August 20, 2008

Con Man on Campus?

Posted: 06:00 PM ET

You can lose a lot of money in a Ponzi scheme. And the international scheme investigators and plaintiffs say was concocted by a graduate of the University of Miami is no exception.  Investigators say investors may have been bilked out of more than $30 million.

According to the FBI’s definition, a Ponzi scheme is an investment fraud where the bad guy promises high financial returns that are not available through traditional investments.  The scheme generally falls apart when there are not enough new investors to keep the money rolling in.  This type of fraud was named after Charles Ponzi of Boston, Mass., who offered his investors a guaranteed 50 percent return on their investment in postal coupons – of course, the scheme fell apart in the end, and the investors lost fortunes. 
Authorities say there tend to be more Ponzi schemes in a poor economy where desperate people seem to fall for pitches on easy ways to make quick cash.
But universities are filled with smart people.  They wouldn't fall for one of the oldest tricks in the book, would they?
Investigators and some of the alleged victims say that's exactly what happened:  The accused perpetrator was allegedly allowed to use a university conference room for investor meetings and UM computers to track all the money.  University employees say they chose to invest, lured by promised returns, in some cases, of 18%.

The university says it's aware of the investigation into the alleged scheme, and that "a few current or former employees" invested.

“University funds are not involved,” UM spokeswoman Margot Winick told CNN. “The university will cooperate fully with the investigation.”

When CNN found out about this alleged Ponzi, we set up an interview with a current university employee who says she lost a substantial amount of money, and who said she would tell us what she knew.
We actually drove to her Miami home to interview her on camera.  We showed up on time, knocked on her door, but there was no answer.  I called her to let her know we had arrived, and that’s when she told us that the university media relations spokesperson advised her not to talk to CNN.  I was surprised, considering it was her own money that was lost, not the university’s money.  So, why were they stopping her from sharing her story?  She told us she was concerned she could lose her job if she told us everything she knew, so, at the last minute, she understandably backed out.
It got us wondering: is there more to the story?
We're going to keep digging.  Meanwhile, tonight you'll get to see what we've learned so far.

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Filed under: Abbie Boudreau

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S.T.Symmes   August 20th, 2008 7:38 pm ET

This proves the old saying,"If something sounds too good to be true, it probably is". And why is this mastermind not behind bars? Keep digging, only the tip of this iceberg is showing now. Just wait, this probably really explode soon and hopefully there not too many victims he fleeced.
Maybe this is a really big reality check for all of us! There are wolves in sheeps clothing out there...Just beware! Trust...but verify!

Nadine R. Cook   August 20th, 2008 10:59 pm ET

Very well done-glad that you are investigating this scheme. I am sure a lot of innocent people will lose money that they can not afford during these "hard times". Good luck.

John V   August 21st, 2008 7:32 am ET

of interest is that Mr. Pimstein is still a "free man"...i am sure that the FBI has a plan

Arthur G Broadhurst   August 21st, 2008 12:41 pm ET

This is not the only Ponzi scheme run by Pimstein. There was at least one more fraudulent scheme in which I was a victim to the amount of $250,000. He had a partner, also a victim, a long time friend and classmate married to my nice. I understood this was a family investment company, also dealing with electronics for Ripley, and was caught up in it after it had been operating for several years, apparently successfully. Unfortunately it caught up many family members who are now without their retirement funds. There needs to be a more complete investigation of the whole scheme and what actually happened to all the money. This second scheme, I was told by Pimstein's friend and partner, involved about $50 million.

H.R.   August 22nd, 2008 1:42 pm ET

Sir Pimstein is free because the FBI operates in an orderly fashion. It will proceed against Sir Pimstein only when it has its ducks in order. Surely, the FBI is compiling a complete database on the scheme before deciding when to proceed and against whom.

Vivien   August 26th, 2008 11:45 am ET

I was also a victim on this scam, however, no one , not one investor has contacted me to file a civil law suit against this horrible person. Isn't anyone out there contacting the investors to file a civil lawsuit?
I myself contacted the best attorney you can get. He is the only one that was able to return money to the investors in the KL Fund case, another Ponzi Scheme in Palm Beach two years ago. However, he wants a retainer and I don't know who to contact that wants to be part of this.
Is no one working in "unison"?
I don't know who to contact as I probably was the last person to invest my money – Invested March 10- Lost it all April 20th! If you also lost money and don't have an attorney, please contact me. Power in numbers!!!

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