Vermont Authorities Investigate Fundraising for Mac Parker's Movie

[00:00:00] Julie: Coming up on this episode of AARP's The Perfect Scam.

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[00:00:05] The Ponzi scheme succeeds often by the power of the personality of the person that's running it, or the promise that whatever it's aimed around holds.

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[00:00:20] Julie: Welcome back to The Perfect Scam and Part 2 of our Mac Parker Ponzi Scheme story. If you haven't listened to Part 1, now is a great time to do that.

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[00:00:30] Julie: We pick up our story just as investigators made the shocking discovery that beloved Vermont storytelling artist, Mac Parker, who's running a massive Ponzi scheme isn't acting alone.

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[00:00:43] Julie: This is Bill Carrigan, lead investigator on the case.

[00:00:47] Bill Carrigan: And it turns out it was a, an accomplice who had lived in Middlebury, Connecticut by the name of Lou Soteriou. Mac had funneled off close to $4 million to Lou. He didn't come to light until after we had subpoenaed the bank records and started going through and seeing the money being funneled off. So that was really when it all came tumbling down. We filed charges to freeze his bank account. Our case was stayed while the case was going through, you know at the federal level.

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[00:01:23] Julie: Now the case is at the federal level and assigned to it is Supervising Special Agent, Dan Rachek from the FBI Office in Burlington, Vermont. I have him on the line with me now. Let me start by asking you why did the FBI get involved in the Mac Parker case?

[00:01:40] Dan Rachek: The Vermont Department of Financial Regulation contacted us, because they realized the size and the scope of the case was outside of Vermont's boundaries, was outside of Vermont's jurisdiction. It involved multiple states, it involved money going back and forth, so at that point, because it's crossing state lines and it's involving multiple investors across state lines, the FBI will get involved and then conduct the criminal investigation.

[00:02:02] Julie: So who is this Lou Soteriou. For starters, he's a chiropractor. Lou and Mac met when Lou was doing chiropractic work on Mac's wife in the late 1990s. Mac's wife had been suffering from chronic fatigue syndrome and responded well to the treatment that Lou offered.

[00:02:20] Dan Rachek: He was very concerned about the health of his wife, and he believed that she was going to die without this treatment, and he believed that Lou was saving his wife's life. So he had this, not weird, but he had a strong devotion to Lou. Even to the point where he would recount stories where they had a dog that they brought down to one of these appointments and they were very sad because the dog was dying, and that Lou put his hands on this dog in the room, and the dog just stood up and was brought back to life. And you know, so he, he would tell stories about this constantly, about how Lou, his wife would be deathly ill, go down there, and Lou would save her and bring her back to good health. So he had this, a very strong devotion to Lou and whatever Lou would say, Mac did, because he thought it meant keeping his wife alive.

[00:03:08] Julie: After the Parkers and Lou become friends, Lou proposes the movie project to Mac.

[00:03:13] Dan Rachek: It was Lou pitching Mac to make this Birth of Innocence, this movie about inner transformation, about finding the inner good in one's self, and that Lou was the inspiration and Mac was going to be the fundraiser for it.

[00:03:29] Julie: It was at that point that Mac started traveling around the state to fundraise.

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[00:03:36] Julie: The two men agreed that Mac would not disclose Lou's role in the movie to potential investors and would focus on raising money from the hundreds of Vermonters who knew him from his 20 plus years of storytelling work in Vermont's firehouses, town halls, and churches. He was relying on that to gain their trust. The first $500,000 that Mac raised went to Lou who claimed he needed the money to further his quest for enlightenment. From the next $800,000, about half went to Lou, an equal amount went to film production, and $11,000 was sent to some of the investors. All of whom had been promised rates of return as high as 30%.

[00:04:19] Dan Rachek: He raised about $30 million from about 2000 through 2009. Um, a lot of it went to payback earlier investors, you know, which is typical of a Ponzi scheme. You know, the way it breeds success is that the earlier investors get their money back plus whatever interest. So a large portion of it went to pay back earlier investors, you know, 'cause this thing went on for almost 10 years, and it just got bigger and bigger as it went on, as did the, the interest payments. You know, you start off with a 15% interest payment which was really good at the time, which would be great now, but then it increased to 30%. People kept investing; their interest rate kept going up.

