Original subtitles

This is a CNBC original.

In this episode of American Greed, a pharmaceutical giant is accused of

profits over patients.

Pfizer Pharmaceuticals goes beyond FDA limits and pushes a pain pill called

Bextra to the masses.

This was about putting bottom line above the patients' lives.

That's wrong.

The illegal marketing has already cost some the ultimate price.

And later in Southern California, Janetta Standifor convinces 600

their cash is rescuing homeowners from foreclosure.

It felt like everyone was going to win.

The would -be marketing mogul relies on friends, relatives, and investors' trust

and faith.

It appealed to their Christian nature to help someone.

And while they think they're helping neighbors stay in their homes, Janetta

helps herself to millions. She lined her own pockets with investor funds and

paid existing investors with new investor funds.

Pharmaceuticals. In the U .S. alone, Big Pharma is a $315 billion a year

business. For millions of patients, pharmaceuticals are something they

can't live without.

We like to believe that the pharmaceutical industry is there to

But oftentimes, especially when you look at the amount of money they're spending

in marketing, you realize it really is a matter of bringing in money as opposed

to helping out the welfare of patients.

In the early 90s, a new kind of wonder drug is in the works.

It's a type of pain reliever called a COX -2 inhibitor.

Under brand names like Vioxx, Celebrex, and Bextra, the drug is designed to help

millions suffering from pain.

Two of the titans of the pharmaceutical industry, Merck and Pfizer, realize that

there are billions to be made.

New pain pills are always welcome on the market and inevitably have a huge

uptake by the tens of millions of unhappy pain sufferers.

Pfizer, with more than $7 billion in sales, is among the world's top -selling

pharmaceutical companies.

But its spot at the top is precarious.

It's getting tough competition from cheaper generics. Its R &D pipeline is

running dry.

The new COX -2 inhibitors are the shot in the arm the company needs.

Pfizer makes a co -marketing deal with Pharmacia Upjohn, the developer of two

the new drugs, Bextra and Celebrex.

Gardner Harris of the New York Times has covered the pharmaceutical industry for

11 years.

He watches the new partnership and the new drugs closely.

The executives knew that their labs were dry, that their companies were about to

go off a very steep cliff.

And so they knew that there was a huge amount at stake in making sure

that Bextra and its sister compound, Celebrex, sold well.

Pharmacia pulls out all the stops to get the new drugs approved, funding studies

that claim Bextra's safety and efficacy.

But not all the studies are positive.

One of the experts contacted to analyze the drugs is Dr. Dennis Mangano.

one of the world's leading pharmaceutical researchers.

Pouring over patient data, Mangano says he soon discovers disturbing results,

especially in older, sicker patients.

What I found was, wait a second, you're getting twice the serious adverse

events, heart attacks, strokes, death, in the patients who got Bextra versus

the placebo.

I said, this is remarkable.

But Mangano makes the discovery too late.

Other reports claiming Bextra is safe are already in the hands of the FDA.

In November 2001, the FDA approves Bextra in small doses to treat certain

of arthritis and severe menstrual pain.

It's not the green light Pfizer and Pharmacia are hoping for.

They want the big market an acute pain reliever can attract.

Dr. Mangano sees a red flag go up.

They're going to give it to patients who we don't know whether or not it's safe

because you're going to double to triple to quadruple the revenue by taking the

population in whom it was tested and expanding it.

The difference translates into millions of new Bextra users and billions of

dollars in sales potential.

But those plans are about to be dashed.

Dennis Mangano publishes his own findings on Bextra's safety and brings

concerns to the FDA.

Then the FDA was apprised of our analysis and results, and they threw

their hands up and said, now, wait a second.

What is this?

We are not going to approve Bextra for acute pain, this indication, nor to

comment that it's safe in high -risk patients.

By 2002, the controversy over Bextra is heating up.

Other safety studies are called for to evaluate the entire class of COX -2

inhibitors. While the FDA evaluates the studies, Bextra is on the shelves, and

it's doing quite well.

