The Pro Con Man

For a decade, Stephen C. Peterson has been the Energizer bunny of white-collar scamsters. And he's still going and going...

Melchizedek's only "export" was paper--the lifeblood of any white-collar scammer. For up to $10,000, Vinedresser/Pedley would provide all the paper one needed--meaningless charters, phony bank statements, audits, securities.

By August 1990, Peterson was a new boy on the block in Phoenix, and thanks to the Dominion, he could show "evidence" of his enterprises.

One document stated, "The Dominion of Melchizedek hereby commissions [Peterson's] American Security Corporation to build airports on the Island of Malpelo, andgovernment facilities on any territory of our Dominion in exchange for $20million [plus 20 percent profit] in a face-value Treasury certificate as attached hereto."

Peterson had no intention of building anything on the uninhabited island. But the document added to the other phony paperwork he was amassing.

According to those documents, American Security Corporation showed total assets of $41 million as of September 30, 1990, including about $20 million in "government securities" from Costa Rica and Colombia. It claimed a net income of $918,000 for the first nine months of that year.

Peterson's personal financial statement at the time put his net worth at $18 million, most of it in Keebee stock. Actually, that stock was almost worthless.

It's unknown how much money Peterson had in reserve when he started revving up in the summer of 1990, but it certainly was closer to $18 than $18 million. By all accounts, he and Mary lived frugally, with few of the trappings white-collar crooks assume.

In the second half of 1990, Peterson tried to sink his talons into every opportunity that came his way. He never paid down payments. Instead, he'd sign promissory notes supposedly secured by the Keebee stock. He'd claim that Keebee's prime asset was about 250 tons of gold concentrate--held in the form of magnetite--on property in New Mexico. While the magnetite does exist, New Mexico officials say it contains nothing of value and, in any case, Peterson didn't own any of it.

Once the magnetite was processed, Peterson would explain, Keebee would net around $8,000 a ton. The company was on the verge of getting on the NASDAQ exchange, he claimed, which guaranteed its value would skyrocket.

In July 1990, Peterson and company--a few members of the Jehovah's Witnesses, his wife and an ever-changing assortment of business associates--moved into the top three floors at the Pinnacle West building at 2828 North Central.

Peterson capitalized on Phoenix's glut of unoccupied office space: His American Security Corporation signed a ten-year lease with Pinnacle West, and got three months' free rent. He rented furniture to decorate the digs--again, with no down payment.

The Jehovah's Witnesses provided an odd twist. No evidence has linked any of them to Peterson's criminal schemes. They apparently performed odd jobs, including chauffeuring Peterson--who doesn't drive--around town.

They seem to have been swayed by Mary Peterson.
"Mary's role in all this is hard to figure," says a California man who claims to have lost $100,000 to Peterson. "She's sweet and nice and religious, and she doesn't seem like the criminal type. Maybe that's her game."

Stephen Peterson told the Jehovah's Witnesses that he would build them a church when his ship came in--literally, as it turned out.

Peterson "purchased" three motels in the second half of 1990, two in Phoenix and the other in Texas. Each was in financial straits. He paid nothing to get title to them.

Peterson had neither the money nor the desire to rejuvenate the properties. He apparently wanted some legitimate, if exaggerated, assets to add to his financial statement, something tangible he could show the unsuspecting.

For a cash infusion, he'd strip the motels clean, selling vending machines, furniture, whatever, to the highest bidder.

Two of the motels never reopened. The third, an Econo Lodge near Sky Harbor International Airport, had a wing of rooms dubbed the "Presidential Suites." Inside each room was a framed portrait of a U.S. president, Washington through Kennedy.

Peterson snatched the paintings for his North Central offices, then closed the Econo Lodge.

Around this time, Peterson somehow ran afoul of the Dominion of Melchizedek. In November 1990, he got a letter from Ben David, the pseudosovereignty's secretary of state. (The letter, by the way, had a Washington, D.C., postmark, not a water mark from the island of Malpelo.)

"Dear King Peterson," it started, "we have temporarily suspended any appointments made by us concerning your ambassadorship and other positions in our Dominion. ... You need to be specially observant of King Jesus' Golden Rule at this time of internal and external persecution."

The letter was signed, "Authoritatively, Ben David."
To get booted out of an empire, even a fake one, takes some doing. It's uncertain what Peterson did to outrage the rulers of Melchizedek. But he continued to flaunt his nonexistent Melchizedek assets to potential investors until police arrested him the following year.

In late 1990, Steve Peterson found something to drool over: It was called The Capriccio, and it was worth more than $1million.

These days, Geri and Bill Buell are happily landlocked in Sun City West, where the closest body of water is Lake Pleasant. The retirees returned to Arizona a few years ago from the state of Washington, where they'd migrated in the mid-1980s.

Both are genteel people who are still loath to discuss the painful memories that the name Stephen C. Peterson evokes.

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