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They Can Convince Most Anyone--Including Themselves : Con Men: Believers in the American Scheme

San Diego County Business Editor

To the casual observer, Bernard Striar looked like any other federal prisoner, dressed in the typical garb of an Orange jump suit and black rubber sandals.

He stood with a hound-dog-sad expression next to his attorney two weeks ago, head partly bowed, and quietly but politely declined a federal judge’s offer to speak in his own behalf.

For the record:
12:00 AM, Sep. 25, 1985 FOR THE RECORD
Los Angeles Times Wednesday September 25, 1985 San Diego County Edition Business Part 4 Page 2 Column 3 Financial Desk 1 inches; 15 words Type of Material: Correction
In a Sept. 24 story on con men, U.S. District Judge Judith Keep was incorrectly identified as Judith Reed.

At 61 years old, Striar needed a sentence that “allows him hope,” pleaded his attorney, Flora Lynne Einesman. Striar, she said, felt tremendous remorse for his crimes and “he knows the effects on other peoples’ lives.”

It was a passionate plea for leniency.

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And it was a scene that’s repeated dozens of time each day in court.

But Bernard Striar was no ordinary prisoner and this was no ordinary case: If one were to believe federal prosecutors, Striar’s demeanor in court was just another in a series of performances that have spanned a 40-year career of fraud and deceit.

10-Year Term Given

“Let’s not have the ultimate con,” said Assistant U.S. Atty. William Braniff, asking U.S. District Judge Judith Reed to downplay Striar’s proclaimed remorse and hand out a stiff sentence.

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Braniff argued that Striar, who faced 20 years in federal prison, has “blended into the background and has been contrite” since his arrest and indictment earlier this year on 112 charges that he defrauded hundreds of investors in his La Mesa commodities trading company of millions of dollars. He pleaded guilty to four felony fraud charges in June.

Reed sentenced him to 10 years in custody and five years on probation.

Although she admonished him that he had “betrayed people’s trust for 40 years,” Reed told Striar that, “unlike most con persons, you seemed to care a lot about those people (you defrauded).”

Even some of those most emotionally damaged by Striar’s multi-identity past--his former wives--wrote letters to the court urging leniency.

‘He’s So Nice’

Striar’s ability to elicit sympathy undoubtedly helped him carry on his decades-long, nationwide schemes.

Even an adversary in the court proceedings against him admitted that “he’s so nice and has the kind of personality that, had I had the money, I probably would have invested with him.”

San Diego has had more than its share of such flimflam artists in the past six years, from Striar to J. David (Jerry) Dominelli, from Coastal Equities’ Phillip Jauregui to MB Financial’s Joe Bello.

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Each case and individual is of course different from the others. But they all may have a common link, a bond that connects all con men and marks the difference between two-bit hoods and those who would perpetrate the Sting.

“As kids, their normal pattern of reward for behavior wasn’t reinforced and rewards from parents weren’t presented. So they felt inadequate and developed alternatives means of getting rewards,” said Dr. Mark Kalish, a psychiatrist often appointed by federal judges to interview investment fraud perpetrators. In the past year, he has worked on both the Striar and Dominelli cases.

“Most of them are so bright and talented that they would have been more successful had they gone straight,” he said.

Typically, their schemes involve deceit, and the more they’re successful, the more their self-confidence builds.

“They learned to manipulate early in their lives and it continues--they have absolute confidence in themselves,” said J. David & Co. bankruptcy trustee Louis Metzger, who also served as trustee in the Bello case.

What makes the con man capable of looking his victims squarely in the eye, promising them hefty profits while knowing he is simply stealing their money?

No one--not prosecutors, psychiatrists or government regulators--seems to know for sure.

“We sit around in staff meetings and discuss what it takes to knowingly tell a lie,” said Art Salzberg, regional counsel for the Commodity Future Trading Commission.

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Cons “believe that what they’re doing is OK,” said Salzberg. “They either lack morals or they believe that ‘if I don’t get that mooch’s (the slang for victim’s) money, someone else will.’ ”

Dishonesty plays no small role. “If a guy can’t lie well, it’s all over,” said Robert D. Rose, chief of the U.S. attorney’s fraud division here. “Because if he’s not lying, then he’s not committing a crime--he’s just a well-intentioned business failure.”

