Original subtitles

In this episode of American Greed, John and Dan Sullivan are more than loving

brothers. They are partners in business and crime.

They were good thieves, big liars and good thieves.

Undercover of a home repair business, the Sullivans prey on victims based on

race and age.

They had catchphrases to describe who they were targeting. They said the

the better, the older the better.

To say how they viewed their targets was odious doesn't even begin to capture

how morally bankrupt the Sullivans were.

For 10 years, they construct a trail of ruin by stealing homes and abandoning

projects until they get nailed.

I told him that I don't know how long it's going to take, but I will never,

give up. I will get you.

And later...

Joseph Greenblatt rips off $31 million from retirees who think he's flipping

houses in New York's up -and -coming neighborhoods.

You're talking about retirees who don't have other sources of income.

In most cases, it wasn't discretionary income.

It was income that they really needed.

When this real estate scam collapses, the startling truth about Joseph

Greenblatt's con game is pulled from the rubble.

I have not encountered a case besides this one where investor money is being

used to pay restitution from a prior criminal scheme.

It was unusual.

In 2002, America's real estate market is on fire.

It is the era of the ninja loan, slang in the mortgage industry for no income,

no job, no assets, no problem.

The lenders were not really monitoring the lending. They would give a loan to

anybody who had a pulse.

If you could fog a mirror, you could get a loan.

That easy money makes it a good time to be in the home repair and remodeling

business.

John Sullivan runs New Look Home Services out of a storefront office on

Chicago's north side.

His brother Daniel works for him. The two brothers target primarily older

African -American homeowners.

They did mass mailings to targeted zip codes on the south and west sides of

Chicago. In addition to that, they did door -to -door canvassing. They hired

people to walk door -to -door and leave flyers for them. Those flyers offered

senior citizen discounts.

They offered seasonal discounts.

But once the Sullivans inspect a property, discounts go out the window.

Their bids are often outrageously high.

They would give an estimate.

for an exorbitant remodeling job, knowing that the victim did not have the

on hand to pay for that.

But money is easy to come by in the freewheeling era of the ninja loan.

The Sullivans basically went into their homes and tried to find out if they had

equity in their home. They would get a blank contract. They would have somebody

sign a blank contract. Then they would hook up with a mortgage broker to make a

loan, and then they would make the contract in the exact amount that the

would be.

That's one of the ways they were able to maximize their take.

Occasionally, they come across a customer with money in the bank. Like

of this home, 98 -year -old Frances Stone, a retired schoolteacher with

living on Chicago's West Side.

In 2002, she hires new look after the Sullivans tell Stone her home needs

hundreds of thousands of dollars worth of urgent repairs.

She digs deep into her lifelong savings and gives the Sullivans more than $200

,000 to pay for the work.

When the defendants ultimately stole the money from her, they literally had to

hold her hand to affix her signature to the check to the Sullivans.

The Cook County state's attorney catches wind of Sullivan's misdeeds. And in the

summer of 2003...

criminal charges are filed against John Sullivan for financially exploiting

Frances Stone.

At the same time, John Sullivan is also facing civil action.

The city of Chicago has filed suit against John and New Look for scamming

many as 58 homeowners.

A preliminary injunction banned John Sullivan and New Look from doing

in the city.

So John Sullivan does what any good con man would do. He reorganizes.

They moved their company from Chicago, where it had been historically based, to

Niles, Illinois, literally 200 feet across the city of Chicago border. They

incorporated there under a new name, J &D Home Services.

Dan Sullivan is not a part of the city of Chicago's injunction, so John assumes

his brother's identity when signing checks, work orders, and contracts.

The Sullivans went so far to wipe out the name New Look Home Services and John

Sullivan's names from existing contracts and replacing that with J &D Home

Services, with Dan Sullivan's name, so that they could continue doing business

in the city of Chicago, contrary to that injunction.

J &D's new office is busy.

The Sullivans use telemarketers who make cold calls from a front office in

search of new clients.

They obtained names, addresses, and phone numbers for people living in

areas on the south and west sides of Chicago.

And the Sullivans have a novel way of keeping their marketing costs as low as

possible. The telemarketers that they hired, according to our investigation,

came from a lot of halfway houses, people that were trying to get their

back together.

They would promise them cash bonuses.

Our investigation revealed from sources that they would pay them actually in

drugs.

As soon as they start working for the Sullivans, the Sullivans are feeding

drugs, making them dependent, and teaching them the trade.