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[00:04:56] Julie: To throw investors off the scent of the scheme that Mac was running, he would show clips to provide reassurance that the film was in progress.

[00:05:04] (film clip) Life is a forest imbued with love.

[00:05:08] Pedie O'Brien-Brisson: We had a couple of different screenings, so we saw the beginnings of the movie. I never really got the total message of the movie, maybe because I'm too practical, I'm not sure.

[00:05:20] (film clip) It's natural momentum is joy. Moving through everything.

[00:05:27] Dan Rachek: They did have a film, it's not your typical movie, you know it was more just imagery and, you know, sunrises and music playing in the background.

[00:05:36] Julie: Was their goal to actually finish the film or was the entire thing just a lie?

[00:05:40] Dan Rachek: They did go around and shoot various scenes in Vermont, but Lou was never part of any of that. That was all Mac and the people that Mac hired. But then when, you know, Mac would get close or what he thought was close to something, Lou would tell him, no, we're not going to do that. Fire that person. Lou never wanted the project done, because if the project was done, then the money would stop coming in. So it seemed like every time Mac was, thought he was close or wanted, needed to make a final decision on something, Lou would kind of change directions. And again, Lou was doing this all through Mac; Lou was not in any of these meetings, um, until the very end when he came to Vermont. And I think that's when people realized this was just a fraud and this thing was never going to get completed.

[00:06:25] Julie: Mac's investors start to catch on. And Dan, with his team of investigators get to work. They pay Lou a visit.

[00:06:33] Dan Rachek: He was living um, at that time with his parents. His marriage had crumbled, the money stopped coming in from, from Mac, so he moved back to Connecticut from Colorado, and he resided with his parents. You know and we, we saw a man that was just didn't appear to be mentally stable. He couldn't really give us a, an accurate answer to what he was doing with the money or why he was given the money. Um, he kind of tended to put all the blame onto Mac, that Mac raised the money and gave him the money. And he was clearly a guy that was not going to be able to finish a movie of the size and for the, the amount of money that he raised, he wasn't going to be able to finish a project that large.

[00:07:12] Julie: Did you make any other discoveries in speaking with Lou?

[00:07:15] Dan Rachek: So, after we talked to Lou it's clear that money has left Vermont and gone to, to another person that the other investors did not know about. So, so we realized now we have an investment fraud. So we execute a search warrant later that month at Mac's house trying to get all the books and records related to the investment and to the making of the movie. Then we started reviewing all the records. We now had a complete list of all the investors. So myself, and other investigators with the IRS, we went out and started contacting all the individuals that made investments with them, trying to get their side of the story.

[00:07:52] Julie: What did Mac and Lou with the money?

[00:07:54] Dan Rachek: Mac's was just kind of living expenses, you know, that time period, this was his only source of income, that's the money him and his family lived off of. It was the money they traveled back and forth to Middlebury for these treatments. You know, he lived in Addison County, Vermont, so it was, you know, probably about a 300-mile drive to Middlebury, Connecticut. Um, and he was doing this drive sometimes two, three times a week going back and forth, and there was also payments that he was making to Lou.

[00:08:20] Julie: Do you think they ever thought this plan through to the end?

[00:08:24] Dan Rachek: Well, the plan according to Lou was that he was going to pop, and pop meant, p-o-p was like a spiritual transformation. That he was going to be able to leave his body and somehow levitate or just transform himself and be able to travel in time. And so, when he could pop, and he ach--, achieved this level of spirituality, he was going to travel into the future, buy lottery tickets, and then travel back and cash them in. So he would know the numbers, and that's how he planned to pay back this fraud. So, he had a plan, it wasn't quite realistic in my, my view or, you know, in the judge's view, but um, it was a plan, I just don't think it was based in reality.

[00:09:14] Julie: That's certainly an interesting payback plan. What happened to Mac and Lou after they were caught?

[00:09:19] Dan Rachek: Um, so Mac came in, said he was going to plead guilty and kind of told us the rest of the story. And then once Mac came in and pled guilty, then Lou pled guilty shortly after that.

