ARCH EN­EMY OF CON­MEN

At the heart of Martin Ken­ney’s de­ter­mi­na­tion are the vic­tims, and get­ting their money back

Reader's Digest Asia Pacific - - Contents - NICK RYAN

This lawyer’s dogged de­ter­mi­na­tion is a life­line for vic­tims of fi­nan­cial fraud.

WHEN JACK CHAU­VET*, a small busi­ness­man from Cal­i­for­nia, first en­coun­tered Art Ferdig in the sum­mer of 2001, the fi­nan­cial ad­vi­sor – and evan­gel­i­cal preacher – seemed like a de­cent man. A friend had sug­gested Chau­vet con­tact Ferdig about the im­pres­sively-per­form­ing “Tradex” for­eign-cur­rency trad­ing scheme he was run­ning. “He was so mild and Chris­tian,” says Chau­vet. “Just some­one run­ning a busi­ness, promis­ing steady re­sults.”

Chau­vet pushed sev­eral hun­dred thou­sand dol­lars into the scheme and for a while things went well, with Tradex’s monthly re­ports show­ing healthy prof­its.

Then in March 2003, Ferdig wrote to say that the money had dis­ap­peared and that a trader he em­ployed to bro­ker his deals, Su­san Lok, was to blame.

“It was an ex­tra­or­di­nary sur­prise,” says Chau­vet. “But dis­be­lief was swiftly re­placed by anger.” Some 327 in­vestors, most of them or­di­nary peo­ple, had lost a to­tal of $21 mil­lion. “I was still young enough to earn some of it back,” says Chau­vet, now 71. “But oth­ers weren’t so lucky.”

Ted and Dolores Land­kam­mer from Santa Cruz, Cal­i­for­nia, had in­vested al­most $150,000. “I’m a tough guy, but I felt pretty down,” says Ted, 84, a re­tired pro­ba­tion of­fi­cer. “Hol­i­days, trips, all the things you dream about do­ing in re­tire­ment were out the win­dow.”

Chau­vet and the other in­vestors were con­vinced that Ferdig was to blame for the lost money. “We needed to un­ravel the mys­tery,” says Chau­vet. So a small group of them con­tacted Martin Ken­ney, a hot­shot fraud lawyer.

Ken­ney, a Cana­dian based in the Bri­tish Vir­gin Is­lands, was keen to help. “Los­ing the money had stolen the in­vestors’ dig­nity,” he says. “Pur­su­ing Ferdig to get it back would em­power them again.”

With Tradex in liq­ui­da­tion, Ken­ney un­leashed a bl­iz­zard of lit­i­ga­tion. One of his in­ves­ti­ga­tors, a former US Se­cret Ser­vice agent, be­gan tail­ing Ferdig as he moved be­tween Boca Ra­ton in Florida, Lon­don, Mon­tene­gro and other lo­ca­tions. Oth­ers waded through thou­sands of pages of bank state­ments, tele­phone records and other pieces of data. Ken­ney knew that un­tan­gling Ferdig’s com­plex fraud would take years. Most lawyers would shy away from such com­pli­cated and lengthy cases, but Ken­ney is no or­di­nary lawyer.

MARTIN KEN­NEY grew up in Saskatchewan, Canada, the el­dest son of a head­mas­ter. Martin did well at school, but his fa­ther – a huge inf lu­ence on him – was de­ter­mined to “put some leather” on his hands and in­sisted he work as a rough­neck on oil fields in the Rocky Moun­tains for three va­ca­tions while at univer­sity be­fore start­ing his ca­reer.

“It was hor­ren­dous, that first sum­mer. The men were vi­o­lent, of­ten drunk, al­ways get­ting thrown into jail,” says Ken­ney. “It was 12- to 14-hour shifts, seven days straight.”

As his fa­ther had in­tended, the ex­pe­ri­ence helped give Ken­ney a steely de­ter­mi­na­tion and af­ter qual­i­fy­ing as a lawyer, he moved rapidly through the world of com­mer­cial prac­tice.