First -year Bextra sales are almost half a billion dollars, despite the FDA's

refusal to approve Bextra for more widespread use.

According to court documents, the co -marketers of the drug, Pfizer and

Pharmacia, dispatched their sales forces with a mandate, push Bextra.

Some doctors are told it's safe for uses the FDA didn't approve.

They were missteps that related to the promotion of the product, primarily what

occurred out in the field with respect to statements that were made about the

product to physicians. And these are missteps that the company is not happy

about and takes very seriously.

Gardner Harris of the New York Times follows the story closely and reports.

The secret of Pfizer's success had been that they understood that far more

important than hiring researchers was to hire drug sales representatives.

People referred to Pfizer as the army of Pfizer.

And the result was that rules, ethics, many of those things that had defined

the industry in the 70s and the 80s. really went by the board so that the

company could meet its sales objective.

Promoting or selling a drug for something other than its FDA -approved

called off -label marketing.

According to the Justice Department, this sales drive is blatantly illegal,

to mention potentially deadly to patients.

Gardner Harris of the New York Times sees it as business as usual.

The Bextra story combines many of these themes of the pharmaceutical industry.

It's extraordinary profitability.

It's desperate marketing measures. It's willingness to frankly

lie to doctors, the media, and to patients, and put patients at risk

as a result.

When American Greed returns, an exclusive interview with a former Pfizer

rep reveals some allegations of shocking sales tactics.

The company was operating at a place where they felt untouchable.

In 2002, Pfizer is marketing what it believes is the next pain -killing

drug, Bextra.

But there's a problem.

Studies indicate Bextra increases some patients' chances of heart attack and

stroke.

Pfizer was in a real pickle.

It was coming in and spending $70 billion to acquire these drugs, Celebrex

Bextra, and Bextra was.

going to be the new leading candidate, billions of dollars.

And this study, which everybody thought would show that it's safe, I came along

and uncovered that it wasn't safe.

The FDA approves Bexter for limited use in patients with certain types of

arthritis or severe menstrual pain.

But according to the Justice Department, Pfizer and the drugs developer

Pharmacia ignore that limitation.

and send an army of 11 ,000 sales reps to push Bextra as a safe provider of

relief for many types of ailments.

On the condition of anonymity, one former Pfizer sales representative

speak with American Greed.

The company was operating in a place where they felt untouchable.

The attitude was, we can have our way with the FDA, and we can push the

envelope, and nothing's going to happen.

The man we'll call David says that by 2002, the pressure to fill sales quotas

overbearing. It was like an intense war. The market with like Celebrex, Bextra,

and Vioxx. Merck had Vioxx, and they were trying to make their foray back

the number one position.

And it was like we were archenemies.

For top sellers, there are trips to the Caribbean and cash incentives for every

signed order.

If you make your sales, you're rich.

It was the greed side, I guess. The incentives were there to make a lot of

money, to win a lot of trips.

I mean, you wanted to go for that.

According to the Justice Department, the incentives reinforce a corporate

culture that pushes sales reps past legal boundaries.

It's not illegal for a doctor to use a drug outside of indication.

It's illegal for somebody to sell it to them. But doctors have the ability to

use a drug as they see fit.

That's where the sales force would come in. You know, doctor, look, we're only

indicated here.

Of course, you're the doctor.

You say that enough times and they get the message.

As a prime example of how far some sales reps push the envelope, Bextra is even

marketed to dentists.

People were calling on dentists.

Clearly, there's no reason.

Granted, those prescriptions are getting filled at pharmacies and you're getting

credit for those sales.

In 2003, the co -marketing partnership between Pfizer and Pharmacia evolves.

Pfizer acquires Pharmacia as one of its subsidiaries.

According to the Justice Department, Pharmacia recruits doctors who give

presentations at luxurious resorts promoting off -label uses of Bextra.

David says some of these doctors, called advocates, suggest that if a little

Bextra is good, more is even better.

You started seeing doses getting cranked up really high. Some representatives

and some managers were pushing doctors and pushing hospitals.

That was outside of indication.