The sales reps are instructed how to target older African Americans,

in Chicago's poorest communities on the south and west sides.

Clementine Thacker steps right into their trap.

They were tricksy. They were good.

They were really, really good.

They got a brain, but they're using it for the wrong reason.

Thacker has lived in her home on Chicago's South Side since she and her

husband bought it in 1953.

The year President Dwight Eisenhower moves into the White House.

And within 10 years, they pay off the house.

Now, as a widow, Thacker struggles to survive on a fixed income.

To bring in some extra cash, she wants to rent the second and third floor

apartments. Boy, this is something else. What a mess.

But the apartments need a lot of work.

She decides to shop around for a contractor when someone shows up at her

I got a knock on the door. The one I shouldn't have been at home.

At her door is a salesman from J &D Home Services.

He sells Thacker on a $63 ,000 renovation of the upstairs apartments.

A lot of money for a retiree on a fixed income.

Thacker wants to take out a personal loan to cover the renovation.

But the Sullivan sales rep encourages her to tap into her home's equity.

He came back by with a representative from the bank that said, oh, we can have

this financed through this bank.

The loan that I was interested in was not refinancing my house. It was just

a regular loan.

And they said they could do that.

Thacker eventually signs for a loan, thinking it's the type of financing she

originally wanted.

I thought I was getting a regular loan, like you go to the bank and get a loan.

And instead of a loan, they were refinancing my house.

Now Thacker is saddled with a 15 -year, $63 ,000 mortgage she can't afford.

They were good thieves.

Big letters and good thieves.

And it turns out, apartments she can't rent because J &D never completes the

work. One of the phrases that the Sullivans used among themselves and with

sales reps who were out in the field was one nail, no jail. And what they meant

by that is if they did the bare minimum amount of work, the Sullivans believed

that they wouldn't go to jail. They may get sued civilly, but they wouldn't have

any criminal exposure.

They were wrong.

Next, the Sullivans con Clementine Thacker again to save their skins.

I said, this doesn't sound right.

He said, well, see, we're lawyers. We want to have something to go into court

with. I said, okay.

So I wrote it and signed it.

And a new victim and a new, more personal strategy.

I thought it was very strange that a 38 -year -old man was becoming friends with

an 80 -year -old woman.

For more than 40 years, Clementine Thacker has been living in her Chicago

mortgage -free until she hires J &D Home Services to renovate her two upstairs

rental apartment.

They convinced her to take the equity out of her home through a loan, and they

then stole that equity, did very little, if any, work on rehabbing her home, and

then left Ms. Thacker with a monthly loan payment of over $500.

They start but don't finish a painting job.

They try to fix up a bathroom and make a lame attempt at installing a banister.

The banister was a joke.

Any person with common sense would know you've got to find a stud

or something that's solid wood to not pull into a wall. You don't just hit it

into plaster.

But the work stops.

And Thacker wants answers.

That's when I start calling. When are the people coming to, you know, do the

work up there?

She gets nowhere.

So Thacker hires a law firm and files a civil suit against the Sullivans and

their company J &D.

As the case progresses, she gets a call.

Someone claiming to be from her law firm wants to come by to see her.

I did have two people come out when they were from...

They said they were from the law offices.

The two men say they need an affidavit from Thacker.

They dictate a statement to her, placing the blame for the fraudulent home loan

on others and not the Sullivan.

Thacker is confused.

I said, this doesn't sound right.

He said, well, see, we're lawyers. We want to have something to go into court

with. I said, but you don't have to have that to go into court with, do you?

Yeah, we need this.

I said, okay.

So I wrote it and signed it, you know.

But the feds say the two men posing as lawyers are actually John and Dan

Sullivan. The purpose of dictating that letter was to shift responsibility from

the Sullivans to someone else. They were trying to get away with it. They were

trying to win their civil suit. And that was a practice and pattern that the

Sullivans had done throughout their various schemes.

And for John and Dan Sullivan, crime pays well.

We were able to trace a substantial amount of money, hundreds of thousands

dollars, to a trust that John Sullivan and Dan Sullivan had set up in the name

of Joseph John Sullivan.

They certainly had hundreds of thousands, if not millions of dollars,

bank accounts, in trusts, in real estate that they bought.

By the looks of the real estate they own, John and Dan Sullivan appear to be

just a couple of average middle -class guys.

But they are anything but.

Over the years, they sock away their earnings and build a financial empire

the hard work of their chosen victims.

