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Archive for Thursday, August 31, 2000

Small-town players, big-time swindle

Illinois-based scam bilked investors out of at least $12.5 million

August 31, 2000

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— Something funny was going on in the small town of Mattoon.

Bankers started getting millions of dollars in deposits from local folks who held modest jobs. A retired electrician began driving a Lincoln, vacationing overseas and leaving $5 tips for $2 coffees. A contractor bought fancy offices and a fleet of 41 new trucks practically overnight.

"We all know each other here," Mayor Wanda Ferguson said. "You have someone who doesn't have much money and then all the sudden they have lots of it, you're going to notice."

According to prosecutors, those suspicions were well-founded.

A federal indictment unsealed this week charged 11 Mattoon residents and eight others in a crude but wildly profitable scam that bilked at least 10,000 people around the globe out of at least $12.5 million.

The key players in Omega Trust and Trading, authorities said, are longtime Mattoon residents known by almost everyone in this farming and industrial community of 19,000. Among the 19 are business owners, a minister, a former city policeman and a former sheriff's officer.

Defense attorneys said those charged are innocent victims of a big misunderstanding.

"I think we're all going to find that each and every one of these people are successful business persons who enjoyed good reputations in the community," said Bill Tapella, a lawyer for four of the 19. "They'll just have to let the system work."

In taverns, restaurants and shops all over Mattoon, people chatted about the bizarre -- but not totally unexpected -- news.

"I just didn't think that our hometown people would succumb to temptations to this extent. It broke my heart," said Joyce Haddock-Kolbus, 68, a farmer who has lived here all her life.

The temptation of Omega, for the alleged swindlers and the swindled, was big money -- fast.

The indictment alleges Omega sellers, starting in 1994, persuaded customers to lend them money to invest in offshore banks. Investors could get in for as little as $100 and, for that amount, were promised $5,100 in just nine months. Put in $5,000, and they were promised a $225,000 payout.

Investors never got paid.

Clyde Hood, the 66-year old retired electrician who authorities say orchestrated the scam with his wife, kept customers at bay with elaborate excuses about delays caused by bankers and pesky government officials.

Mattoon police started getting tips from residents, and various government agencies received a wave of consumer complaints. Investigators also got tips from people who worked for Omega or invested in it, but they won't say exactly what it was that set off the investigation, which eventually grew to include the FBI, the IRS and the Postal Service.

"There were some obvious telltale signs, things that just didn't fit," Mattoon Police Chief David O'Dell said.

Chris Engel's construction company grew into a behemoth with a shiny fleet of late-model trucks and new brick offices. Former Mattoon police officer Bryan Boes opened a chain of sandwich shops. Corrections officer James Turner allegedly delivered $120,920 in $20 bills to Florida as final payment for a prefab building that became the Blue Bird Diner in Mattoon.

Investigators said they traced $12.5 million to Omega participants in Illinois, Missouri, Oklahoma and California.

Authorities promise more arrests, but the mayor said she has been told the main players are shut down.

"You don't like to see things happen like this in your community," Ferguson said. "But you're glad to see all the rotten little apples caught."

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