But at the same point, that's more pills being sold, which means better bonus

money coming in.

The doctors who join the Pfizer army are showered with gifts. They get thousands

of dollars in consultant fees, golf trips, even tropical getaways.

Anything would go from places that you could take doctors, box seats at premier

sporting events, luxury restaurants, very, very expensive wine.

I mean, you name it, limousines.

I'm sure doctors built houses based on amounts of money that they were paid.

David begins to feel that Pfizer is crossing the line. At least one of his

colleagues, John Kopchinsky, a sales rep at Pfizer, feels the same.

Kopchinsky won't appear on camera. His attorney will.

Erica Kelton explains what her client told her.

There were things with marketing Bextra that he and the other sales

representatives were asked to do, and in fact were given financial incentives to

do, that John just wouldn't do.

According to his lawyer, in early 2003, Kopchinsky is growing increasingly

concerned that Pfizer is breaking the law by pushing Bextra for off -label

She says he speaks up. He was criticized as not being a team player.

Kopchinsky hires attorney Erica Kelton, and along with several other employees,

starts the process of a key TAM or whistleblower lawsuit.

In 2003, Kopchinsky is fired.

John Kopchinski was terminated from the company in the early part of 2003 as a

result of concerns that related to theft of product by both him and his manager.

We don't have a record of John Kopchinski having indicated to the

he had concerns about Bextra, about the way it was being promoted.

There's certainly the feeling within the pharmaceutical industry that if you

do... speak up and if you do raise concerns and if you do become a

whistleblower, that you're at a great risk of being blackballed by the

So a lot of people don't speak up.

After the matter settled, we were contacted numerous times by people

organization and other pharmaceutical companies who applauded John for what he

did.

The news of John Kapczynski's termination sends shockwaves through the

sales force.

There were a lot of us that said if you cut us, we would bleed Pfizer blue.

John had a stellar reputation.

And when he started questioning wrong things, that I think is when people

started to become a bit dissatisfied because what we believed about Pfizer in

terms of their loyalty to us, it didn't exist.

Meanwhile, according to those who become watchdogs of the drugs, as Pfizer

continues to ignore FDA safety guidelines, patients pay the price.

I'd say, conservatively, a thousand people had serious enough complications,

including death, that didn't have to.

It didn't solve pain any better.

It just had this extra risk.

Explain to me.

Why any company would launch this drug?

By early March 2003, attorney Erica Kelton has started compiling a mountain

evidence for a civil lawsuit on behalf of the whistleblowers.

You had the FDA's denial.

You had a marketing scheme. We also had evidence of a nationwide fraud scheme.

If you were to put together the dream off -label case, this pretty much would

it.

When American Greed returns, scientists link Bextra to a potentially fatal

skin disease.

Not only is it not as good at solving your pain, but it might actually lead

skin to fall off.

In the spring of 2003, Pfizer Pharmaceuticals is a juggernaut, the

seller of drugs in the world.

But the $32 billion a year company has a chink in its armor.

Six whistleblowers have filed suit, claiming that Pfizer's efforts to sell

popular pain reliever Bextra are in flagrant violation of FDA limitations.

The FDA has approved Bextra for certain types of arthritis and severe menstrual

cramps.

But according to the Justice Department, Pfizer and its subsidiary, Pharmacium,

are ignoring potential health risks and pushing Baxter for much wider use as a

potent painkiller.

By 2003, Baxter's sales are at $687 million.

Gardner Harris of the New York Times covers the story and believes... Pfizer

knew that they were distributing a pill meant for just a very few people.

to everyone, exposing an enormous number of people to problems.

And did Pfizer stop? Did Pfizer turn around?

Did Pfizer tell doctors to slow down? Not at all.

If anything, Pfizer did just the opposite and told doctors, you know, to

going.

Pfizer's chief compliance officer, Doug Lankler, defends the company.

claiming the sales force has extensive training in FDA compliance.

It is a difficult area to ensure compliance, and that's not an excuse.

reality. But it's nonetheless one that's incredibly important that we have to

make sure we abide by.