They had catchphrases to describe who they were targeting.

They said, the blacker, the better. The older, the better.

To say that their targets and how they viewed those people was odious, it

doesn't even begin to capture how morally bankrupt the Sullivans were.

would do any means necessary, use anyone necessary to get what they ultimately

wanted, which was money. They put in a lot of work in trying to find those that

they could exploit and could victimize. That was their main job. It wasn't

remodeling. It was trying to find potential victims.

In 2003, the Sullivan brothers spot a new opportunity.

In the Chicago neighborhood of Norwood Park, 81 -year -old Frances Spinks is

living out her golden years in her five -bedroom century -old home.

Roxanne Sarno is Spinks' niece and looks after her Aunt Frances.

This is Aunt Frances' communion.

Sarno says her aunt wants to unload a mobile home she owns in Florida.

She decided she was going to sell it because she was getting too old to

She put an ad in the Norwood Park and the Chicago paper.

That's how she became familiar with the Sullivan brothers.

John Sullivan responds to Spinks' ad.

John Sullivan told Anne Francis she was asking him too much money and that she

would never get that, the asking price.

No sale, but they stay in touch.

John introduces Spinks to his brother Dan.

Dan starts coming by the house regularly to visit Spinks, a cancer survivor who

is now diabetic and in failing health.

The front door was always open because he could not get up to answer the door.

And Daniel...

was prominent at the house.

He would come over and let the dog out and visit her.

I thought it was very strange that a 38 -year -old man was becoming friends with

an 80 -year -old woman and that he was up to something.

All the sweet talk helped Sullivan to discover that Spinks owns her home

outright. The brothers find it pays to turn up the charm.

That was one of their best skills, was trying to build relationships with their

potential victims.

They were just setting them up so they could take advantage of them later

these fraudulent practices.

Daniel Sullivan seizes the opportunity when Spinks tells him of an ongoing

dispute she has with the city of Chicago.

The sewer system in Norwood Park is not the best, and when it rains, sometimes

the basements get flooded.

Dan Sullivan says he can help her fight City Hall.

He just needs Spinks to sign some papers.

She told me that she had signed papers.

And I yelled at her and made her cry.

And she didn't have a copy of what she signed.

So I had no idea what she signed.

It remains a mystery until February 2004.

when Frances Spinks takes a turn for the worse and has to be hospitalized.

Sarno keeps an eye on her home.

I was going to the house like usual and started cleaning the house because I

wanted to bring her home to die.

I started seeing mail addressed to Daniel with Aunt Frances' address.

I got a sick feeling.

Fearing the worst, she asks her attorney to do a title check on the home.

He called me at work and told me that Daniel owned the house.

It turns out what Frances Spinks signed was a quick claim deed, turning over

ownership of her home to Daniel Sullivan.

But if his plan is to keep the property transfer a secret until Spinks dies, the

scheme has failed.

Sarno knows everything.

When I went to the hospital, I said, did you give Daniel Sullivan your house?

And she said, no.

I said, are you sure?

And she said, no.

I said, he owns your house.

Do you want me to fight for your house? And she said, yes.

I called Daniel on his cell phone and told him that I knew what you did.

I don't know how long it's going to take or how much money, but I will never,

ever give up.

I will get you.

Next on American Greed, the investigation takes a tragic turn.

There's a caller on 911 stating that a 14 -year -old boy had been shot in his

house. And later, will another desperate call stop John Sullivan for good?

He called 911 and he wanted a police officer to shoot him.

In early 2004, Roxanne Sarno gets an upsetting phone call from her attorney.

When I got this phone call, I was hysterical.

She learns that Dan Sullivan's name is recorded on the title of a home

to her aunt, Frances Spinks.

I was hurt that somebody did this to my aunt, and then I was mad.

And I knew I had to do something. I could not just sit by.

and watch this man steal everything my aunt had.

Sarno immediately files legal documents to keep Sullivan from selling her aunt's

home.

But Dan Sullivan is one step ahead.

He's already converting his newly acquired property into cash.

He went to World Savings Bank and took a mortgage for $200 ,000.

And then he remortgaged it for another $400 ,000, I think. Then remortgaged it

third time. He sucked the life out of the house.

In June 2004, Frances Spinks died.

She had to lay there with a respirator and a feeding tube, dying, knowing that

her legacy, everything she wanted to leave her family that she worked hard

was gone.