Then in 1987 an as­so­ci­ate stole $ 400,000 from a com­pany bank ac­count – us­ing a card Ken­ney had en­trusted to him. Ken­ney was stunned and up­set. “To this day, I feel ter­ri­bly re­spon­si­ble for what hap­pened,” he says, a solid fig­ure in a pin­stripe suit. The shock was the first step on Ken­ney’s path to ded­i­cat­ing his ca­reer to fight­ing fraud.

Soon af­ter, while work­ing at a New York law firm, he was called in to in­ves­ti­gate an in­ter­na­tional bank­ing fraud at a prom­i­nent Cana­dian in­vest­ment house. Ken­ney tracked down tens of mil­lions of dol­lars by hir­ing a former CIA agent to pose as a fel­low fraud­ster and be­friend the sus­pect while wear­ing a body wire. Ken­ney went on to help re­cover a $5 mil­lion casino debt for Don­ald Trump by us­ing com­plex le­gal pro­ce­dures to freeze the main as­set of a Ja­panese real es­tate in­vestor with links to or­gan­ised crime – his palace.

Fel­low New York lawyer Irv­ing Co­hen re­calls meet­ing the “hard­nosed” young ad­vo­cate when they were rep­re­sent­ing op­po­site sides in a le­gal bat­tle in 1992. “I watched him re­trieve $5 mil­lion in 90 days. It was the most re­mark­able thing I’d ever seen.”

The pair formed an as­set-re­cov­ery firm to­gether, In­ter­claim, which they ran un­til 2002, be­fore Ken­ney struck out alone with Martin Ken­ney & Co.

At the heart of his work are the fraud vic­tims. “The me­dia call [con­men] rogue traders, as if they’re some­thing nice, but they are vi­tu­per­a­tive char­ac­ters,” he says. “Peo­ple lose their edge and faith in them­selves when they’re

“PEO­PLE LOSE FAITH IN THEM­SELVES WHEN THEY ARE CONNED. IT’S A VI­O­LA­TION - AS BAD OR WORSE THAN VI­O­LENT CRIME”

conned. It’s a vi­o­la­tion – as bad or worse than vi­o­lent crime.”

He re­counts vis­it­ing one of his first clients in hos­pi­tal in 1992. The banker had had a heart at­tack af­ter los­ing $2.8 mil­lion in a cheque fraud. “I will never for­get the ter­ror that was vis­ited all over his face. He had been an ebul­lient man with a great sense of hu­mour and self-con­fi­dence. But what was left was a crushed soul.”

ART FERDIG’S FRAUD had al­ready claimed its first fa­tal­ity – an in­vestor from Maine had been wiped out fi­nan­cially and com­mit­ted sui­cide. But, a year into the in­ves­ti­ga­tion, Ken­ney was tight­en­ing his net. He flew in foren­sic IT spe­cial­ists to crack the server of one of Ferdig’s shell com­pa­nies – set up with no func­tion other than to laun­der in­vestors’ money – and re­cover deleted emails. Ken­ney dis­cov­ered that Ferdig had spent mil­lions on homes, boats and trav­el­ling by pri­vate jet. Much of it was paid for with no-name credit cards, iden­ti­fied by num­ber only, linked to se­cret offshore bank ac­counts.

Ferdig had also lef t be­hind a com­pli­cated trail of women, in­clud­ing a Do­mini­can girl he’d mar­ried when she was just 18 and he was 61, put t ing her in an apart­ment pur­chased with his ill-got­ten gains – another laun­der­ing op­por­tu­nity.

Still, Ferdig man­aged to con­vince the FBI that his trader em­ployee Su­san Lok was largely to blame for the fraud and she was im­pris­oned for ten years in 2006. Ferdig was even­tu­ally ar­rested in Cal­i­for­nia – where he was giv­ing talks on an­gels to lo­cal groups – and was jailed for 18 months for tax eva­sion in 2008. But by now it was clear that the 327 or­di­nary in­vestors taken in by Ferdig’s for­eign-cur­rency Ponzi scheme had lost their money when new in­vestors’ cash ran out. “He should have got 30 or 40 years,” says Ken­ney.