But according to the Justice Department, Pfizer and Pharmacia's sales efforts

willfully ignore studies that tie Bextra to an increased risk of heart attack

and stroke and push it as a broad pain medication.

Bextra has now been on the market since early 2002.

More and more patients are using it. And now other serious health problems

arise.

Gardner -Harris believes the drug companies are playing a game of Russian

roulette with patients.

Millions of people were taking this pill thinking it's a miracle drug when the

company's own data suggested just the opposite is true. Not only is it not as

good at solving your pain, but it might actually give you a heart attack and, in

rare circumstances, lead your skin to fall off.

This terrible, terrible side effect called Stevens -Johnson syndrome, which

be fatal. It's hard to come up with death that's more painful, and this drug

caused it.

Though very rare, SJS causes unimaginable misery, painful spreading

blisters, and layers of dying skin that sheds or peels off.

Doug Lanker explains that the warning was always on the label.

The skin issues that were associated with Bextra were part of Bextra's label

the time of its launch. It was something that Bextra sought to make sure doctors

were aware of.

But lawyer Erica Kelton says Pfizer's efforts to warn the public about all

Bextra's side effects are just not good enough.

It was arrogant.

Safety should always take priority over profits because human lives are at

stake. And unfortunately, those priorities have been reversed by some

pharmaceutical companies.

While the civil lawsuits continue, federal prosecutors are strengthening a

criminal case for fraud.

We can prove that the corporate side only got permission for osteoarthritis.

adult rheumatoid arthritis, and primary dysmenorrhea, and therefore knew that

the company didn't have permission to sell it for pain.

As cases mount, the FDA orders larger studies of Bextra. Its findings are

published in late 2004.

Guess what they found?

Exactly the same things.

Heart attack, stroke, renal failure, death.

So the first study done, a million patients before, should have halted the

of the drug during the interim. But what it did was it allowed the

accumulation of $2 .5 to $4 billion of revenue with this drug during that

period.

In the largest recall in the drug industry's history, Pfizer and Merck

their once promising COX -2 inhibitors, Bextra and Vioxx, from the shelves.

Pfizer is advised to put Celebrex under new testing.

Pfizer, which makes both Bextra and Celebrex, said in a statement it

respectfully disagrees with the decision about Bextra and agreed it will conduct

a long -term study about the safety of Celebrex.

Pfizer's chief of compliance, Doug Lankler, says that the FDA's decision to

Bextra from the shelves is unrelated to the Justice Department's ongoing

criminal investigation.

Importantly, Bextra was not withdrawn because of any marketing concerns.

Primarily, this was a situation of looking across the pain medications,

which ones had different risks and benefits, and making decisions along

lines.

a drug that was pulled off the market because the FDA insisted that it be

off the market. Pfizer did not want to take it off the market.

This was done years after it had become clear that Bextra had an

acceptable risk for many of those taking it.

For nearly six years, U .S. attorneys in Boston gather evidence to slap Pfizer

and its subsidiary Pharmacia with criminal charges.

By September 2009, the pharmaceutical powerhouse is ready to capitulate.

Pharmacia pleads guilty to a criminal count of introduction into interstate

commerce of a misbranded drug.

Pfizer has agreed to pay $2 .3 billion.

Pfizer gets hit with a staggering total of $2 .3 billion.

$1 billion in civil fines and $1 .3 billion in criminal fines for its

subsidiary, Pharmacia.

Pfizer's criminal fines are larger than Enron, WorldCom, larger than any other

case in United States history.

There were missteps that occurred that the company ultimately paid a very

significant price for.

$2 .3 billion is just three weeks' worth of sales for Pfizer.

So even these seemingly blockbuster fines are difficult to

get the attention of executives around.

Pfizer pays the fine in one wire transfer.

No one in Pfizer's upper management or the executive marketing team is charged

to some watchdog's dismay.

If we had senior level people being prosecuted for crimes or fraud.

And actually going to jail, guess what?

They wouldn't do it anymore.

