Las Vegas is ripe for ATM swindles

Greg Tuttle

Monday, July 3, 2000 | 11:42 a.m.

Three years ago Esther Bader and her longtime friend and roommate, Irene Taub, thought they had found a safe way to make a little money by investing in automated teller machines.

Retired with a healthy portfolio and only each other to support financially, the Las Vegas women were keen on the idea when a trusted adviser described how they could make money by owning an ATM.

"We had heard on the television and on the news that the banks and ATMs had been deregulated and anyone could own an ATM," Bader recalled.

But the 70-year-old retired Army officer wasn't sold until a Las Vegas man showed her a printout of the money flowing through an ATM on the Strip. It was, she said, an impressive document.

"When you look at a Caesars Palace ATM read-out, it looks pretty good," she said.

Bader and Taub decided to invest, and two weeks before Christmas in 1997 they wrote a check for nearly $30,000.

It was the last time the women saw their money. And they are not alone.

Federal and state officials have recently uncovered several ATM scams in the Las Vegas area.

In early June three men connected to the ATM Store of Las Vegas were arrested and charged with defrauding three investors of more than $45,000. Phillip Gardner, Bernard Joseph Titony and Douglas Kent Bawden face felony charges of securities fraud, sale of an unregistered security and transacting business as an unlicensed broker-dealer and sales representative.

The three face an additional charge of committing a crime against a person 65 years or older, which could double their sentence if they are convicted.

Then last week federal authorities in Las Vegas issued an arrest warrant for 61-year-old Louis M. Vallette, who is alleged to have bilked would-be ATM investors out of $2 million. Vallette, who remains at large, operated a business in Nevada called ATM Services, according to federal prosecutors.

Two similar scams operating in the Las Vegas area are currently under investigation and could result in criminal charges, said Charles Moore, the Nevada securities administrator whose office investigates financial crime.

The recent crop of hucksters all appear to operate the same way, and Las Vegas is a ripe market for their hollow wares, Moore said.

"There have been quite a few (ATM scams) over the past four years, and it's not limited to Nevada," said Moore. "It's another scheme to convert your money into their money."

After realizing they were victims of a scam, Bader and Taub quickly demanded their money back. But Bader said the man who sold them on the investment, Douglas Kent Bawden, didn't return her phone calls or letters.

Bader, now 73, and her roommate, found an attorney and last year joined five others in a federal lawsuit against Bawden and his company, Moneylink.

The seven investors allege in the lawsuit they lost a total of $188,080. The lawsuit seeks $1.4 million in damages and punitive sanctions.

No criminal charges have been filed against Bawden in connection with Moneylink, but a review of the federal lawsuit and the indictment involving Bawden and the ATM Store of Las Vegas show striking similarities.

In both cases, investors were promised that if they purchased an ATM, the company would set up the machine in a prime location, service the machine regularly and forward profits to the owner.

Bader and Taub bought two ATMs for $27,320. Another Las Vegas woman, Anna E. Mendes, bought five ATMs from Moneylink at $73,300, according to the lawsuit.

In most cases, the machines were never delivered or set up anywhere. Sometimes investors did receive letters from the company describing the locations of their new ATMs, but usually the company simply disappeared.

Mendes "has never received acknowledgment of any kind as to the whereabouts of her ATM machines," according to the lawsuit.

In one case, a machine was set up inside a gentleman's club in Hawaii, according to the lawsuit. But when the investor, Robert Pool Jr., of Las Vegas, tried to contact the club, he discovered it had been closed.

Bawden, Gardner and Titony allegedly ran a similar scheme through the ATM Store of Las Vegas, according to the criminal complaint against them.

In one case, the three allegedly flew an elderly woman from Reno to Las Vegas, paying for the flight and one night at the New Frontier hotel-casino. The woman agreed to buy four ATMs and wrote a check for $12,000, a down payment on the total of $62,000.

The woman was later told her credit was no good, but the company would purchase one ATM for her at an additional cost of $3,500. She agreed, but later demanded all of her money back. She received a promissory note, but never any cash, according to court records.

Bader said she does not know whether she will see her money again, but she hopes others will avoid the trap set for her.

"It's just the idea of being taken to the cleaners," she said.