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[00:09:31] Julie: Mac pled guilty to conspiracy to commit fraud and to filing fraudulent tax return charges. Although federal prosecutors suggested a three year sentence because he cooperated with the case against Lou, the sentencing judge gave him 4½ years.

[00:09:47] Julie: Any final thoughts? How does this case stack up against others?

[00:09:51] Dan Rachek: Um, it's, it's not so much the size of the case. I just think, just an odd story. Um, you know, I never had somebody tell me that they were going to spiritually pop, travel in time, and you know, know the, the winning numbers of a lottery and then travel back in time and buy those tickets. You know, so it was just a weird case, you know, from, from the beginning to the end. Um, and kind of sad for all those people that lost so much money.

[00:10:19] Julie: It doesn't seem like a, a realistic, a reliable way to pay back investors.

[00:10:23] Dan Rachek: Dan Rachek: No, no. (chuckle) To say the least.

[00:10:27] Julie: Well, Dan, thanks so much for being on The Perfect Scam, and thanks for all that you do.

[00:10:32] Dan Rachek: Thank you.

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[00:10:34] Julie: Bill, I just can't get over the strange twists and turns in this case. In all the cases that you've seen, what stood out to you the most?

[00:10:42] Bill Carrigan: The biggest surprise for me was Mac's ability to raise money. You know, un--, unbelievable amounts of money from people and there were folks who we would hear from that um, you know, didn't have money to pay their rent anymore, might not be able to stay in their home, 'cause they didn't have money to pay their mortgage, and this was the first time I had dealt with somebody, you know, to this magnitude, that was continually out there asking for more and more and more, and promising people that they were going to get their money back. And, and it just really showed, it showed me the level of trust that somebody could build up with, with folks and essentially with a straight face, be telling them something that uh, uh I don't know, I don't know how you can believe it's actually going to happen.

[00:11:33] Julie: The broken trust is the thing that stands out to me the most too. Imagine waking up one day to find your life savings gone, and even worse, discovering it disappeared at the hands of the person you trusted the most.

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[00:11:48] Julie: Pedie, as someone who knew and trusted Mac Parker, what's the biggest lesson you've learned from this?

[00:11:53] Pedie O'Brien-Brisson: Not to be quite so trusting. You know, we grew up in a, my husband is almost a generation behind me, but we grew up in different generations. We didn't lock our doors, we didn't take the keys out of the car, we didn't, we'd let our children go out and ride their bikes on a road someplace that wasn't too busy. They'd go off wandering around in the woods and playing; we didn't worry about any of that stuff, because we didn't have to, and now I mean I get phone calls from all kinds of scammers on my other phone, and you just can't get rid of them. We just don't, if I don't know the number, I don't even answer the phone. I just pick it up and hang it up and that's it. You know, we still don't have any hate in our hearts for Mac. If we met him on the street, we would probably stop and say, "Hi, Mac, how are things going?" Life's too short to worry about stuff like that. We never said we hate Mac, because we're not that kind of people. But, you know, you do lose your trust in someone when they do something like that to you.

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[00:12:56] Julie: Trust is at the heart of the investor relationship. And scammers like Mac Parker know it. With me now is Gerri Walsh, President of the FINRA Investor Education Foundation. Gerri is going to give us tips on what we can do to avoid investment fraud. Gerri, thank you so much for being on the podcast.

[00:13:15] Gerri Walsh: Thanks for having me.

[00:13:16] Julie: Gerri joins us once again, because she's uniquely positioned to give us insight into the world of Ponzi schemes. For listeners just tuning into the podcast, you can hear Gerri share her expert insight on a multi-part story we dove into previously on the show, a story about criminal mastermind Darren Berg who stole millions in a lucrative Ponzi scheme, and it just so happens Berg escaped out of a California prison while serving his time and is still on the loose today. But you can hear all about the twists and turns in this story in Episodes 30 and 31. Gerri, before we get into this week's story, can you explain what FINRA stands for, and what is the foundation?

