Con case tangled in property
Adam Harvey
New York
20mar06
A CONMAN who stole $90 million from TV doctor James Wright and other investors diverted the cash into luxury properties in Australia and the Bahamas.
US court documents show New Zealander Derek Turner used the stolen money to buy a $5.25 million parcel of waterfront land in the Sydney suburb of Hunters Hill and other property, including a pair of adjoining luxury apartments.
One of the flats, a penthouse, is now on the market for $1.6 million.
"I think his plan was to buy up several hundred yards of waterfront property so he could build a Derek Turner compound," said assistant US attorney Larry Ferazani, chief prosecutor in the case.
A US judge, who sentenced Turner last month to 20 years' jail, ordered the forfeiture of all the properties to try to recover some of the money investors lost -- but those efforts have been complicated by some of Turner's unusual real estate deals.
For instance, he bought the Hunters Hill land on the condition the owner of the property could remain living there free until he died, said FBI special agent Matthew Galioto.
"Turner was not a very good businessman," commented Agent Galioto.
Similar complications are delaying the sale of the Bahamas properties.
Investigators with the US Department of Justice and the FBI say the scammed investors will probably recover less than a quarter of their money.
Whatever his business skills, Turner managed to persuade Dr Wright and 68 other Australian and US investors that he was the astute manager of an successful investment fund.
Turner boasted of astronomical annual returns of about 37 per cent, and was soon swamped with cash.
Starting in 1999, according to US District Court documents, Dr Wright claimed his not-for-profit charity, Medi-Aid, invested $90 million with Turner.
Turner gave out fake investment certificates and tricked everybody with a simple pyramid scheme: he used the cash of new investors to make "interest" payments to the original investors.
Turner was caught only because his scheme was noticed by a convicted conman turned fraud-fighting priest named Barry Minkow, a teenage entrepreneur who spent most of his 20s in jail after being convicted of fraud.
He immediately recognised Turner's scheme was a con, and brought it to the attention of the FBI.
Turner was arrested and his lack of contrition and bizarre attempts to blame the investors for their lost money contributed to his hefty prison term.
His crimes have had an impact. Medi-Aid says it will not be able to build planned retirement villages and low-cost housing in NSW. Some of the smaller investors are virtually destitute.
"There was one gentlemen who survived the Holocaust who has lost his life savings. Another man was living off the interest payments. He's lost it all," said Mr Galioto
AI
