Thursday, Jan. 8, 2009 | 2 a.m.
The $50 billion investment scandal involving longtime Wall Street stalwart Bernard Madoff is getting plenty of play in the national media.
That’s only natural given that, on top of the enormous amount of money involved, Madoff also is accused of defrauding celebrities and some of this nation’s wealthiest people in an elaborate Ponzi scheme.
Closer to home, though, Southern Nevada is embroiled in a similar, but smaller, investment scandal that hasn’t gotten much publicity other than what has been reported in the Sun.
But this one, which involves about $50 million, is no less important to the people who lost that money, many of whom are average senior citizens.
At the center of this scandal is longtime Pahrump developer Hans Seibt, who ruined the golden years of several hundred investors when he filed for bankruptcy protection Sept. 25, as his real estate empire was collapsing around him.
Unlike Madoff, Seibt hasn’t been arrested by the FBI, but agents here are investigating Seibt’s financial dealings, while many of his creditors are pouring their hearts out in bankruptcy court, hoping to recover the nest eggs they believe were stolen from them.
Lawyers representing the creditors and Lenard Schwartzer, the bankruptcy trustee assigned to help recover Seibt’s assets, have suggested that his dealings also resembled a Ponzi scheme.
But there is another big difference between the Madoff and Seibt cases. Madoff has acknowledged defrauding his investors. Seibt hasn’t.
At a recent creditors meeting, Seibt appeared oblivious to the pain and stress he has caused those who once trusted him with their hard-earned cash. When I asked him afterward whether he wanted to comment on how he wound up in bankruptcy court, he chose to criticize my reporting rather than express any remorse or any sympathy for his creditors.
His cavalier attitude has enraged those creditors even more, as they face an uphill battle to get even a portion of their life savings back.
The creditors have an important ally in this fight — the FBI. With its criminal investigation, the long arm of the law has the ability to put more pressure on Seibt to come clean with his assets.
So far, it looks as though the FBI has been sensitive to the devastating effect of Seibt’s financial transgressions on his creditors.
About a month after Seibt filed for bankruptcy protection, the FBI sent letters to as many creditors as it could informing them that they have a number of rights as alleged victims during the investigation, including the right to restitution.
Restitution, however, doesn’t happen overnight. Sometimes, it can take years. Many of these creditors, however, are elderly and may not live long enough to recoup any of their money.
“We try as best we can to make sure victims are made whole,” U.S. Attorney Greg Brower says. “But it’s not an easy process.”
In most cases, even with government-obtained restitution, Brower says, the odds are slim that victims will get all of their money back.
“Chances are the money’s no longer there,” he says.
Neither Brower nor the FBI would comment on the Seibt investigation, but one option for the government is to pursue Seibt’s assets through forfeiture proceedings, a complicated process that usually isn’t completed until after the subject of a criminal probe is convicted and sentenced.
Forfeiture would put the vast power and resources of the government behind the effort to get the victims’ money back. But it could also further delay any restitution.
Even so, the FBI’s involvement may be Seibt’s creditors’ — or in some cases their estates’ — best shot at a full accounting of Seibt’s assets.
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