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The Spokesman-Review Newspaper
Spokane, Washington  Est. May 19, 1883

Crime flourishes in the Sunbelt

Froma Harrop Syndicated columnist

PALM BEACH, Fla. – Oh, it’s another sun-blessed, balmy day in Palm Beach County. Were it not for the foreclosures, collapse in tourism and Madoff scandal, all would seem perfect. Did I mention retailing? Dior on Worth Avenue vanished the day after Christmas. The Macy’s at the Palm Beach Mall closed several weeks later.

Some distress is of the national sort: drained stock portfolios, seized-up credit markets, fear itself. And any place so dependent on real estate and splurge spending would get harder hit.

But a financial crime wave targeting locals at every income level has added to these economic challenges. Shills, confidence men and assorted tricksters roam every region, but here they are an industry.

The headliner of the group, Bernard Madoff, famously cleaned out fellow members of the Palm Beach Country Club, as well as investors across the globe. (An estimated $50 billion is gone – somewhere.) In the more modest condo corridors spreading inland, meanwhile, a plague of annuity fraud snares elderly retirees.

On the political side, sexual misconduct has sent two of Palm Beach’s U.S. congressmen packing, one after the other. Republican Mark Foley e-mailed sexually explicit messages to underage male congressional pages.

Then Democrat Tim Mahoney engaged in serial extramarital romps and mistress payoffs.

In local government, corruption charges were recently slapped on County Commissioner Mary McCarty, a political fixture for 18 years. She is alleged to have funneled government-bond contracts to her husband’s underwriting firm.

Why here? Well, it’s partly a Sunbelt thing, according to former Minnesota Assistant Attorney General Prentiss Cox.

“The worst kinds of scams all come out of the Sunbelt,” Cox told me, noting that he himself is Mississippi-born and Louisiana-raised. An expert on predatory lending and telemarketing frauds, Cox now teaches at the University of Minnesota Law School.

State investigators list a handful of return addresses as hotbeds for financial misdeeds. There’s Orange County, Calif., epicenter for subprime-mortgage abuses. Plano, Texas, seems to specialize in direct-mail fraud. Las Vegas and Southern Florida offer the full range of swindles.

“People are presumably guilty if they’re operating out of Southern Florida,” Cox added, only half kidding.

Still, one asks why these particular places attract so many con artists. Cox surmises that it could have something to do with their rapid development. The populations of Orange County, Plano, Las Vegas and Palm Beach County have all exploded. Newcomer dupes get thrown together with newcomer cheats, who are long on charm and short on background. Clients don’t have much history on which to judge a financial adviser’s integrity.

There’s also a gold-rush mentality in fast-growing areas. All that easy real-estate bubble money for seemingly little work. Miami was home to a legendary binge of property speculation in the 1920s, and that too ended badly.

It’s otherwise hard to explain how many of these outlandish schemes caught on. Victims gave two Florida companies $30 million promising to make them rich selling iPods in South America. And in Texas, elderly investors put $45 million in a “hedge fund” that offered annual returns up to a fantastical 61 percent.

The cons can also be outrageous. Marcus Schrenker was a financial adviser from Indiana accused of perpetrating an annuity scam. He faked a plane-crash death near Milton, Fla. The Florida authorities later picked him up.

A certain unreality comes from spending winter in a place where the wind-chill factor is never a factor. While even much of the South shivers, South Floridians get away with short sleeves by day, light sweater at night. Perhaps the cheating-of-the gods quality in the weather convinces crooks that they can cheat everyone else. That’s one theory.

Time for a swim.

Froma Harrop is a columnist for the Providence Journal.