‘No Sense of Wrongdoing’

And the con man’s ability to “have no feelings about deceit” is also a key to success, according to Deputy Dist. Atty. Tony Sampson, who specializes in white collar crime cases. “They can lie and have no sense of wrongdoing,” he said.

Con men believe that their schemes could have worked if “all the basic assumptions had proven out--that other things caused it to fail,” said Sampson. “It doesn’t matter (to them) that their assumptions are incorrect.”

Both Dominelli, who lured $200 million from 1,500 investors, and Bello, whose bankrupt firm drew $21 million from 1,200 investors, maintained after their businesses collapsed that, had they just been left alone, they would have emerged profitable.

“Most feel they’ve done nothing wrong at first,” said Metzger. “Then they get defiant and then they finally plead guilty. They don’t want to recognize what they’ve done. But certainly they must have stayed up nights asking themselves how long it could continue.”

Some embrace what psychiatrists used to call the “as if” theory--they act as if their lives are truly different than they really are. It’s not psychotic, it’s just dealing with a different reality, psychiatrists say.

Few Trades Actually Made

Dominelli, for example, often behaved as if his J. David & Co. in La Jolla was a real business. In truth, few foreign currency trades were ever made and most of his investors’ funds were used to pay for Dominelli’s lavish life style and for contributions to political and charitable organizations.

Much of the motive for Dominelli’s fraud, sources involved in the case believe, was that he desperately wanted the love and attention of Nancy Hoover, J. David & Co.'s second-in-command and Dominelli’s live-in companion. Until he met Hoover, Dominelli was just another mediocre stockbroker.

By fudging his trading record to show only profitable transactions, however, Dominelli, over a period of just a couple of years, was transformed into a financial guru for 1,500 investors, who, virtually without question, accepted his claims of 40% annual returns.

Such perpetrators suffer from an “impostor” syndrome, according to psychiatrist Haig Koshkarian, who has worked on several federal court fraud cases.

“The impostor takes on the identity of someone he isn’t,” said Koshkarian. “The gratification of being seen as brilliant, smart, wonderful and generous is as important as the money.”

Part of the problem is that would-be investors are often swayed by style more than substance.

“The white-collar criminal has the appearance of an upstanding member of society, even though he’s not,” offered Bill Grauer, a former white-collar crime prosecutor. “One of the problems is that we’re preoccupied with the trappings--a person may look reputable (by wearing) three-piece suits.”

Although the impostor knows he is ripping off investors, Koshkarian said, the “primary motivation isn’t hurting people--it’s to be seen in a certain way.”

These people aren’t psychotic, said Koshkarian, “but they can block out certain parts of reality; they walk around believing that they are the person” others think they are.

Eventually, Koshkarian added, these people just burn out or come “face-to-face with how empty their lives have been.”

J. David & Co. experts believe that Dominelli fit the impostor profile. His stroke last October, although certainly rooted in medical explanations, may have been his body’s physiological reaction to years of lies and deceit, these sources contend.

Striar Reported ‘Cured’

Typically, curing these swindlers is not a realistic goal.

In Striar’s case, for example, he had been jailed in the 1950s for investment fraud and, in a later case, had been acquitted by reason of insanity.

U.S. District Judge Reed even disclosed in court that one report in 1956 revealed that Striar had been “cured.”

And, two months after Dominelli’s stroke, he concocted the improbable tale that there may be as much as $2.3 million hidden in a bank account in Vienna, Austria. Authorities obligingly checked out his story, but found no funds.

Because of the recent rash of investment frauds, San Diegans may now be more on guard against such schemes than ever before.

But that awareness can quickly wear off.

“People get complacent and let their guards down.” said Kalish, adding that investors themselves must be the first line of defense against swindlers.

“People have too great a reliance on psychiatry and the penal system to rid society of these problems,” he said. “The greater responsibility is for people to use judgment and care for themselves.”


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