The pharmaceutical giant is ordered to put a monitoring program in place and

sign a compliance agreement.

Greed keeps winning, and people keep dying until people go to jail.

We need to figure out as a society who should be held criminally liable.

Is it going to be the soulless corporation that employs thousands of

Or is it going to be the person who actually devised the fraud scheme?

And I would hope.

that we decide that people should go to jail.

We as prosecutors can have suspicion, but we only can prosecute

people if we've made a judgment that we could prove beyond a reasonable doubt.

It's much easier to prove that a corporation has committed a crime than a

person. As part of the whistleblower case, the federal government awards

Pfizer salesman John Kopchinsky $51 .5 million.

Pfizer's other wonder drug Celebrex has had its own set of problems and

lawsuits. It's still on the market with a warning of an increased risk of heart

attack and stroke.

As for Big Pharma's future, reporter Gardner Harris says to expect more cases

like Bextra.

These cases are all filed under seal, but my sources tell me that there is a

mountain. of these cases out there that have yet to come to the fore.

And the Bextra case is not the last of these, and probably not even the biggest

of these.

Up next, it's an appealing sales pitch.

Help your neighbor avoid foreclosure and make a nice profit to boot.

Too bad it's all a lie.

What a waste.

She did all of this. She went through all of this to...

BAM! Turn out to be a frog.

In 2005, real estate is in a red -hot frenzy across America.

Even novice investors are led to believe they can buy, flip, and profit.

Investing in real estate appeals to veteran Marine Corps officer Ron Crowder

his wife Poppy, a school psychologist and new mother to twins.

I knew I was going to be home for at least a year. And so I wanted to just,

know, put my money into something that would bring me a little bit of income.

We had just started going to, like, Trump seminars, investment -flipping

property -type seminars, because that's the way the market was at that time,

particularly in California.

In January 2006,

Poppy and Ron meet Janetta Standiform, a 37 -year -old entrepreneur with a

background in real estate.

Her real specialty is self -promotion.

I was just very impressed with her. I thought, wow, she's young, and she's

smart, she's knowledgeable, and she's so transparent.

Since November 2005,

Standifor has been the founder and CEO of Accelerated Funding Group, or AFG.

She claims to buy troubled mortgages from banks in bulk.

For each homeowner in jeopardy, she finds an angel investor.

The investor ponies up cash for either a refinance or a settlement with the

bank. Either way, the homeowner avoids foreclosure, and the investor makes a

tidy return on the deal.

Standifor claims that anyone who invests can make fast and easy money.

Investors were told that their funds would be used to get specific properties

out of foreclosure.

And once the homeowner was out of foreclosure, that homeowner would either

their home.

or refinance, and then pay back the principles that the investor gave and

receive returns.

Janetta's pitch sounds too good to be true, and it is.

But she can overcome any doubts, in part because she capitalizes on

inexperienced investors.

Maybe you just have a little bit of money to invest, or you never really

about investing.

It's with a young African -American woman who has all this years of

and skill and expertise.

It feels comfortable.

By early 2006, before most of the country has heard the phrase subprime

home foreclosures are edging up in California.

The real estate market in California was really booming.

Mortgage companies had different lending rules than they have today, and people

found themselves in situations where they couldn't make their mortgage

Janetta Standiford is hatching a business plan designed to exploit a

many don't see coming.

Armed with a catchy marketing kit, Standiford hunts for investors,

whirlwind seminar tour at learning centers, conference rooms, golf courses,

Sunday services.

She appeals to their sense of altruism. At churches, she says investors can do

the right thing and help their neighbors stay in their homes and still make a

respectable profit.

It was a philanthropic investment of sorts. They were helping out the

and if all else failed, they believed they held title to the property.

To many investors, it sounds like a win -win deal.

The more money they invested, the greater their return, and these returns

averaged between 25 and 50 percent.

Doing business as AFG, Janetta promises returns in 30 to 45 days.

There's even a money -back guarantee.

At any time they could receive their money back with a one - to two -day

they may not receive their profit, but they would get their money back.

