He Promised Investors 2% to 6% a Week; He's Headed to Prison
By Don Bauder
November 16, 2009
Rancho Santa Fe residents have come up with some wild frauds in the past, but this one deserves special mention. Richard M. Hersch pleaded guilty today (Nov. 16) in federal court to recruiting 150 investors to plunk $25 million in his company, called All States ATM. Hersch, 72, of Rancho Santa Fe, told his investors that his company had contracts to place automated teller machines (ATMs) on the "backside" of racetracks, where only track employees, horse owners and trainers and others could have access to them. He promised 2% to 6% returns per week. That's per WEEK. Hersch said he had 160 employees and hundreds of ATMs. Investigators found that racetracks had no contracts with him. He faces 20 years in prison for mail fraud and 5 years for financial conspiracy, according to the U.S. Attorney's office.
Another small fry swindler (by today's standards) gets caught, convicted, and a stiff prison sentence. But the really big crooks keep their jobs in many cases, are never prosecuted, and get government bailouts. Ain't fair!
Response to post #1: You are so right. The details that keep coming out of AIG are just nauseating. The government bailed out the big insurance conglomerate even though it really had no legal authority to do so. Much of the government money went right out the back door to Wall Street firms such as Goldman Sachs, as well as foreign banks. There is another story in today's (Nov. 17) NY Times. And remember the John Moores cases in San Diego. One San Diego judge after another, on the flimsiest of legal rationale, would not let those civil cases get to juries. And that's only part of it. Best, Don Bauder
Visduh, I'm sure I've written this before, but to quote Tom Paxton, "I'm changing my name to Chrysler, I'm going down to Washington DC, I'll tell the power brokers what they did for Iacocca, will be perfectly acceptable for me..." Snappy little tune.
“...place automated teller machines (ATMs) on the "backside" of racetracks, where only track employees, horse owners and trainers and others could have access to them…”
He found some ignorant suckers for this one. Don’t any of these “investors” ever look at the metrics?
There are slightly more than 75 thoroughbred horse race tracks in the United States. Most only operate for a season of from 8 to 16 weeks. The behind the scenes staff typically number in the low hundreds, whereas the customers number in the tens of thousands.
Just realizing they would be installing less than 100 machines that would only be used for a month or two a year should have raised suspicion.
Ponzi-Stupid people with money to burn are still stupid people.
Agreed. But many modern schemes are far more elaborate. This one is so stupid it took extraordinary greed and gullibility to buy into it.
Another example is $25 million will get 5,000 of ATM machines that would be more than sufficient (security, capacity, etc.) for the proposed employee backroom use.
Response to post #3: Write to the Federal Reserve and tell it you want to borrow money at 0% to 0.25%, the same rate that the big banks get. If the Fed protests that the big banks are better credits than you are, show them the facts: actually, these big banks are in WORSE financial shape than you are. Best, Don Bauder
Another way to look at it is that any investor who believes a promise of "2% to 6% returns per week" deserves to be fleeced, and deleted from the gene pool.
However, as for promises made by Wall Street one wonders if they might be leading America down a path to economic extinction, allowing China to win the survival of the fittest contest, at least until China follows us down the same greedy path to extinction.
Response to post #4: Of course those facts should have raised suspicions. But don't you think that a return of 2% to 6% a week would raise the most suspicions? Best, Don Bauder
Don: maybe we should start calling it Rancho Santa Fraud?
Response to post #5: Sometimes I think the authorities should lock up the victims of these schemes, as well as the perpetrators. Incarceration might be the only way to protect these suckers from themselves. Best, Don Bauder
Response to post #6: Yes, as I saw so many times, the essence of white collar fraud is contrived complexity. The perpetrator of this one forgot that. Best, Don Bauder
Response to post #8: We're certainly losing to China now. Our economy is more than 70% consumption. China finances our overleveraged consumers so they can continue to buy what they don't need-- greatly products made in China. When manufacturing has become a small part of your economy, as in the U.S., you're on your way to perdition. We gave away our manufacturing base to low-wage countries so our companies could make higher profits and pay more obscene salaries to their chief executives. Best, Don Bauder
Response to post #10: Rancho Santa Fraud. Great idea, Pat. Best, Don Bauder
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