Fraud suspect kills self

Bob Shemeligian

Friday, March 20, 1998 | 1:40 a.m.

A former Nevada Gaming Control Board accountant has pleaded guilty to conspiracy charges for defrauding investors of $35 million in a complex securities scam.

A second suspect, James D. Greenbaum, 46, Las Vegas, was expected to plead guilty but was found dead at the Fiesta hotel-casino Thursday afternoon. Sources said they understood it was a suicide. An autopsy was scheduled today by the Clark County Coroner's Office to determine the cause of death.

North Las Vegas Police Sgt. Michael Judd said a hotel employee found Greenbaum's body in a hotel room, and then called 911.

"At this time we're treating it as a suicide," Judd said. "We didn't see any outward signs of trauma. It could be an overdose."

A court clerk said Greenbaum had been scheduled to appear Thursday morning before federal Judge Howard McKibben. This was confirmed by Howard Zlatnick, first assistant federal prosecutor.

"He (Greenbaum) was scheduled to appear in court yesterday," Zlatnick said. "That was in the public record. He didn't show up, and he was found later by North Las Vegas Police."

Meanwhile, Jeffrey Jolcover of Las Vegas, who worked for the state from 1977 to 1979, faces a prison term of up to 25 years.

Standing next to his attorney in federal court Thursday morning, Joseph Cronin of Reno, Jolcover pleaded guilty to charges of conspiracy to commit securities, mail and wire fraud, and money laundering in connection with the sales of securities to the public in wireless television systems.

Through the scam, referred to by an investigator as "robbery on the information super-highway," Greenbaum and Jolcover allegedly defrauded more than 3,200 investors across the nation, according to a criminal complaint filed in U.S. District Court.

In addition, the complaint refers to the involvement of a lawyer for companies controlled by Jolcover. In a related Atlanta wireless-cable fraud case, settled in 1985, a Securities and Exchange Commission filing in federal court there identified that lawyer as John A. Field III, who served as U.S. attorney for the Southern District of West Virginia in the early 1970s. Field has not been charged. The Atlanta filing also identified Greenbaum as a partner of Jolcover in the alleged telemarketing fraud.

Through the use of a nationwide network of telemarketing rooms, Jolcover and Greenbaum marketed securities -- interests in wireless television systems in Texas, Nebraska, Alabama and Wisconsin -- to the public, according the complaint in federal court.

Investigators contend that telemarketers throughout the nation, working under the direction of the defendants, utilized infomercials to identify susceptible investors, especially people with Individual Retirement Accounts.

Through a complex securities scheme involving "a maze of interlocking corporate shells," investors were falsely led to believe that they could expect a high rate of return, based on projections that Jolcover and Greenbaum knew were false, an investigator said.

Jolcover and Greenbaum purchased the wireless television systems, and then created corporate shells to acquire the "assets" to create the appearance of profitability, according to the complaint. For example: they purchased a wireless cable television system in Madison, Wisc., for $750,000 and then created Midas Media of Madison, Inc., a Nevada corporation that purchased the cable system for $4 million.

Jolcover and Greenbaum raised $16.7 million in securities sales to investors willing to bet that the Madison wireless cable television system offered a heavy return. But the reality was that none of the wireless cable television systems were profitable, according to the complaint.

Will the investors -- many of whom are senior citizens who raided their IRA accounts after being targeted by the defendants -- ever get their money back?

"Sadly, they probably will receive pennies on the dollar," said a source close to the investigation, who explained the defendants diverted half the revenue from investors to telemarketers throughout the country.

"Many of them are transients who operated in boiler rooms," the source said. "They're in and out in a matter of weeks."

Additionally, Greenbaum was to have been charged in connection with his operation of American Microtel Inc., a Nevada corporation once headquartered at 2300 Paseo del Prado in Las Vegas that sold wireless cable application preparation services in 1991 and 1992.

American Microtel charged consumers between $4,000 and $5,000 for submitting applications on their behalf to the Federal Communications Commission, and that through a telemarketing sales force, the consumers were advised that they were highly likely to win a wireless cable license in an FCC lottery, and that Microtel would accommodate them in meeting FCC financial requirements through an independent company capable of providing necessary financial resources.

Not a single applicant who utilized Microtel's services was awarded a license, and the Federal Trade Commission sued Greenbaum in 1992, alleging he and others had engaged in fraudulent and deceptive practices in the sale of Microtel's services, according to court records.

Months later, Greenbaum settled the case and agreed to pay a fine, according to the court records. American Microtel shut down operations in June 1992, three months after the FTC appointed a receiver to control the company's assets pending the outcome of legal action, which the agreement resolved.

Investigators believe the scam to sell securities in the wireless television systems evolved from the Microtel operation.

SUN reporter Cathy Scott and the Wall Street Journal contributed to this story.