By Allie Conti
By Keegan Hamilton and Francisco Alvarado
By Jake Rossen
By Allie Conti
By Kyle Swenson
By Chris Joseph
By Michael E. Miller
By Frank Owen
"He called me and called me and had a very persuasive and kind voice, and I think he caught me at a moment when I was lonely or needed someone to talk to, because I listened to him," she recalls. "He said they were the best in the business. He said he could double my money in a month."
On November 16, 1999, she succumbed to the sales pitch and wired $5000 from her savings account to Barclays. Eight days later Barakis called with good news: Her money had already doubled. He persuaded her to send another $5000. A few weeks later, another telemarketer, this one calling himself "William Buhler," called and said he'd taken over her Barclays account, which he claimed had again substantially grown in value. On January 14, 2000, Buhler, whom Powers remembers as an exceptional salesman, talked her into investing another $8000 -- the remaining $1500 in her savings account plus another $6500 borrowed on her MasterCard.
A week later Buhler phoned with more sparkling news -- her total $18,000 investment was now worth $37,500. "Buhler assured me he knew what he was doing and that he'd helped literally thousands of people," she remembers. "He said he didn't have much time to waste talking to me, but I needed to send him more money. I said, "I'm getting scared.' And he said, "No, no, no, we're going to do you good; we're going to make you money.'
"I told him that was as good as it will get. I told him to just send me the $37,500 minus whatever commissions I owed."
Buhler hesitated, and then abruptly hung up the phone.
When Powers speaks of what happened next, her voice cracks; she still sounds shell-shocked. Troubled by Buhler's rudeness, she tried calling back. No one answered. She faxed a letter to Buhler, asking for her money. No response. The next day, she faxed another letter and called several more times. Nada. "They shut me out," she surmises.
Powers then contacted the FBI and was forwarded to Agent Nass in Miami's boiler-room unit. "I'm the one who turned the whole company in," she says. "And I talked to Mr. Nass almost every day until the arrest."
According to FBI reports filed at the federal courthouse in Fort Lauderdale, Nass began his investigation of Barclays on January 27, 2000 -- about the time Powers reported her complaint. It's no wonder the FBI jumped on the case; the Bureau has stepped up efforts to stop people like Ruth for good reason: U.S.-based telemarketing scams now total $40 billion a year. And South Florida, as an FBI spokeswoman puts it, is the boiler-room "capital of the world."
Nass quickly gained the cooperation of two Barclays employees, whose identities remain secret. The FBI agent, according to court filings, learned the company was run by Melvin Ruth and that "William Buhler" was, in fact, one of two phone names Ruth had used at Barclays. (The other was Wade Chandler.)
Nass discovered that Ruth had formed a new company called Chase Capital Management Group (borrowing another well-known, respected name in world finance) and was running telemarketing offices in both Miami and Fort Lauderdale. He was also starting an operation in Newport Beach, California. Most of the victims had answered ads Ruth had placed in major newspapers, including USA Today, which listed the phone number of one of the boiler rooms. Others investors (including Powers) apparently had been contacted from phone lists provided by Ruth.
Of the $1 million raised by Barclays/Chase, Ruth actually invested only $7500 in the foreign-exchange market, according to the FBI. All the rest, including Powers's entire $18,000, went to Ruth and his employees. (An alleged partner of Ruth's, Gregory Swarn, was never charged and couldn't be reached for comment.) On March 15 the FBI raided Ruth's offices and arrested him on a warrant for violating his probation. Two weeks later Nass testified before Marra, and on April 18, the FBI charged Ruth with mail and wire fraud.
Ruth's arrest went unnoticed by the media. (His name has never appeared in any South Florida newspaper.) The FBI didn't send out a press release, but it did inform Ruth's investors of the bad news. A federal-government retiree named Joseph Q. Whitley, of Tavares, Florida, lost the most money to Ruth's operation -- $70,000. "After I had given $30,000, they called and said it had gone way up, and I thought, I'm going to make this move, and I wired another $40,000 to them," says the 82-year-old Whitley. "There is no need to cry over spilt milk; I'm a fighter. This isn't virgin pain. I've been in the market for years. It's the biggest hit I ever took."
Powers, the angel maker, didn't take it so well; she felt as if she'd been taken in by the devil. She says $18,000 might not sound like much to some people, but it was all she had in the world -- and more. She had to sell some of her belongings to pay off the credit card. Powers says she has tried to contact Nass at the FBI to see if she might get any money back, but he doesn't take her calls anymore. "They're just like Ruth and that company: When they're done with you, they just shut you out," she remarks of the Bureau. "I lost everything I had. That's hard to take."