continued Robert G. Dukes worked a doubleheader, wooing the elderly with quotes from the Bible and a do-good pitch: investors could make 15 to 20 percent a year by putting money in rundown properties that would be restored. His Mason Gordon Co. set up more than 90 limited partnerships. But there were drug and gang problems at the properties. Dukes juggled the books, pocketing investors' money. In 1996, he got two years for grand theft.
Religion has been a recurring hook in San Diego. Fundamentalist Christians were wooed into a $12 million scam to exploit alleged inventions of Stephen H. Smith. Management opened investor meetings with a prayer, then described the offshore-money flow. Federal prosecutors indicted eight people; two confessed, and more are expected to do so this month.
Ethnic scams abound in San Diego. In the late 1990s, Hispanics were targeted in a pyramid scheme called Network Associates. In pyramids, people pay money to get in; then, as they recruit more people, they move up and finally collect a pot of money -- unless the chain breaks, which it inevitably does. In 1996, Frank Campos got five years' probation for selling houses he did not own to unsuspecting Latinos who did not speak English.
Jewish people were the major victims of the $200 million Pioneer Mortgage hard-money lending scam of the early 1990s. In such scams, people who can't get credit pledge their second-rate real estate to get a loan at an interest rate of, say, 20 percent. Then investors get 13 to 15 percent and the middleman keeps the rest. But when real estate collapses, so do such schemes. In this case, the middleman was Gary Naiman, who was active in his synagogue and in Israel. He went to prison.
In the mid-1990s, Mission Valleybased BAOA, Inc., sold a board game, Black Americans of Achievement. Rev. Jesse Jackson joined its advisory board in 1997, apparently not aware that the original East County investors had received their stock through an offshore (Cayman Islands) institution, thus attempting to dodge capital gains taxes. They later got into trouble for another offshore scam, and the company's top executive went to prison for a different caper. San Diego and scamsters have a special affinity. It's not surprising that affinity-group scams thrive here.