Janetta comes off as a seasoned pro.

She breezes past questions like how homeowners already in foreclosure could

possibly pay investors a return on their money.

The red flag should have gone up. A 50 % return in 30 days.

Unheard of. But this was the case. They had Janetta that they trusted

implicitly. Janetta's charisma lends credibility to those unrealistic claims.

Poppy and her husband Ron remember her appeal.

Any question that came up, she answered it. The confident was there. She looked

you in the eye. She was a real professional.

She would meet with people in hair salons or barbershops, which in the

-American community, that is a very popular meeting place.

And, of course, if you come with that demeanor that Janetta has, you know,

personable, very calm, nothing slick.

It's easy to earn that trust.

She has a knack for reaching women.

I think that's the case because they bonded with Janetta. It was trusting

fellow female.

And so Janetta just wasn't only an investment advisor.

She was their friend.

Janetta Standifor is operating a scam.

Next on American Greed.

Standifor buys herself diamonds with investors' money.

You have to wonder about a person who doesn't seem to care who they're hurting

or how much they're hurting them.

In 2006, Janetta Standifor's Pasadena -based Accelerated Funding Group is

in cash.

Standifor convinces her investors that she's buying bundles of troubled

mortgages, which she doles out to them as deals.

For each deal, investor cash supplies desperate homeowners a mortgage lifeline

so they can refinance or sell the property.

It works out for everyone.

Homeowners are rescued from foreclosure, investors get their money back with a

healthy profit, and Janetta gets a commission.

I didn't question that this was legitimate because it had come from a

good friend of mine.

She had done about three or four deals with Janetta.

In May 2006, Poppy receives a payout from her first investment.

After it closed, I did immediately request another deal because the payout

nice.

She doubles her original investment, and then she does exactly what Janetta is

banking on. She spreads the word.

I told everyone I knew.

I wanted everyone else to benefit from this idea of you're helping

someone else, but you're also earning money for yourself as well.

Word of mouth works fast.

In less than two years, AFG boasts nearly 600 investors in Georgia, Nevada,

California.

Once you hear that people you know were successful in this investment, they're

more willing to believe that this is a safe, secure, and legitimate investment.

But everything about AFG is a lie.

Janetta isn't buying a bulk foreclosure note from anyone.

She's just finding addresses online.

She subscribed to an Internet site that listed details about properties

that were in foreclosure. What she told investors is that each one of these

properties had enough equity so that the homeowner would be able to refinance or

sell their property and use that money to pay the investor.

back their investment as well as their profit.

Accelerated Funding Group isn't funding a single foreclosure rescue.

Investors pump almost $18 million into AFG.

Janetta kicks most of the money back to her early investors to keep the scam

going and word of mouth spreading.

She tells them their supposed profits come from refinance deals she's

In reality, she's just churning their hard -earned cash and keeping a nice

for herself.

It's a classic Ponzi scheme of you pay the first investors to help those

investors lure later investors.

Then she preys on emotions to prevent investors from contacting the supposed

homeowners. She would get these properties and obviously have no

with the homeowners or the mortgage companies.

She told investors not to contact the homeowners, claiming that the homeowners

would be embarrassed.

By 2007, she's stolen nearly $2 million from investors.

She blows most of it on herself.

Janetta lived a pretty lavish lifestyle.

For one of her homes, she spent over $650 ,000 to make improvement.

She purchased two luxury automobiles for $186 ,000.

She bought jewelry with the investor's money of about $165 ,000.

Tickets, a lot of theater tickets, concert tickets, front row and center

at sporting events. A lot of money went towards travel and entertainment.

Janetta and longtime boyfriend Daryl Dansby decide to marry in May 2007.

She even invites some of her favorite investors to the wedding.

But the lavish celebration hides a harsh reality.

She was running out of funds.

So she brought in one last investor, and that investor put in an additional $150

,000. And most of that money went to pay for her wedding and her honeymoon.

Stan DeFord lives it up on a plush Maui honeymoon.

But AFG is crumbling.

Checks are a month late.

