications and money for investments in one or more of Herbage's funds. He would then offer 2% a month in return on investments, higher than any other investment opportunity. However, over half of the money from investors went to funding Herbage's lavish lifestyle and not to any actual investment opportunities.
Cont.
By the beginning of the 1980s, Herbage had spent millions of dollars of investors' money to buy a 44-acre estate named Sutton Manor, a 9,000-acre estate in Scotland, and homes in France, the Netherlands, and the Caribbean. Being the intelligent financier that he was, he did all of this while subsequently keeping most investors happy by employing a classic Ponzi scheme. He had convinced investors that they were making money, despite the fact that he was spending most of it.
Then, in 1984, cracks in the scheme began to appear after an article in Barron's detailed Herbage's scheme and sketchy past. Investors began demanding their money back, and potential investors backed out entirely. Americans quickly reported him to the Justice Department, which forwarded the case to the Postal Inspection Service.
Investigation & Punishment
In 1985, Postal Inspectors Ronal Scheid and Michael Flynn flew to the UK to investigate the scheme further. They spent two weeks with foreign law enforcement officials obtaining search warrants and reviewing thousands of documents from Herbage's homes. It became clear that Herbage had created an extensive Ponzi scheme that he jeopardized the financial well-being of over 3,000 Americans and many others.
In 1986, Herbage was imprisoned in England for other charges. investors urged him to be extradited to the United States. When the extradition was approved, he was placed in a military cargo plane, due to his size, and was indicted by a federal grand jury. Herbage faced 27 counts of mail fraud across nine different countries. He pleaded guilty to three counts on August 27, 1987. On November 19, Herbage was sentenced to 15 years in federal prison.
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