by Bryant Urstadt
This is a story about what happened when an artist met a Ponzi scheme. The name of the artist is Billie Mintz, and he is a filmmaker in Toronto. His money disappeared on a January Monday in 2008. Mintz had just sat down to check his email. Monday was normally the day he got his statements from RazorFX, a foreign currency management firm operating out of Northport, New York, on Long Island. On the recommendation of a friend, Mintz had invested his life savings, which was about $20,000.
He loved getting his Monday statements. They detailed the trades his manager, Bradley Eisner, had made, and they were usually up, not by a lot, but maybe by one percent. It was a number not so outlandish as to be unbelievable, but exciting enough to tell your friends about, and it made Mintz feel that he had done something smart and sensible. At that rate, Mintz’s $20,000 would turn into $33,000 in a year.
No statement, however, arrived, and Mintz immediately knew something was wrong. Not long after, a Google search confirmed the worst. Eisner and his partner Michael MacCaull had been arrested in Long Island that morning. They had been running a Ponzi scheme, and had stolen more than $100 million. Mintz was stunned, not only by the loss of the money, but by the questions it suddenly raised about himself, chief among them the realization that he might have just become that guy who loses his life’s savings in a Ponzi scheme.
And, no, it had nothing to do with that Ponzi scheme. Bernie Madoff wouldn’t have tipped Mintz at the golf club, much less let him into his select circle of gullible millionaires. Mintz had fallen victim to one of the hundreds of other Ponzi schemes that swept the country in the easy credit years.
Mintz didn’t stay seated in shock for long. Where many might have seen pure loss, a shame to be covered up, and a mistake to forget, Mintz saw an opportunity to learn about issues of the human condition, from trust to kindness to greed. “I saw this as a chance to learn something about being human,” he says. “About who we are.”
Mintz is an upbeat guy, 35, who describes his life’s work as making movies that help foster positive change. He is tall, attractive in a slightly comic way, with bushy hair and a goatee, and able to see the humor in just about anything. So, yes, he had lost his life savings, but he had found his next subject for a film. It would be called, “The Ponzi Scheme” and it would be part tragedy and part comedy.
In the next months, he would undertake an odyssey into the heart of the scheme that took his life savings. He would criss-cross the continent, meet victims in Phoenix, stake out accomplices in Vancouver, and, finally, disguised as a pizza delivery man, confront the man who had stolen his money.
“I started out a filmmaker,” says Mintz, “and I ended up a vigilante.”
The first thing he learned was that victims of a Ponzi scheme mostly haven’t a clue what to do, or how to do it. “Nobody else was ready to actually do anything,” says Mintz. “Everybody was just reeling at having lost so much money. They were crippled by it.”
He felt he could help. As he saw it, making the film served a lot of purposes: He would educate the public about these schemes, tell a good story, and maybe even get some justice, or revenge. A few days after he found out about the arrest of Eisner, Mintz found a Yahoo group where victims were commiserating about their losses, their anger, and their own stupidity. He found that dozens of the victims lived in Vancouver, and so he went there, organizing a meeting of town hall style meeting of victims.
Like many of the Vancouver victims, Mintz had come to RazorFX through a friend, in his case a talent manager in Hollywood, who in turn had come to the fund through his trainer, who had heard about it through a friend who was a teacher. Razor FX would find investors across the country in this way, and in the U.K., New Zealand, Mexico, and Hong Kong, blossoming in the pockets of trust where “affinity fraud” often blooms. The “affinity” is usually a religious denomination or a neighborhood, but it can be any group, up to and including the members of a golf club, a la Madoff. Razor FX took off particularly in Hollywood, capturing investments from B-list stars and A-list managers, and in the Vancouver area, having likely migrated through a film world connection.
In Vancouver, most of the victims had come into RazorFX through a feeder fund called Horizon FX. Vancouver investors, many of them with small deposits like Mintz’s, poured as much as $30 million into RazorFX through the firm. HorizonFX is suing RazorFX for fraud, but more than one investor, including Mintz, believes that the suit is just cover, and voice suspicion about HorizonFX’s founder, Cem Ali, who has basically disappeared. Mintz hired a private investigator, found out where Ali lived, or at least where he had been living, and staked out his Vancouver apartment, hoping for an interview. Though Mintz learned a few tricks of the private investigator’s trade – always bring your own waste bucket to a stakeout, for one, because PIs don’t share – he never found Ali.
