Clients Say Loan Brokerage Didn’t Deliver, 2 File Suit

On paper, Jack Feingold was an international loan broker of astounding means.

Letters from foreign banks promised multibillion-dollar loans to clients of Feingold’s South Bay-based International Finance Exchange. Telex messages claimed that the firm maintained bank accounts totaling more than $48 billion in Banco do Brasil and Banco Nacional de Mexico. And along with such boasts of financial clout came word of how to obtain massive loans from IFE.

Some clients said they were so impressed by Feingold’s access to the world’s financial players that they paid IFE from $80,000 to $112,000 to get a piece of the action.

2 Lawsuits, 3 Complaints

But now, four clients have charged that the financial empire was nothing but a paper sham.

In two lawsuits and three complaints filed with police, the investors claim that the loan brokerage bilked them out of $364,000 in fees without delivering a penny in loans.

Police in Torrance, where Feingold once ran IFE from his home, said they are investigating complaints from three former clients, two of whom also filed lawsuits alleging fraud and breach of contract. A fourth investor has not sought criminal charges but has sued IFE, Feingold, and his former partner, Jack Warren Schwartz.

Neither Feingold nor Schwartz has been charged with a crime.

Messages left on International Finance Exchange’s answering machine were not returned, and the door was locked this week at the firm’s new one-room office in south Redondo Beach.

Feingold, 49, visited the office this week but has not moved in, although he signed a lease more than two months ago, according to the building’s landlord.

Torrance Police Detective Randy Kjenstad said that his investigation of IFE has just begun, but “our understanding is that we are looking at maybe $1 million that was taken from people all over the world.”

The case is complicated by the status of former IFE partner Schwartz.

Although the two lawsuits charge Schwartz and Feingold with fraud and breach of contract, Schwartz said he has gone to Torrance police, the FBI and former IFE clients with evidence against the firm, which Kjenstad confirmed.

In an interview this week, Schwartz said he and Feingold formed IFE last October, and profits from the venture were used to raise money for the manufacture of a solar-energy device designed by Feingold.

Schwartz said it was not until February, when he said Feingold asked him to falsify a letter under the letterhead of a Mexican bank, that he realized that the loan brokerage was not legitimate.

“I was a victim, too,” said Schwartz, 37. “My life was destroyed by this.”

The first lawsuit against IFE was filed May 31 in Los Angeles Superior Court by Anton Billis of Perth, Australia. That was followed Aug. 1 by a suit filed jointly in Torrance Superior Court by Charles A. Black of Boise, Ida., and Jack G. Whitney of San Diego.

Charges of Fraud

Both suits charge IFE, Feingold and Schwartz with fraud and breach of contract. Torrance police said they have received similar complaints from Whitney and Black and from a Colorado man whom they declined to identify.

Martin N. Refkin, Billis’ lawyer in Los Angeles, said Billis hoped to secure a $125-million loan through IFE to expand a small mining company he owns.

“It was probably pie in the sky more than anything else,” Refkin said. Investors “saw it on paper that some banco de banco would issue its promissory note and here is the letter showing that the money has been earmarked. . . . And they believed it.”

Billis paid an “advanced fee” of $112,000 to IFE and believed that the Redondo Beach brokerage would persuade foreign banks to provide the $125-million loan, Refkin said. He said he did not know about the interest rate or other terms of the deal.

No Return for Payment

But, according to his lawsuit, Billis received nothing in exchange for his payment.

Even though the contract said the fee was not refundable, Refkin said that provision would not be valid if IFE misrepresented itself.

In the second lawsuit, Black says that he paid an $81,000 fee in anticipation of receiving a $400-million loan, and Whitney says he paid $91,000 in the hope of receiving a $500-million loan.

Black and Whitney said that forged letters from the Banco do Brasil convinced them that the funds were available. “The true facts were that no such loan was ever contemplated by (IFE),” the lawsuit states. “Defendants were never in the business to make loans.”

The lawsuit describes Black as president of an Idaho construction company and Whitney as a lawyer and president of a San Diego real estate company.

Whitney said in an interview that he learned about Feingold through a real estate broker and that he intended to use the loan to buy property.

‘Too Good to be True’

“It’s an enormous amount of money, and it was too good to be true,” Whitney said. “I would not have done it but for the fact that (Feingold) assured me that the loan was real and that he had the letter from the bank that assured it was real.”

Black could not be reached for comment, but his lawyer, Richard J. Pinto, said Black would have used his loan money for large construction projects. He said he did not have details of the projects.

Pinto said Feingold made “excuse after excuse” for not coming through with the loans earlier this year before he moved out of the Torrance home that doubled as his office. “Then he just wouldn’t return phone calls,” Pinto said.

The Colorado man who filed a complaint with Torrance police said he lost $80,000, Detective Kjenstad said. But Torrance police declined to disclose details of the complaint.

The disgruntled clients said they hope to recoup their losses from an IFE bank account at Bank of America’s Riviera Village branch in Redondo Beach.

The account, which contains an estimated $270,000, was ordered frozen last month by Los Angeles Superior Court Judge Dion G. Morrow. The judge granted the temporary restraining order at the request of Billis’ attorney.