The Undercover Files: White-Collar Crime

An anonymous Indiana Securities Commision senior investigator talks to IM about Ponzi schemes and more.

White-collar criminals are, by definition, very professional-looking. Guys like Tim Durham and Marcus Schrenker were flashy, which isn’t that unusual. Ponzi schemes are the most common white-collar crime. Sometimes the victim has no documentation, so we do some undercover work. We’ll pose as a relative and wear a wire the next time they visit the offender’s office. We’ll set up fake e-mail accounts and P.O. boxes. There was a time when we would use a fake Social Security number and a fake driver’s license. Most criminals don’t even ask for that stuff now. The surprising thing is that they have become less cautious as the scrutiny has become harsher.

Several years ago, we had an individual who was a thorn in the side of the division. He was a licensed investment agent, but we knew he was crooked. He was fired from his firm for diversion of client funds—stealing—but he wasn’t prosecuted because the firm paid the restitution. Then, in 2004, he was caught selling unregistered securities. While that case was pending and he was out on bail, we received a phone call from someone who said the offender was trying to sell them an investment. I sent an undercover agent to meet with the offender. He went through his pitch, and she said she didn’t have the kind of money he was looking for, but she had an uncle who might be interested. So we set up a second meeting at a Carmel restaurant with an undercover Indiana State Police officer. A check was exchanged, and he was arrested.

Usually, we just follow the trail of money. Offenders will open 15 bank accounts and keep the money moving from one to the next. Eventually, it always comes out of one of those accounts into a mortgage, or a car, or a boat. We have a case right now where the guy bought an island. But most of them don’t leave the country when things are closing in on them. They just sit there waiting to be arrested. I always scratch my head wondering, “What was their end game?”

—As told to Daniel S. Comiskey

The Undercover Files continue here.

This article appeared in the March 2013 issue.