She looked so happy there.

I think it broke her heart.

When you think someone's your friend, and then you find out not only are they

your friend, but they've taken everything that you have, it broke her

Eventually, the house goes into foreclosure.

Because she had filed liens on the property, Sarna was able to reach a

settlement with the bank, but it doesn't come close to the home's value.

The plan was when Aunt Frances passed away, I would sell the house, fulfill

will, and all the monies left would be a college fund. So my great nieces are

cheated out of their college funds because this man was greedy and took

everything she had.

For nearly 10 years, the Sullivan brothers have preyed upon the powerless,

leaving a swath of financial ruin.

They've been able to avoid jail by always staying one step ahead of law

enforcement.

Each time that they were sued, each time that a governmental agency brought an

action against them, they were able to delay, they were able to postpone, and

they never went to jail until we came in and did it.

In 2006,

Assistant U .S. Attorney Patrick Pope begins investigating the Sullivan

and brings in the U .S. Postal Inspection Service.

Federal investigators look closely at the way J &D is coercing homeowners into

refinancing their homes, and they discover one of the secrets to the

success.

As anyone who's ever done a mortgage or a closing knows, you sign an initial,

numerous documents.

You don't read them all at the closing.

Once the Sullivans have the homeowners' trust, they can get them to sign

whatever they want.

That's what happens to Clementine Thacker.

In this instance, they had Clementine Thacker and other homeowners sign

of direction directing the bank, the mortgage company, to send the check, the

equity that came out of that house, directly to J &D Home Services.

So the proceeds from Thacker's loan never even see her bank account.

Oh, I was feeling like I had S -P -U -P -I -D written on my forehead.

It's just how I felt, you know.

John Sullivan relocates to Surprise, Arizona, a suburb of Phoenix, as

investigators are closing in.

John knew that we were investigating him and his brother and his company for

these fraudulent activities, and we were getting close.

He divorces his wife but continues to live with her and their teenage son in

this house.

Investigators suspect that the divorce is a sham.

designed to protect Sullivan's assets.

Their life in Arizona seems relatively quiet until the afternoon of September

16, 2010.

There's a caller on 911 stating that a 14 -year -old boy had been shot in his

house and he needed fire and police right away.

The caller is John Sullivan.

Sullivan's 14 -year -old son has shot and killed his friend while waving

a loaded .22 caliber semi -automatic pistol.

Local police, including Detective John Bantz, want to know from Sullivan what

happened. John was contacted in the garage when police arrived, and he kept

making statements. It was an accident. It was an accident, talking about the

shooting.

Police execute a search warrant.

Our warrant was centered on the shooting incident.

We got into the house, and we found that.

22 caliber handgun right away. We also found some marijuana.

We also found that there were numerous locked boxes.

There's a large safe in John Sullivan's closet that was locked.

Police execute a second search warrant and begin to uncover evidence of another

crime.

When we opened that safe, my first impression was, I have bricks of

bricks of drugs.

That's what it looked like to me.

When American Greed returns, see what Arizona police find in John Sullivan's

safe. What was the common lie that Sullivan used to secure bank loans?

Find out at AmericanGreed .CNBC .com. We'll be right back.

In Surprise, Arizona, the tragic shooting of a teenager has pulled back

cover on another crime.

John Sullivan.

Under investigation in Chicago and accused of fraud as a stash of marijuana

a locked safe.

Police want to know what's inside.

When we opened that safe, my first impression was, I have bricks of

It's only after we started to pull it out that we realized, no, this was cash.

And a lot of cash.

In total, $550 ,000.

Police are shocked not only at the large amount of loot, but also the way it is

contained.

It had been wrapped in tinfoil and had dirt on it, as if it at some point had

been buried in the ground.

It was a significant amount of money to discover.

Our experience has shown us that in these type of fraud schemes and

the money usually does not stay around very long.

Surprise police seize the cash and begin to dig through Sullivan's financial

records. They see that there is more money hidden, but not in a safe, rather

an account called the Joseph John Sullivan Revocable Trust.

We wrote a warrant and had it granted, and we ended up seizing just over $1 .1

million out of this bank account that was in this trust's name.

Arizona detectives pieced together a financial paper trail and traced much of

the money back to the Sullivan Chicago victim.

Just two weeks later, in Chicago, the U .S. Attorney's Office indicts the

Sullivans on charges of wire fraud, and warrants are issued for their arrest.

