By Francisco Alvarado
By Trevor Bach
By Chris Joseph
By Michael E. Miller
By Allie Conti
By Keegan Hamilton and Francisco Alvarado
By Jake Rossen
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Ruth and a business associate named Ronald Hogan contacted L'Hoir and met him at the Canadian's $470,000 house in the upscale Coral Ridge subdivision of Fort Lauderdale. The deal they presented to L'Hoir was simple: Ruth and Hogan would align Payday Today with about 20 independent sales offices -- or telemarketing boiler rooms -- that would raise the money he needed. Here's how the return would break down, according to L'Hoir: Ruth and Hogan would split 15 percent of the investors' cash, while L'Hoir's business would receive 60 percent. The remaining 25 percent or so would go to those who worked in the boiler rooms.
The investors in Payday Today -- which also had a first-rate Website -- were never told that at least 40 percent of their money would be taken off the top for Ruth and his boiler rooms. Instead telemarketers told speculators only that they would make an astronomical 4 percent a month return on their money. L'Hoir and the salespeople also told investors that Payday Today was aligned with numerous existing check-cashing stores. It wasn't.
This bogus sales cocktail proved intoxicating to investors around the country. Telemarketing offices began pitching Payday Today in earnest this past February. By April an incredible $10 million had been raised. L'Hoir says 500 investors chipped in, including comedian Howie Mandel (who invested $10,000).
L'Hoir used his millions to pay off investors' interest in what the FBI alleges was nothing more than a Ponzi scheme. L'Hoir also lavished $1 million on himself, according to FBI reports. He disputes that figure but admits he bought a $150,000 cruiser-style boat and a $50,000 Porsche Boxster as a "wedding gift" for his fiancée and paid himself a salary of about $20,000 a month. "None of that is outrageous," he says of his expenditures. "We were pulling a million dollars a week."
L'Hoir says he was negotiating with check-cashing companies to make Payday Today a reality. The false claims that Payday Today contracted with existing cash-checking stores was a result of the business using "old stationery," he says. "It was a changing creature."
He claims the real scam was committed by Ruth. "Mel was ripping people off right away," L'Hoir says. "He was keeping money that wasn't his. So I stopped paying Mel."
According to court records, Ruth went to the FBI on March 20, and the Payday Today case was assigned to Rick Kiper, an agent on the boiler-room task force. L'Hoir asserts that Ruth went to the feds only to exact revenge. Ruth told Kiper that he initially believed Payday Today was a "legitimate operation" and that he received 2.5 percent of the proceeds, making a total of $100,000, according to FBI court filings. L'Hoir insists that Ruth was paid 7.5 percent and had made about $200,000 before their falling out. (L'Hoir also says Hogan, who wasn't indicted but was named in court records as Ruth's associate, made about $600,000. New Times' attempts to reach Hogan were unsuccessful.)
On April 4 the FBI wired Ruth with a recording device and sent him to L'Hoir's office. According to a partial transcript of the ensuing conversation, L'Hoir told Ruth, "Between you and me, if we ever get shut down, you know who's going to get hurt? Not me.... I'm so protected it's ridiculous.... Guys like you and me, no one can touch us."
L'Hoir told Ruth that he could "run" and that he'd already moved some of the business proceeds out of the country. "I got everything fuckin' covered," he said on the tape. If the authorities shut down his business, L'Hoir said, he would take "an early retirement.... I can change my name in Canada, and I come back as a new name.... No one can trace me.... At the end of the day I know the game."
The FBI, armed with the recording, raided L'Hoir's office in May and indicted him on charges of fraud and money laundering. Nearly $6 million was frozen in bank accounts held by Payday Today and L'Hoir. This money, if L'Hoir is convicted, may be divvied among investors.
Today L'Hoir is under house arrest awaiting trial. He concedes the FBI tape sounds incriminating but insists he was only "bullshitting" with Ruth. "I was drinking, and I was infuriated because Mel was threatening to shut my company down to get all investors to call in their notes," he explains. "Mel Ruth ruined my life. There's one thing better than money, and that is freedom. Mel was getting his sentence reduced."
While L'Hoir may or may not be guilty, there's little doubt Ruth made the scam possible. "Ruth set it all up," says L'Hoir's lawyer, Yale Galanter, who has defended numerous boiler-room operators and is now representing O.J. Simpson. "Mel Ruth is the bad guy here. None of this would have happened without him. He lied to the FBI."
Ruth saved his greatest lie for last. New Times has learned that, even while Ruth was cooperating with the FBI on the Payday Today case, he was setting up a veritable clone of L'Hoir's company called Cash Today. He again used boiler rooms to collect investors' money, which again poured in. Kirk Volker, another attorney defending Ruth, says his client raised $2 million in the venture, but he insists it was a lawful enterprise. "There is a huge difference between what Mr. L'Hoir did and what Mr. Ruth did," the lawyer says. "It's our position that money that was taken in [from] investors was used to a very large degree for what Mr. Ruth and the company said it was used for. We certainly contend that Mr. Ruth had no intent to commit fraud."