[00:13:55] Gerri Walsh: Absolutely. FINRA is the Financial Industry Regulatory Authority, and we're a not-for-profit regulator of, of part of the securities industry, the brokers who sell stocks, bonds, mutual funds, and other investments. And our mission is investor protection and market integrity. And as part of investor protection, we believe very strongly that an educated investor is a protected investor. And so, FINRA set up the FINRA Investor Education Foundation to partner with organizations like AARP and other nonprofits and academic institutions to do research and really understand what uh, what consumers need to know.

[00:14:36] Julie: And Gerri, as we've seen from the Mac Parker story, it's very easy for people to get roped into a Ponzi scheme since it's often proposed by people that they trust. What are some of the characteristics of a Ponzi scheme, and how can we avoid them?

[00:14:50] Gerri Walsh: A Ponzi scheme can be difficult to spot. In, in hindsight, once the charges have been brought and the trial has happened, everyone thinks, how could anyone fall for that scheme, but when you're in the middle of it, and if you're working with a fraudster who is pretty sophisticated, things that, in retrospect you say sound too good to be true, actually look both good and true and real. And that's how Ponzi schemes work. Basically what happens is you have someone who serves as a hub, they're the person that's collecting the money. Sometimes you have multi-level schemes, uh where you recruit someone to then go and recruit other people to participate in the investment, but essentially, all the money comes into the hub, and instead of being used for the stated purpose, it's used to fund often a lavish lifestyle for the fraudsters.

[00:15:48] Julie: Gerri, why is the Ponzi scheme so successful? And what makes it so unique?

[00:15:54] Gerri Walsh: The Ponzi scheme succeeds often by the power of the personality of the person that's running it, or the promise that whatever it's aimed around holds. And so, producing a movie, right. If you're not in LA, how many people are even exposed to the movie production world, right? It's new, it's different, it's exciting, it sounds like it could be lucrative, and so if you encounter somebody like a Mac Parker who's gregarious and you know them, and they persuade you that this is something that, you know, is exciting for you to invest in, but also meaningful, there was a spiritual dimension, uh to this particular Ponzi scheme, and often there is that kind of hook that targets people. Um, so that they let their guard down.

[00:16:45] Julie: And in addition to speaking with victims of this kind of financial fraud, I'm sure you speak with the criminal masterminds as well. What are some of the biggest things you've learned or discovered um, when speaking with them?

[00:16:57] Gerri Walsh: One of the most illuminating things that I've learned from talking to fraudsters, is that they don't want to hear questions. And so, if you want to take a play from the fraudster's playbook, start asking questions. Because one of the things that they will do, whether it's in person, on the phone, or through email, is they will take either positive or negative tactics to persuade you to part with your money. They'll start berating you if you feel like you're hesitating, and they'll sort of, they'll, they'll hold out this phantom riches for you, you know, this promise of a big return, um, and kind of keep at you. They will pummel you with all these different persuasion tactics to try to get you to part with your money, but you can stop that by asking questions. And asking questions about their credentials. Are they licensed? Where are they licensed? Have they ever been in trouble with regulators? These are important questions to ask. Every investor should ask them. And you can check it using FINRA Broker Check. But also, for the investment, you know, how will it make money? How can it lose money? How do I get my money out? How long will my money be locked up, you know, give me audited financial statements. Ponzi schemes almost never have audited financial statements. Some do, some of the worst do, but, you know, that can stop someone who's sort of a, a second-rate Ponzi scheme.

[00:18:25] Julie: And are there any recent developments in investment fraud that we should be aware of?

[00:18:30] Gerri Walsh: With the advent of uh technology and digital assets, we do see that there's an increase in fraud surrounding crypto currencies, and initial coin offerings, and token sales, um, based on crypto assets and crypto companies. And so that's an area where we are seeing more fraud, but the mechanisms of the fraud really don't change. Fraudsters can turn on a dime when it comes to changing their pitch, and especially if they have no product to sell, but they're just selling this fake thing, they can shift pretty quickly from one thing to the next. So, when clean energy was hot, we saw a lot of clean energy scams. But when there was the promise of the return to oil and coal and natural gas, we saw other types of energy frauds that were emerging involving those companies and those technologies. So that's one point for our listeners to remember, is that the pitch can change, but fundamentally someone is promising you something that doesn't exist, and if you do your homework and ask questions, you should be able to avoid that.

