Grift and Run

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

The FBI didn't see it that way. While it's unclear how agents found out about Cash Today, Judge Ferguson revoked Ruth's bond on June 29, and a bench warrant for his arrest was issued July 16. Predictably Ruth couldn't be found. Volker says Ruth never intended to run. "He just needed time to get information to prove that what he was doing was legitimate," his attorney claims.

Ruth didn't get enough time. In late July -- the exact date hasn't been released by authorities -- U.S. Marshals caught him at a Holiday Inn in Hollywood. Ruth's two Cash Today bank accounts, which Volker will only say contained more than $100,000, were frozen. "The U.S. Attorney's Office and the FBI felt that he may have been engaging in wrongdoing," Volker explains. "There is now an investigation, and we are waiting for the outcome."

L'Hoir's attorney, Galanter, says it's a simple case of the FBI trusting a crook. Ruth is the chief witness against Galanter's client, and the lawyer says he plans to use the Cash Today debacle -- along with Ruth's felonious past -- to help sway a jury to acquit L'Hoir.

Ruth almost pulled off the ultimate con: He's accused of ripping off millions of dollars while working for the FBI
Ruth almost pulled off the ultimate con: He's accused of ripping off millions of dollars while working for the FBI

"The rattlesnake jumped up and bit them on the ass on this one," Galanter declares, adding that Ruth is a long-time "granddaddy" of boiler-room scams in South Florida. "The FBI just didn't know who they were dealing with. It just so happens that Mel is absolute scum, and he ended up screwing the FBI. I blame the FBI just as much as I do Ruth."

Special Agent Judy Orihuela, the FBI spokeswoman in Miami, doesn't deny that Ruth went out of control after the Bureau sprang him. She concedes that Ruth set up the boiler-room operation for Payday Today and that he started a new scam with Cash Today. She also confirms that Ruth is under investigation and might be hit with new criminal charges.

But she also points out that Ruth led agents to L'Hoir and helped make the case against him. "What Ruth did doesn't negate what L'Hoir did," she asserts. "L'Hoir was really behind Payday Today."

As for Ruth's transgressions, Orihuela says using criminals in investigating other cases is a necessary evil. She says informants swear to be truthful but often aren't. "It would be nice to have confidential informants who were all good, upstanding citizens," she says. "We don't have them under 24-hour surveillance. We don't have them locked up. What could we have done in this case? I don't know. It's a Catch-22: You're damned if you do, damned if you don't. It's just something you have to deal with."

Galanter says the real problem is that the FBI has a culture in which agents expect criminals like Ruth to do their work for them. And they fail to keep a close watch on their informants. "It's laziness," he avers.

Investigator Crespo says he's seen many convicted swindlers get what he calls "free passes" from the FBI. Too often, he says, they betray the government's trust. "Here's a guy that should be serving his time for what he's done, and he gets a free pass," Crespo says of Ruth. "You're never going to change these people. They aren't going to rehabilitate from one day to the other. They just can't change. And while Ruth's out, he went from nickels and dimes to huge amounts of money. That's really what is sad about this."

And with every scam, victims are left hurt, embittered, and usually helpless to get their money back. Like Martha Powers.

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