He con­tin­ued to pur­sue the fraud­ster through the civil courts and by March 2013 he had seized back some $7 mil­lion for Ferdig’s vic­tims. Since Ferdig died in 2014, Ken­ney has been pur­su­ing land owned by Ferdig in Ja­maica.

There is real sat­is­fac­tion among the in­vestors, says Chau­vet, that with Ken­ney’s help they haven’t let Ferdig get away with his dev­as­tat­ing dis­hon­esty.

“It means I’m no longer a help­less

KEN­NEY ALSO USES SUR­VEIL­LANCE AND

ST­ING OP­ER­A­TIONS TO FIND WHERE A CON­MAN IS CHAN­NELLING HIS CASH

vic­tim,” says Ted Land­kam­mer.

DE­SCRIBED BY Cana­dian Lawy e r mag­a­zine as hav­ing a “Robin Hood rep­u­ta­tion”, Ken­ney is one of the world’s lead­ing fraud hunters, able to track down the con­men and as­sets that have eluded po­lice or govern­ment agen­cies. Work­ing on ev­ery­thing from head­line­grab­bing cases such as Bernie Mad­off (who stole US$ 18 bil­lion from wealthy in­vestors) to in­ves­ti­ga­tions into cor­rupt in­sur­ers and Rus­sian crime lords, Ken­ney em­ploys a multi­na­tional staff of 27 in­clud­ing mul­ti­juris­dic­tional lawyers like him­self, foren­sic ac­coun­tants and hand­writ­ing ex­perts.

Ken­ney usu­ally op­er­ates by be­com­ing the le­gal coun­sel of a re­ceiver or liq­uida­tor of a con­man’s “failed” com­pany. This gives him pow­ers to pur­sue as­sets in other coun­tries and call on com­plex anti-fraud leg­is­la­tion, such as the An­ton Piller or­der (which al­lows his team to en­ter and search premises and seize

ev­i­dence) or the Nor­wich Phar­ma­cal or­der (grant­ing ac­cess to doc­u­ments and in­for­ma­tion held by third par­ties, in­clud­ing banks). Ken­ney also uses a va­ri­ety of sur­veil­lance and st­ing op­er­a­tions to build up a pic­ture of where a con­man is chan­nelling his cash.

He also calls on a lead­ing ex­pert on the psy­chol­ogy of busi­ness fraud, Alexan­der Stein, founder of Do­lus Counter-Fraud Ad­vi­sors, to help him work out how a con artist’s mind works, the sort of peo­ple he’s likely to rely on and what his weak points might be. “Fraud­sters are very adept in psy­cho­log­i­cal ma­nip­u­la­tion,” says Stein. “So fraud re­cov­ery is psy­cho­log­i­cal war­fare.”

Ul­ti­mately, when Ken­ney’s team has lo­cated a crim­i­nal’s as­sets, they freeze them via civil courts. They are then liq­ui­dated and the pro­ceeds given to the vic­tims – with Ken­ney’s firm tak­ing a cut for fees.

One of Ken­ney’s more chal­leng­ing cases in­volved Cana­dian James Blair Down, who conned hun­dreds of Amer­i­can pen­sion­ers in a $240 mil­lion tele­mar­ket­ing lot­tery scam. One old lady suf­fer­ing from de­men­tia be­came so con­vinced she had won that she in­vited lo­cal me­dia to her house and laid on a big party to cel­e­brate. Of course, she never re­ceived a penny.

Blair Down was found guilty of con­spir­acy to de­fraud in 1999, yet was jailed for just six months be­cause he pleaded guilty and paid $12 mil­lion resti­tu­tion. But at the re­quest of the FBI, Ken­ney traced much of his laun­dered money – some of it had made it as far as a forestry project in Pa­pua New Guinea – and in a syn­chro­nised se­ries of raids on Down’s busi­nesses ev­ery­where from the Caribbean to the Chan­nel Is­lands, Ken­ney was able to freeze $150 mil­lion in as­sets.