[00:19:38] Julie: Gerri, what advice do you have for people who have made some money in their career and are interested in investing it?

[00:19:44] Gerri Walsh: One of the best ways to get started with investing is to sit back, focus on your goals, and think about what would help you achieve those goals. And I know that that can be tough to do, but on FINRA's website we have a number of resources that can help people with goal setting and thinking about goals. Goals are important because everyone's goals are going to be unique and everybody's financial circumstances will be unique, but when you're ready to think about investing the money, it's a good idea to check out the firm or the individual broker, if you're working with someone for advice, to make sure that they're licensed, and find out their disciplinary history, and think about the products that can help you achieve your goals. Some investment professionals sell a very limited range of products. Others sell a lot of products. So as you're talking to a broker or to an advisor or to a firm, you want to find out what products and services am I going to get, how do I pay for those products and services, and what conflicts do you have? Are you able to sell me a wide range of securities, or do you only sell specific types? Do you get more compensation if you sell me an annuity product compared to a mutual fund? All those kinds of things are important for investors who are getting ready to invest.

[00:21:08] Julie: Great, excellent advice. Thank you so much for being here this week, and as always, you share a lot of great advice to our listeners. Thank you.

[00:21:15] Gerri Walsh: Thank you.

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[00:21:17] Julie: And I'm back with AARP's Fraud Watch Network Ambassador, Frank Abagnale. Frank, we've learned a lot about Ponzi schemes, from the perspective of the people who've been victimized, as the people who hold the scammers accountable for their crimes. Are you able to share with me, what are defining personal characteristics of someone who operates a Ponzi scheme? Is it narcissism, an inflated self-importance? I mean who are these characters?

[00:21:41] Frank Abagnale: Everything you say and also that no compassion. They're not concerned about that they're stealing these people's money. They know from the beginning they're never going to give, give these people the money that they're taking or that they'll ever back their investments, so it's all back to me. What can enhance me? What can make my life better, and if I have to take these people down doing it, I don't have a problem with that. Again, and as I say, they want to look very good in the eyes of people, because the better they look then the more people would trust them. You know, they used to come to Madoff and say to him, we'd like to, to get you to invest, to give us some money for this wing we're going to build on the side of this hospital. You're kind of saying, wow, I'd like to be, do business with this guy. He's obviously a very nice guy, a very compassionate guy, he cares about people. And then you hear about all of these returns from people. And you know, his investors were with big corporations, so obviously I'm thinking to myself, this guy must be okay, or he knows maybe what he's doing. And that's what they do. So even in this case of the person in Vermont, he was building up enough people that had influence over other people that were basically saying he's a good guy and saying that he's okay. You know, it's kind of like the woman we read about here a little while back that went to New York. She didn't have a dime to her name. She was from Europe. She started mingling with very wealthy people. She said she was worth millions of dollars. Same thing. I tell you that you're an influential person, you get, well you like me because I'm a likeable person, so then you say to your friend, let me introduce you to Carol and say, let me tell you a little bit about Carol. She's a multi-millionaire from somewhere. So then you believe, well, my friend said this is who she is, and then that woman started getting in and hanging out with all of these very wealthy people. They all believed she was this other person, and then, of course, she said, "I'm looking for investors to do this," and she, you know, stole $250,000 from people who gave her, gave her money. So they all work the same, but again, you know, they always tell you, to be a smart investor, and that is, you have to make sure if you're going to part with your money that you know where your money's going, and that it really is realistic and if it's too good to be true, it's probably not. 

[00:23:44] Julie: All right, Frank. Thanks so much for being here.

[00:23:47] Frank Abagnale: Thank you, Julie.

[00:23:49] Julie: If you or someone you know has been the victim of a fraud or scam, call AARP's Fraud Watch Network Helpline at 877-908-3360. Thank you to our team of scambusters; producer Brook Ellis, our audio engineer, Julio Gonzales, and of course my cohost, Frank Abagnale. Be sure to find us on Apple Podcasts, Spotify, or wherever you listen to podcasts. For AARP, The Perfect Scam, I'm Julie Getz.

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