John Sullivan, still living in Surprise, Arizona, becomes unhinged and makes a

desperate call.

He called 911 after he learned that there was an arrest warrant out for him

said that he wanted to be taken into custody and he wanted a police officer

shoot him.

Sullivan refuses to give his location, sending Maricopa County Sheriff's

deputies on a day -long search for him.

They finally track him down at Tequila Willie's, a bar in nearby Youngtown,

Arizona. When authorities arrive, he denies he's John Sullivan.

So he went from a period of come and find me to I'm not who you think I am.

John Sullivan makes a return trip to Chicago, this time as an accused felon

cuffs.

Dan Sullivan, under surveillance by federal agents outside his home in

Chicago, is arrested while pulling out of his driveway.

The brothers are jailed and remain there until their trial.

Meanwhile, the Sullivans' victims and their families try to salvage their

from the wreckage. Now in her mid -80s, Clementine Thacker is making purses and

other crafts and selling them at her church to make enough money to survive.

During that time when the Sullivans had stolen her equity, had stolen her

ability to live her life, frankly, her brother passed, her sister passed, and

her nieces and nephews grew up without her being able to travel to see them,

as a result of what the Sullivans did to her.

And remember the century -old home that Dan Sullivan stole from Frances Fink?

On January 18, 2007, the house is destroyed by fire.

An investigation confirms it is arson.

Dan Sullivan makes a brazen attempt to get a payout from the insurance company.

But when it is discovered that the fire was intentionally set, the claim is

denied. No one has yet to be charged.

In October 2011, the federal criminal case against the Sullivans goes to trial

in downtown Chicago.

Each man is facing two counts of wire fraud.

In their defense, the Sullivans claim that they completed the work they

promised.

Ultimately, we proved overwhelmingly that they did not. The jury saw through

their defense, saw through their fraud, and convicted them.

On November 9, 2011, the Sullivans are found guilty of wire fraud.

They are later sentenced to 14 years in prison.

They are also ordered to pay more than $700 ,000 in restitution to their

Daniel Sullivan did not respond to our request for an interview, but in a

written statement to American Greed from prison, John Sullivan maintains his

innocence, writing, No wire fraud was committed. I might have to live with

charge forever, but there was no wire fraud committed by me.

People are defined by who they are and what they do.

And in this case, what the evidence showed was that the Sullivans were

serial fraudsters who preyed upon vulnerable victims with a callous

to the lives they ruined.

Next on American Greed, a New York real estate con man gets caught once.

The Greenblatt's created a Ponzi scheme, which was successfully disguised as

long as the checks were coming.

Then gets caught again a decade later in a $31 million scam.

We went out of town, created a whole fiction. It was a sophisticated,

purposeful, very harmful criminal enterprise.

Want inside information from the show?

Join the Greed Social Network.

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We'll be right back.

Brooklyn, New York, June 1995.

A local real estate investment company, Executive Funding, is suddenly shut down

by the Brooklyn District Attorney.

Executive Funding's owners, including Joseph Greenblatt, are arrested.

It's all over the news.

The doors to the Greenblatt's Executive Funding Corporation here in Borough Park

were gated shut today.

Joe Greenblatt is accused of swindling clients and investors of his mortgage

brokering firm out of millions.

Greenblatt created a Ponzi scheme, which was successfully disguised as long as

the checks were coming. The checks come from investors who think executive

funding is financing high interest mortgages for people who can't get

conventional loans.

Mr. Greenblatt promised his investors that he was going to acquire properties

make certain mortgages. He took money and he didn't actually do with it what

had. advise the investors that he was going to do.

Kings County Supreme Court in Brooklyn.

Joe Greenblatt pleads guilty to 94 counts of grand larceny and other

But at sentencing, he catches a major break.

In a plea deal, Joe Greenblatt, facing up to four and a half years behind bars,

walked. No jail time.

The judge allows him to remain free under the supervision of the court so he

earn $5 million to pay back his victim.

But the judge makes it clear, if he fails to make restitution, he'll go to

The Brooklyn case shows what you can do if you have the right attorney.

Benjamin Brofman, who has been the attorney for a lot of celebrities, he

arranged a plea deal that would allow Greenblatt to take time to raise

money to pay back the investors who were defrauded.

With a $5 million debt hanging over his head, Joe Greenblatt, now a convicted

con artist, has to figure out how to make money, and a lot of it.

So he packs up, moves, and launches a new company.

