The Real Boiler Room

Hollywood's International Currency Management specialized in trading foreign currency -- and helping clients' money disappear

She sought help from other investment houses, other advisers. A contact referred her to ICM and Howard Needle who, she says, called the Chicago traders a scam. "[ICM] said, 'We will help you rebuild your account,'" she recalls. "Then they asked me to invest money with them, initially $6000. Soon after [that], they called me and said, 'Your money is really very vulnerable.' They said they would allow me to trade in blocks of one million yen if I put $50,000 in with them. Which I did."

Her experience mirrors Christensen's and those of a half-dozen other former ICM investors interviewed for this story. She began trading in June 1998, and at first thought she was doing fine, even pulled some money out of her account. A few months later, things began to go wrong. In the end ICM blamed the losses on the market.

Melrose would assure her that her trades were placed as she wanted them and that she could get out of the market quickly if necessary. But she discovered her orders weren't followed and she'd taken huge losses. When she asked Melrose to fax her statements, he told her the company wouldn't allow it. For a while Hadler and Melrose had been in almost constant contact, then she had trouble getting hold of anyone in the office at all. Hadler's voice rises as she recalls the growing realization that her life savings was in the hands of someone she increasingly distrusted. "I have people doing things to my account I know nothing about, and I am supposed to say that's OK?"

Robert "Brother Rob" Christensen says ICM "reminded you of a boiler-room operation"
Troy Maben
Robert "Brother Rob" Christensen says ICM "reminded you of a boiler-room operation"

In a last-ditch effort to recoup her losses, Hadler sent ICM another $65,000, the rest of her savings. Melrose set up trades for her and promised to watch them carefully. Days later he was nowhere to be found. Melrose had car trouble, then problems with his back, then was fired from ICM. His supervisor told him the company suspected he was using drugs and missing too much work. He believes the real reason is that he was becoming too much of an advocate for Hadler, taking her losses too seriously. "Joanne Hadler was starting to come down on them," he says. "I think they wanted to separate our cohesion."

Hadler was turned over to Mark Singer, the trader who purchased ICM from Needle and Kahn. He told her the market had gone badly against her, the account was overdrawn, and she would need to send another $21,000 just to cover her losses. He wasn't pleasant about it, either. "I had never talked to anybody who is the president of a company who acted like this guy," she recalls. "He acted like a gangster."

Hadler is a trusting sort who believes Melrose was sincerely trying to help her, even though his account management lost her a lot of money. She flew him to Wisconsin because he agreed to give her an informal videotaped deposition and because she was worried about him. "Max was destitute," she says. "Really a mess. I frankly brought him up here because I did want to talk to him and because I was concerned for him as an individual." On the tape Melrose and Hadler sit side by side on her plaid couch, talking straight into the camera while they recount the mismanagement and missteps that ultimately cost Hadler $120,000.

What's obvious from the tape is that many of the warning signs the CFTC points out in its 1998 consumer advisory were there in her interactions with ICM: an emphasis on leveraged Interbank trading, a prediction of large profits with minimal risk, and opportunities that sounded too good to be true. As the alert states, "Getting your money back once it is gone can be difficult or impossible."

Meanwhile the foreign exchange business chugs right along. A filing with the Florida Department of State indicates Needle and a former ICM trader named Arnold Zager formed a new company, FX Trading Group Inc., in early 1999. The company's business address is a lawyer's office in Coral Gables where their incorporation papers are kept.

Contact Bob Whitby at his e-mail address:

bob.whitby@newtimesbpb.com

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