Then two, three, four.

Janetta is suddenly unavailable.

Well, I was getting a lot of that. No one's in the office. Would you like to

leave a message?

Calls and emails are urgent.

Then frantic.

Janetta buys time with a series of lies.

Janetta was telling the inspector.

There were family illnesses. She was ill.

So they were giving her space to take care of the illness.

Some of AFG's 600 investors tried to keep the faith that Janetta will come

through. They held on to hope.

To give that up would have meant that their investment was worth zero.

By July 2007, the real estate market is tanking.

Janetta Standifor is nowhere to be found.

Finally, it dawns on me. This is not real.

And I go to the Better Business Bureau's website and check out Janetta.

The rating?

F.

When American Greed returns, the ugly truth of AFG.

As soon as we got the bank records, we were able to figure out that this was

essentially a Ponzi scheme and a misappropriation of investor funds.

In Pasadena, California, Accelerated Funding Group founder, Janetta

promises to make investors big money by helping others avoid foreclosure.

Instead, she's built hundreds of investors in three states out of more

million.

I heard about people who mortgaged their home, invested basically their life

savings. You know, they were close to retirement, and now they probably have

work for the rest of their lives.

Prompted by complaints, the Los Angeles Securities and Exchange Commission opens

an investigation.

Nothing was adding up here. We saw no evidence that Janetta ever had purchased

any loans from any banks for properties that were distressed. And so really, the

money that was coming into AFG's account were all investor funds.

While the SEC works a civil action against Standiform, U .S. attorneys

criminal fraud investigation.

We have to prove beyond a reasonable doubt that Janetta Standifor was

investors. Not only that, but we have to look at what federal crimes she was

violating, and here we decided to look at wire fraud and mail fraud.

Wire and mail fraud are easy to prove in Janetta's case.

FBI agent Linda English follows the money and finds it flows from new

to initial investors.

What struck me the most was...

the volumes of paperwork.

She had a very extensive filing system for this

investment that there were no properties.

One place the money does not flow to is troubled investors.

At the end of the day, I could not locate one deposit she received from an

escrow company, and alternatively...

One check she had made payable to a bank to purchase property.

Every closing she arranged with investors was completely bogus. Every

saved from foreclosure, a mirage.

By May 13, 2008, prosecutors have all they need.

A federal grand jury indicts Standifor on 11 counts, including wire and mail

fraud. On May 14th, the SEC files five securities fraud charges.

FBI agents arrest Janetta the same day.

I think who she targeted was one of the things that struck us.

A lot of these cases are affinity frauds in which someone decides to use the

trust and friendships that they've developed within their own community to

their money.

Janetta can't make bail.

She was running out of funds.

Even her closest friends and family can barely scrape together the $400 ,000 she

needs to bond out.

Of 600 investors, almost half lose every dime they put in AFG.

This was no different than a violent crime because the investor said she has,

effect, taken away our future.

When you're taking someone's life savings or the child's education

and knowing I'm going to spend my honeymoon on your money. How can you do

if you have a conscience?

Some investors have even said in open court that the ripple effect of this

go on for generations in their family.

Others lost more than money.

They so trusted Janetta that for the future, I think they're going to

their own ability to judge others, and that's key.

In September 2008, Janetta plea bargains with the Justice Department and claims

responsibility for multiple fraud charges.

In that plea agreement, she pled guilty to a lost amount between $7 million and

$20 million.

On January 20, 2009, Janetta Standiford is sentenced to 12 years in prison and

ordered to pay nearly $9 million in restitution.

Both she and her defense attorney declined to speak to American Greed.

Standifor successfully appealed her sentence, and it was reduced to eight

in February 2010.

Meanwhile, one of her two homes is in foreclosure, and the few assets the FBI

seized don't make a dent in the money she owes investors.

Poppy and Ron haven't forgotten their AFG experience.

We're going to invest in something. We're just going to make sure that we do

homework a little better.

If it sounds too good to be true, it probably is.

Even if it's your mom that's advising you to invest your money in

something, check it out first.