Joseph left Brooklyn, crossed the East River, went across Manhattan, jumped the

Hudson, and went to New Jersey, where he started Maywood Capital Corp.

Maywood Capital is just another clever ruse to get the cash Greenblatt needs,

this time from a new set of victims, retirees in Florida.

Carter Blunden retired to Bradenton, Florida, so he could enjoy the sunshine

playing music alongside his wife, Claire.

I've played the harmonica for 70 years.

These are all my friends.

I'm a vocalist, big band singer from way back.

London has always been frugal and invested his savings when he worked as a

hospital supply salesman. So when an ad for Maywood Capital appears in the

Bradenton Herald offering 14 % investment returns, it catches London's

He calls the number in the ad.

Joseph Greenblatt answers and arranges for the two to meet in Sarasota.

I met him at Yoder's restaurant down in Sarasota, and we talked, and he told me

how good an investment he had and how safe it was. And so I thought, well,

sounds good.

So I go and invest with him.

Greenblatt tells Blunden and other investors that he's buying run -down

in need of renovation in New York's burgeoning neighborhoods like the Bronx,

Queens, Brooklyn, and Harlem.

In late 2001, Blunden withdraws money from an IRA to make his first investment

with Maywood Capital.

He gives Greenblatt $25 ,000 to invest in a two -story brick duplex in

Just a month later, he ups the ante and invests another $75 ,000, this time for

a commercial property in Queens.

I'd already gotten one big return on an interest payment.

And so I just said, well, I'll just go get in deeper. So I did.

Greenblatt's plan is to fix up properties and flip them for a profit,

cases, rent them out.

Occasionally, investors visit New York to check on their investments.

Greenblatt drives them around.

He likes to show off his real estate prowess.

He took them into Harlem, and not only was he showing them the property that

they were interested in possibly investing in, he had pointed up the

indicate that it was right down the street from former President Clinton's

office.

Carter Blunden never visits New York.

From 1 ,100 miles away, he's convinced Greenblatt is doing right by him.

So he dives in deeper.

Within two years, Blunden is invested in five properties in Harlem, two in

Queens, one in the Bronx, and one in Brooklyn.

Things are going so well, even his wife Claire wants in.

I had $25 ,000 that I wanted to invest.

And since he was getting such a good return, I decided that I would invest my

$25 ,000.

For a while, the interest checks keep coming.

In total, Blunden gets more than $55 ,000 in interest payments.

I was getting a monthly return, and it was good.

Checks were being cashed and everything.

There was no problem at all.

But when those checks start bouncing... Suddenly, they just turn sour.

It doesn't take long for the Blundens to figure out Joe Greenblatt is playing

them.

Next on American Greed, bouncing checks reveal a web of lies.

Once they started bouncing checks, then the investors were all, where is my

money and where is this money? And that's when it all starts collapsing.

Between 2001 and 2003, Florida retiree Carter Blunden taps into his IRA to the

tune of $165 ,000 and invests in Maywood Capital.

It wasn't my life savings, but it was quite a lot of my savings, yeah.

Biggest share of it, yeah.

You're talking about retirees who don't have other sources of income.

In most cases, it wasn't discretionary income.

It was income that they really needed.

Maywood Capital is run by Joseph Greenblatt, a convicted Ponzi schemer

been ordered by a Brooklyn, New York judge to pay back $5 million to his

or face jail time.

Carter Blunden and his wife have no idea about Greenblatt's criminal past.

What they do know is Joe Greenblatt is awfully convincing.

He was a very good salesman.

He's a nice -looking fella, and he was very knowledgeable, seemed very, very up

on all type of investments and everything.

Lots of the investors told us that they liked Joe. He was always responsive.

He always talked to us.

And I think he probably did, and that was probably because he had to do that

order to continue to run the scheme.

But by late 2003, Claire and Carter Blunden realized something is wrong when

monthly checks they had been cashing are suddenly bouncing.

Blunden gets Greenblatt on the phone.

And I asked him what was going on. I said, I want you to return my money. I

don't want to, I want to get out of this.

Blunden isn't alone.

Greenblatt passes bad checks to dozens of investors.

Once they started bouncing checks, then the investors were all, where is my

money and where is this money? And that's when it all starts collapsing.

Greenblatt faces a tidal wave of angry investor calls and letters.

He tries to calm the storm.

There were a myriad of excuses.

They would say, well, oh, it's really just a mistake. It's not that the money

isn't there. It's just that we changed banks.

