Grift and Run

The FBI doesn't want you to know about Mel Ruth

Inside the palatial Palm Beach County Courthouse on March 29, 2000, Melvin Donald Ruth pleaded for his freedom, trying to convince the judge he wouldn't run if he were let go. Ruth, who had been jailed on a probation violation stemming from a 1996 fraud conviction, had reason to feel some confidence. Most everyone who has ever met the tall and trim Ruth attests to what a smooth, almost magical salesman he is. But Ruth is much more than that; he's also a predatory swindler who, during the past decade, has been charged with numerous crimes in Broward and Palm Beach counties. And it was in courtrooms where Ruth practiced his greatest trick: making justice disappear.

In an amazing run of cons, the now-60-year-old Ruth slipped through the system's sometimes faultlike cracks, leaving behind a trail of angry, bitter victims. This time, however, the man who sometimes calls himself "M.D." was destined to lose. The two witnesses lined up against him were too convincing. A family man named Randy Odom told Judge Kenneth Marra that Ruth had bilked him out of thousands of dollars in a home-buying deal. "They kicked me out of my house because of him," an emotional Odom complained to Marra. "I had to leave one day with my son being sick.... I want to see [Ruth] put away so that nobody has to go through what I went through. My wife still cries over this man."

The other witness -- Federal Bureau of Investigation agent Steffan Nass -- was even more damaging to Ruth's hopes. While it's rather rare for federal officers to testify at state probation hearings, Nass was determined to keep Ruth behind bars. Nass is one of ten agents assigned to the Bureau's special telemarketing (or "boiler-room") unit, which also handles Internet fraud. He complained to Marra that Ruth was involved in the telemarketing scam du jour: luring investors into the foreign currency exchange market and stealing their money. Ruth also used two aliases and four social security numbers and ran several fraudulent companies listed under the name of straw owners, Nass testified. Further, he said, the suspect traveled "extensively" outside the country and had transferred significant amounts of cash to the Bahamas. "He is a risk of flight and a danger to the community," Nass declared to the judge.

That was enough for Marra, who promptly ordered Ruth back to jail. A few weeks later, on April 18, Nass charged Ruth with conspiracy to commit mail and wire fraud, alleging the suspect had swindled investors out of a cold $1 million. Facing an airtight case, Ruth pleaded guilty, and finally it seemed as if the con artist would be going away -- for as long as five years.

But in May of last year, Ruth proved he still had some magic left: He walked out of Miami's Federal Detention Center a free man. The FBI arranged for Ruth's release after he sold agents on his ability to infiltrate other boiler-room operations. Ruth was no longer a prison inmate; he'd become a "C.S.," a confidential source working for the most powerful law-enforcement agency in the world.

But Ruth was really thinking only of himself. He'd duped the FBI. Within a year after he was set free, Ruth helped orchestrate alleged scams that generated $12 million and left dozens of victims, New Times has learned. And he did it all under the FBI's nose. When agents finally realized what Ruth had done, he went on the lam. U.S. Marshals caught him in late July, and this time Ruth -- a man the federal government didn't want you to know about -- was kept behind bars. The damage, however, had already been done.


To understand the kind of pain Ruth has inflicted on people, consider the story of Martha Powers, a 63-year-old mother of two grown sons, who literally made angels for a living. While many of Ruth's countless victims were sucked into his scams by their own greed, the same can't be said for Powers: She was just trying to stay above the poverty line. After 20 years making and selling angel-shape jewelry (most pieces were crafted from pewter) in a little South Carolina town oddly called "96," she retired last year. But she worried about her sparse income; social security checks would pay her about $1000 a month, and she had a grand total of only $11,500 in savings. Because she needed extra income, she began exploring the stock market in 1999, when it was still soaring.

In the fall of that year, a salesman identifying himself as "Bob Barakis" called her out of the blue to entice her to invest in an Internet company. She resisted, but he kept contacting her. After a couple of months, Barakis told her he'd changed jobs and had begun working for an outfit called Barclays Management Company, which he claimed was associated with the London-based international investment-banking giant of the same name. Barakis told Powers that the Miami-based Barclays specialized in the foreign-currency market. Adding to the company's seeming legitimacy was its professional-looking Website and colorful "Welcome Packets," brochures that were sent to potential investors.

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