After Vancouver, Mintz traveled to speak with victims in Arizona and Los Angeles. Some of the stories were heartbreaking. One widow had lost $600,000, her life savings, and was thinking of killing herself. Other stories proved how stupid smart and informed people could be. Mintz met someone he describes as “big in the financial world,” who had lost millions. He had gone so far as to call Eisner’s supposed “clearing house” in London, where trades were claimed to have been made. The brokers there couldn’t talk about specific trades or volume, but they warned the investor off anyway. The big wig ignored their advice.
Next, Mintz got some cameraman friends, hopped in his little econocar, and headed through a blizzard to Long Island. Long Island, it turns out, is a good place to find a con man, or to learn the trade. RazorFX, Mintz found, appears to have roots in a family tree of con men, being descended from some of some of the best known securities frauds of the 80s and 90s. When MacCaull helped start RazorFX, the Department of Justice affidavit alleges, he was already under arrest for his involvement as a broker working for Sterling Foster, a “boiler room” operation where con men cold-called prospects with hot tips on fake companies, the stock of which the firm later sold for a profit. The operation, which closed in 1997, took more than $200 million from investors. MacCaull pleaded guilty in 2002, and was sentenced to prison for 15 months. Sterling Foster, it later turned out, had been “secretly controlled,” in the words of a 1998 New York Times article, by Randolph Pace, who had run another crooked brokerage, Rooney Pace, which was closed in 1987 by the SEC. Forbes in 1997 called Pace a “notorious bucket shop owner.” He went to jail for eight years in 2002 on 13 counts.
To locate Eisner, Mintz found a private investigator and former cop who was not only willing to help, but volunteered his time. They found a rap sheet with assault on the record, and seven registered addresses for Eisner and RazorFX. They went to the offices of RazorFX, which were supposed to have been in Great Neck, NY, and Upper Saddle River, NJ, but they turned out to be mere forwarding addresses.
Along the way, Mintz made a visit to the North Fork Bank, where $68 million had been stored in one account under Eisner’s name, and where Mintz made a Michael Moore-like show of asking for his money back. They also learned that Eisner and MacCaull seem to have spent the money in the usual con man way. MacCaull in the affidavit is described as living in a “luxurious apartment,” and driving an Aston Martin paid for by Eisner out of the investors’ funds.
Mintz also pieced together what had happened in the days leading up to the missing email that Monday morning. He learned that the fraud went south sometime in December of 2008 or January of 2009, though the Department of Justice and the United States Postal Inspection Service, who worked together on the case, have yet to disclose exactly how the case broke. The indictment describes a first meeting between a “Confidential Source” and United States Postal Inspector Vincent Minecci on January 9, 2008. The source, identified as one of the “principals” in RazorFX, is likely to be Bradley Eisner, and he probably agreed to call MacCaull while the Inspection Service taped the conversation.
In the taped call, Eisner told MacCaull that an investor wanted to take out $10 million, but the funds weren’t there. MacCaull suggested they “squash” the account, which is the typical exit strategy for a con. David Maurer’s classic book on fraud, The Big Con, is full of squashed race track cons and fake stock plays, though Maurer calls this stage “the blow off.” MacCaull stated that they had already squashed the accounts five times before.
Finally, Mintz, with the help of his Long Island PI, began to close in on Eisner. They visited an address that turned out to be an older, smaller home, and then spent the night in a motel before heading out for the last on the list.
His girlfriend, whom he called that night, was not crazy about the plan.
“You guys are either going to turn up dead, or you’re going to get fucked,” she said.
The next day, Mintz and his crew headed to Four Merrivale Terrace, in Great Neck, New York, on Long Island. It was a mansion, and Mintz, in his econobox, parked across the street.
This one looked certainly looked right: It was a huge red brick home, with multiple towering chimneys, a two-story entry with a portico, and grand double doors. In short, the new money special. (Mintz would later find that it had been bought for some $1.65 million, in cash.)
Mintz’ plan was to pose as a pizza deliveryman, and then ask Eisner what had happened to his money, and how Eisner could have stolen from so many people.
Mintz and his cameramen were all scared.
“I’m fucking shitting bricks,” said Mintz, before getting out. “I’m so goddamned nervous.”