Ken­ney was then dou­ble-crossed by the case’s class- ac­tion lawyers, Ness Mot­ley, who agreed to re­turn the cash to Down for a promised $4 mil­lion cut. It looked as if the vic­tims and Ken­ney would be se­ri­ously out of pocket – push­ing his com­pany, which had spent five years on the case, to the point of bank­ruptcy. But in 2003 Ken­ney had the last laugh, su­ing Ness Mot­ley for $ 36 mil­lion, the largest pay­out of its kind in US le­gal his­tory, al­low­ing him to re­turn a large chunk of the pen­sion­ers’ money.

MARTIN KEN­NEY has a suc­cess rate that, for the in­dus­try he’s in, is as­tound­ing: in two-thirds of cases, as­sets are re­trieved. Con­se­quently, fraud­sters fear and loathe him. One con­man, forced to the point of bank­ruptcy by Ken­ney, “frothed and used

MARTIN KEN­NEY HAS A SUC­CESS RATE THAT IS AS­TOUND­ING: IN TWO THIRDS OF CASES, AS­SETS ARE RE­TRIEVED

many un­kind ex­ple­tives”, when they met, Ken­ney re­calls. “He ex­plained that he had lain awake at night, ev­ery night, think­ing of ways to kill me!” In Sao Paulo, Brazil, while tak­ing on an or­gan­ised crim­i­nal gang, Ken­ney and his team were pro­tected by armed guards around the clock.

“Martin was ac­cused of be­ing an in­ter­na­tional eco­nomic ter­ror­ist ‘who prac­tises ex­tor­tion by court or­der’ by the lawyers of one fraud­ster,” laughs Dan Wise, Martin Ken­ney & Co’s head of lit­i­ga­tion. “Peo­ple make very se­ri­ous al­le­ga­tions and put the firm to a lot of ex­pense to de­fend it­self. It’s part of their strat­egy to try to frighten us off.”

“It be­comes per­sonal when you get the guy by the wal­let,” says Ken­ney. “But it just washes over me. It doesn’t stick.”

Yet those on the right side of the law take a very dif­fer­ent view of Ken­ney. Fraud vic­tim Mark Se­crist says Ken­ney’s team con­tains “some of the most re­mark­able men and women you could find on the planet.” Psy­cho­an­a­lyst Alexan­der Stein calls him “bril­liant, a trail­blazer”. In June 2014, Martin Ken­ney re­ceived the Cressey Award, the high­est hon­our for a life­time achieve­ment in the com­bat against fraud from the As­so­ci­a­tion of Cer­ti­fied Fraud Ex­am­in­ers.

At present, Ken­ney is deal­ing with, among other things, 14 mas­sive Brazil­ian fraud cases – to­talling more than $12 bil­lion in stolen as­sets. He’s also work­ing on be­half of 22,000 vic­tims of jailed Texas banker and cricket mogul Allen Stan­ford who op­er­ated the sec­ond-largest re­ported Ponzi scheme in world fi­nan­cial his­tory. Stan­ford’s scheme took in as much as $8 bil­lion. He was or­dered to re­pay $6.7 bil­lion. So far, only $72 mil­lion has been re­paid while mil­lions re­main frozen in as­sets.

“I spend up to half the year away on cases and con­fer­ences,” says the di­vorced fa­ther of two, rub­bing tired eyes. “My sec­ond home is a seat on Amer­i­can Air­lines.” As he heads off for yet another pan-global in­ves­ti­ga­tion, yet another air­port, there seems lit­tle stop­ping the man known to many as “the fraud buster”.

Ken­ney makes no apol­ogy for his un­com­pro­mis­ing

stance on fi­nan­cial crime and cor­rup­tion

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