It turns out that even FBI agents get hoodwinked by Madoff-style scam artists.
A self-described retirement expert who hired top federal law enforcement officials to work for him, and who used his alleged friendship with FBI Director Robert Mueller as a sales pitch, fleeced hundreds of federal agents out of at least $34 million in a Ponzi scheme, Gang Land has learned.
After admitting that his investment schemes were a sham, Wayne McLeod - a Jacksonville, Florida broker, was found shot to death, an apparent suicide. McLeod, 48, killed himself two weeks ago after admitting he was a scam artist. For more than two decades, he had used a mini-Madoff-style scheme that preyed on FBI, DEA and ICE agents so he could enjoy a lavish lifestyle that included luxury homes, cars and a 38-foot boat named "Top Dawg."
All told, according to a court-appointed representative for the victims, as many as 300 current and former federal agents in 28 states were ripped-off by McLeod, who was hired by the FBI - as well as the other agencies - to conduct retirement planning seminars that gave him a steady stream of potential victims to steal from.
Mueller, who did not invest his money with McLeod, vacationed several times at a luxurious condominium that McLeod owned on Amelia Island, an exclusive resort area off Florida, about 30 miles northeast of Jacksonville. But Mueller spokesman Michael Kortan told Gang Land that Mueller paid for his stays at McLeod's condo, and that the vacation spot was selected and arranged by a travel agent, not Mueller, who did not know McLeod.
The FBI spokesman left many questions unanswered, but issued a sharp denial that Mueller had any ties to McLeod. Here's Kortan's full statement:
Director Mueller contracted with a property management company to rent vacation condominiums on Amelia Island occasionally over the past several years. The management company may at times have provided a unit owned by Wayne McLeod, as well as units owned by other individuals at other times. The units rented by Director Mueller were assigned by their availability and no other criteria. The Director had no personal or professional relationship with Mr. McLeod, nor did he engage in any financial dealings of any kind with him.
Kortan wouldn't say who approved using McLeod as a retirement speaker, how much he was paid, or how many seminars he gave over the years.
Overall, it's a pretty embarrassing moment for the agency charged with protecting the rest of us from scam artists. Sources say several New York based FBI agents invested money with McLeod, who conducted FBI-sponsored retirement seminars in New York and New Rochelle in 2006 and 2007. Several agents invested with McLeod, but Gang Land was unable to reach them.
Jeff Westcott, a spokesman for the Jacksonville FBI, told Gang Land that there "are FBI agents at various levels" who were taken by McLeod, but he declined to identify them, their positions, or where they worked. The FBI, added Westcott, is still investigating the scam, and among other things, searching for assets that McLeod may have hidden away.
"It's outrageous that the FBI gave this guy entrée to hard-working men and women," said one retired New York mob-busting agent whose former colleagues attended a seminar and invested their "hard-earned" money with McLeod.
"He would tell people that Bob Mueller was a friend of his," said another retired agent who spoke only on condition that his name not be used. "The guy was a real charmer. He would say that he and Bob were best of friends and that Bob and his wife used to stay at his place all the time. The worst thing about this is that this creep scammed hard-working GS13s and GS14s," he said, using the official government classifications for street agents and supervisors.
In 1988, according to an SEC complaint, McLeod began offering investors "guaranteed, tax-free returns of eight to ten per cent annually" in return for long-term investments in a bond fund that was managed by his company, Federal Employee Benefits Group, Inc.
"In reality, the purported bond fund, which McLeod called the FEBG Bond Fund, did not exist," said the SEC complaint, which noted that McLeod "simply used new investor funds" to pay interest to other investors and enjoyed a lavish lifestyle until the bubble burst last month.
Government agencies paid as much as $15,000 to hire McLeod for a seminar, said the SEC complaint.
"Between 2005 and June, 2010 alone, McLeod spent more than $1 million on promotional expenses to bolster his image in the community, including paying for box seats and an annual trip for him and 40 friends to the Super Bowl," said the complaint. A tireless self-promoter, McLeod got a local Fox TV station to do a feature about his trip to the Super Bowl in February, even as some investors began to question McLeod's FEBG Bond Fund.
"He was the devil," said DEA agent Tony Marotta, a supervisor in the Detroit office of the DEA, which had many more victims than the FBI.
"He'd name drop all of those top people whose names you knew. He was the DEA's retirement expert. How could you not trust this guy," Marotta said last week, according to the Florida Times-Union, which broke the story and continues to investigate and report on the case.
On June 22, some five days after he admitted to SEC investigators that his FEBG Bond Club was a fraud, McLeod was found shot to death in his car, a shooting that authorities have said was self-inflicted.
Meanwhile, the future is bleak for the law enforcement officials who were taken by McLeod.
Less than $10,000 remains in the coffers of Federal Employee Benefit Group, according to Michael Goldberg, a Ft. Lauderdale attorney who was appointed to represent McLeod's victims, and is working to locate and freeze any McLeod assets for dispersal among his victims.
"But the assets appear to be minimal when you compare it to the amounts that were stolen," said Goldberg, adding that there may be $4 million in assets, including insurance, that he can seize for his clients. "Nearly 98 per cent of them," he said, are current or retired FBI, DEA, or ICE agents.
Goldberg says he is also investigating whether any former McLeod employees were involved in the scheme, and whether there is a way he can obtain reimbursement from government agencies whose officials put their employees in harm's way by hiring McLeod to give retirement seminars.
"We will look at anybody who may have liability," he said.