The whole lousy deal started for Milt Heinemann, as it does so often in Arizona, on a golf course. In 1990, a friend introduced the retired engineer to an affable fellow duffer from Minnesota named Bob Pomerenke.

During their round, the name of Pomerenke's son John came up. John Pomerenke was said to be a wizard at playing the stock market. The young man had made millions for himself and those for whom he invested.

Bob Pomerenke and Milt Heinemann became regular golf buddies. Pomerenke told Heinemann he and his wife Lois had turned over their life savings to their boy to invest. The investments were earning about 5 percent per month, Pomerenke said, a remarkable profit.

A grandfather in his mid-70s, Heinemann says he was aware of the adage, "When it sounds like it's too good to be true, it probably is." But he wanted to hear more.

Soon, Heinemann met the 23-year-old John Pomerenke for the first time.
"The word 'con' did not come to mind," Heinemann says. "He's faceless, no personality to speak of. He wasn't a fast talker, which was a plus. I thought I was dealing with a computer nerd."
Heinemann was more impressed with the youth's luxurious Mesa home, his fleet of fancy cars and his spectacular swimming pool, replete with a waterfall and state-of-the-art lighting system.

The plaques and photographs on the walls of Pomerenke's penthouse office suite provided testament to his connections. One prominently displayed photograph showed Pomerenke shaking hands with then-Vice President Dan Quayle.

Heinemann took comfort that Pomerenke seemed to be a God-fearing, tithing young man whose personal life revolved around church--he had opened a Christian bookstore for his mother--his family and his knack for making money.

"I asked him, 'How do I know about your fiscal performance?'" Heinemann says. "He pulled out a file with all these positive numbers on it."
The documents bolstered Pomerenke's claim that he was a master at stock trading, an art form that takes wisdom, guts and luck.

Pomerenke's prospectus showed in words and graphs that he had never had a losing month since he'd started investing in 1987. The brochure claimed Pomerenke's accounts were insured by a New York City firm that in turn was insured by the famed Lloyd's of London.

Heinemann invested more than $100,000 with John Pomerenke, a hefty chunk of his life savings.

All appeared fine for more than a year after Milt Heinemann cast his financial fate with Pomerenke. Like clockwork, Pomerenke mailed Heinemann a computer print-out that indicated, as promised, his investments were earning about 5 percent each month.

Pomerenke's "management fee" of 10 percent of the net monthly earnings seemed fair compensation for the fabulous job he was doing. Heinemann says he figured to double his original investment before long if everything stayed on track.

But there was something neither Milt Heinemann nor any of Pomerenke's other 200 investors knew about John Pomerenke: Pomerenke hadn't been investing their money. Instead, he was running a scam that would ruin hundreds of residents, most of them elderly Christian folks residing in the East Valley.

In the summer of 1991, Heinemann and most of the others learned John Pomerenke was a thief.

Records indicate John Pomerenke collected more than $8 million from investors before the state Attorney General's Office shut down his business in October 1991. He had actually invested less than $1 million of that sum on behalf of his clients. Before he was caught, Pomerenke spent about $5 million of other people's money on homes, property, first-class vacations and cars--many, many cars--for himself, family members and friends. And that insurance protection Pomerenke had promised Milt Heinemann and the others? It never existed.

What Pomerenke had pulled off is known as a Ponzi scheme, named in tribute to Charles Ponzi, who was nabbed for perpetrating it on investors in the early 1920s.

A Ponzi works like this:
A financial adviser collects money from a client, ostensibly to invest. The adviser issues checks to the client from the interest the investment is said to be earning. To avert suspicion, the adviser covers the check with a small piece of the client's original investment, or with money collected from new suckers. There are no earnings because the adviser has stolen the money instead of investing it.

A la Ponzi, Pomerenke returned about $3 million to investors as his scam ran its course. He and state prosecutors say nothing is left for restitution, though most of his investor-victims don't believe that for a second. They remain convinced he stashed away bundles in the Cayman Islands, whose banks have become as renowned for their secrecy as those in Switzerland.

But others continue to believe in John Pomerenke, saying he would have made back the money he "lost" if authorities and skittish investors hadn't hounded him.

Pomerenke himself seems candid about his crimes. "It was like taking candy from a baby," says the Camelback High School dropout whose best job before becoming a self-proclaimed financial wizard was as front-desk manager of a Mesa motel. "I was the biggest liar around, but everyone thought I was such a wheeler-dealer."

@body:"He doesn't walk into a room and overwhelm it like so many white-collar cons do," says assistant attorney general Sherry Stephens, who calls John Pomerenke the most unusual con artist she's come upon in her 12 years on the job. "When you meet him, he's not dynamic. He speaks ungrammatically. You ask yourself, 'How in the world could he have pulled this off?' But you don't get a good answer."

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