Mintz got out. It was raining. He was wearing a dark winter coat and a blue baseball cap. He hadn’t shaved in a couple of days. One of his friends handed him a hot box of pizza. He went up to the big door. He knocked once, twice. A big guy with thinning hair came to the door in an maroon Abercrombie & Fitch sweatshirt.
“Hey,” said Mintz. “Pizza?”
“I didn’t order any,” mumbled the guy.
“Are you Bradley Eisner?”
“Yeah,” said Eisner, trying to close the door, but Mintz had his foot in already.
“He thought I was going to shoot him,” says Mintz. “I could see it in his eyes.”
Mintz instead told Eisner that he came on a mission of peace and understanding, that he wanted to know if Eisner understood how many people he had hurt. Eisner muttered that he couldn’t talk about the case. Mintz asked him how he could do it and got the same answer. Mintz tried to connect with him in any way he could, even prefacing the whole talk as being between one Jew and another.
There was no shooting, or violence. Instead, Mintz found himself overwhelmed with sympathy, and, oddly, admiration.
“I probably spoke with him for seven or ten minutes,” says Mintz. “It was more just me telling him how I felt. But the weird thing, at the end of it all, was that I kind of liked him. He wasn’t the monster I thought he would be. He was just a normal guy, a likable guy. I saw myself in him, and I thought, ‘We’re all capable of this.’”
Eisner’s lawyer, Benjamin Brafman, will certainly stoke any sympathy he can. “In Bradley’s defense is the fact that he came forward and brought the fraud to the attention of the government when he was not under investigation,” says Brafman. “He came in to my office and told me, ‘I’ve been involved in fraudulent activity for years and I want it stopped.’ He was fundamentally honest, and did not want to live like that the rest of his life.”
Brafman goes on to describe Eisner as a “soft-spoken, gentle young man,” a husband and a father, with no substantial post high school education, and no real background in finance.
Eisner, according to Brafman, went with Brafman to confess to the DA. If this is so, it’s likely the government asked Eisner to make the call to MacCaull as part of any bargain. Because of Eisner’s actions, Brafman says, “the investors are going to participate in a restitution pool of $30 million. It could have gone on for years. Investors may be angry but they should be to some degree grateful.”
Even Brafman seems impressed by the lure of the business. After Eisner “stopped participating,” says Brafman, “investors continued to send in money. The clients were so happy with their returns that they were tripping over themselves to put more money in…. It’s remarkable how easy it was for Bradley to begin the business.”
The U.S. Attorney’s office did not respond to an e-mail and a telephone call trying to determine whether or not Brafman’s version is correct.
Mintz doesn’t find Brafman’s version too crazy, and imagines the scheme snowballing out way beyond the original dreams of Eisner and MacCaull.
In July, Bradley Eisner and Michael MacCaull pled guilty, and both await sentencing. They each face up to 20 years in prison and a $250,000 fine. In all, the scheme took in over $100 million, says the Department of Justice, with just $28 million recovered. The DOJ adds that “tens” of millions were returned to investors on top of that, to “perpetuate the scheme.” That leaves well more than “tens” of millions unaccounted for.
As Maurer notes in his book, “If the fix curdles and the insideman should find himself inextricably involved with the law, the safety of the whole mob is menaced; hence the insideman retains excellent legal service to be used in such an emergency.”
Brafman’s service qualifies as excellent, to be sure. He is a premier lawyer specializing in white collar crime, having represented Sean Combs, Jay-Z, Michael Jackson, nightclub owner Peter Gatien, and many others, including a number of New York-area organized crime figures.
Even Mintz’ stellar empathy has limits, and to Mintz the appearance of Brafman is not a historical nicety but another in a series of grim jokes at the expense of the victims. After all, Eisner is spending Mintz’ money to avoid having to spend time in jail for having taken Mintz’ money. As humor, it doesn’t get much darker than that.
“Still,” says Mintz. “I feel for the guy. I almost felt like we could have been buddies. You get caught up in something and you think you can outrun your conscience. It must be a nightmare once it starts to haunt you.”
In the end, as Mintz sees it, he and Eisner made a kind of spiritual trade.
“He took my money,” he says, “but I gave him my greed. For me just to point my finger at him would be taking away from a recognition of what was inside myself, too.”
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