So it was another way of just buying more time.

Fed up with the excuses, investors start calling and writing authorities in New

York and New Jersey.

A letter from one of those investors in October of 2003 triggers an

investigation by the New Jersey Attorney General's Office and the Bureau of

Securities.

Soon, a startling discovery is made.

Maywood Capital didn't own all the properties they claimed.

Some of the properties were never purchased. And in some of the

ambassadors actually attended the closing and thought that the closing had

through with no problems. But in reality, Maywood was canceling the

the purchase of the properties, and they were never purchased.

As the investigation deepens, the Bureau uncovers even more deceit.

Greenblatt is using Maywood investor money to chip away at that $5 million

restitution from his 1995 Brooklyn conviction.

I have not encountered a case besides this one where investor money is being

used to pay restitution from a prior criminal scheme. It was unusual.

They also discovered more than $9 million in officer loans that are never

back and wild spending on the company's American Express card.

There were personal expenses charged to credit cards, such as shopping at Neiman

Marcus, Saks, Polo Ralph Lauren.

There were purchases for jewelry.

There were charges for medical expenses.

The investors did not know that their money was being used for their personal

expenses.

January 2005.

The New Jersey Attorney General's Office and the Bureau of Securities file a

securities and racketeering suit against Joseph Greenblatt and other Maywood

associates. The civil suit accuses Maywood and Greenblatt of stealing more

$42 million from over 100 investors while diverting over $9 million for

use.

Meanwhile, Manhattan District Attorney Cyrus Vance says his office is watching

closely and opens its own criminal investigation.

I think once we were aware of the acts in other jurisdictions, certainly they

were helpful in us understanding who he was, how he'd acted.

By this time, Greenblatt's legal troubles are exploding.

Greenblatt has been living with an ultimatum from a Brooklyn judge.

Pay back the $5 million he swindled from the victims of his 1995 conviction or

go to jail.

Greenblatt comes up short, so the judge orders him to prison for three to nine

years.

Joseph Greenblatt and Maywood Capital file for bankruptcy.

Attorneys John Pereira and John Campo are brought in to untangle Maywood's

He was fairly cooperative with us.

I think he knew, he understood that the gig was up.

Kevin Desmarais is a reporter for The Record in Bergen County, New Jersey.

At times it could get tough just tracking all these things and really

need a spreadsheet.

With the lid about to be blown off of Maywood Capital, this story becomes big

news. For a time, it becomes his life.

Kevin Desmarais was very diligent.

in his investigation of Joseph Greenblatt. He did really open up a lot

people's eyes about what was going on.

Newspaper reporters rely on photos as much as the written word to tell their

stories. Kevin DeMurray realizes he doesn't have a good photo of Greenblatt

an upcoming cover story, so he asks him for one.

The only picture we could find was a typical perp walk picture with Joe and

father, Max.

And it was a terrible picture that I knew we couldn't use.

But I persuaded him, if he would let us take a picture of him in Harlem, that we

wouldn't run the picture with his father.

So he agreed to it. And I just felt so proud because I had caught the con man.

November 2007,

Manhattan.

A New York County grand jury indicts Maywood Capital and Joseph Greenblatt on

counts ranging from grand larceny to tax fraud in a $31 million Ponzi scheme.

And we went out of town, created a whole fiction. It was a sophisticated,

purposeful, very harmful criminal enterprise.

September 2012.

Five years and over 100 court appearances later, Joseph Greenblatt

Manhattan Supreme Court to answer those 2 ,007 charges.

Greenblatt pleads guilty to swindling victims out of $31 million and is later

sentenced to six to 18 years behind bars.

As for Maywood capital victim Carter Blunden, he eventually gets back more

$57 ,000 as part of the bankruptcy proceedings.

That's 52 cents on the dollar recovered for Blunden and the dozens of other

Maywood victims.

We're proud of the fact we were able to get so much money back for them, but

that's an unusual case in the Ponzi scheme.

We've gotten about 52 % back.

But some victims aren't that lucky.

The one thing that remains with me most in this is the victims.

the elderly retirees who lost their life savings, and it's all gone.

And that's not going to come back.

Next, a shady lawyer from the Sunshine State scams $1 .2 billion on a 10 -year

spree. One investor alone lost $125 million. Florida's largest financial

American Greed scams scoundrels and suckers. Next on CNBC.

Restaurant Startup premieres Tuesday, July 8th on CNBC.