30 Years for ‘King of Swindlers’ in $12-Million Scam : Sentencing: The Laguna Hills businessman solicited investors by telephone and stashed much of his take in a subsidiary of BCCI.
One of the toughest sentences ever handed down in a telemarketing fraud case was given Monday to a former Orange County businessman whom the judge dubbed the “king of swindlers” for bilking investors of $12 million, much of which was diverted to a subsidiary of the now-infamous Bank of Credit and Commerce International.
Gilbert Traylor Jr., 44, was sentenced to 30 years in prison for his role as co-owner of First American Currency of Laguna Hills. The company solicited investors by telephone to invest in silver and other precious metals, then diverted their funds into lavish executive salaries, luxury cars and houses and hid about a quarter of it in the Panamanian branch of BCCI.
The Luxembourg-based BCCI was shut down last summer and has been the focus of a worldwide investigation because of its reputation as a haven for money launderers and drug traffickers. The bank became so notorious that it has been referred to as the Bank of Crooks and Criminals International.
“This is indeed a massive fraud,” U.S. District Court Judge James M. Ideman said of First American Currency. “The defendant is in the first rank of people who have committed this offense.”
Ideman also sentenced former First American sales manager Lester Thompson, 47, of Riverside to 10 years in prison. Both men were ordered to pay restitution, though the judge said he doubted whether victims of the scam will ever be reimbursed.
Federal investigators have never been able to account for more than $2.3 million in investments, leading to suspicions that it still might be comfortably tucked away in a niche of BCCI, the focus of a worldwide scandal.
Traylor stood stone-faced in a blue prison outfit and said, “I lost everything I own.” But Ideman retorted, “I think you have a couple million out there waiting for you” and that Traylor’s penalty must serve as a deterrent to others.
At another point, Traylor’s attorney Lupe Martinez suggested that his client should be treated like any other American. “Any other American who steals millions, you mean,” the judge interjected.
Assistant U.S. Atty. Steven M. Bauer said the company, which operated from 1983 to 1985, was one of the first in a long line of precious metal investment scams that were prosecuted. He said little of the $16-million total invested with First American Currency was ever converted to precious metals. Instead, Traylor used it to give himself a $1-million-a-year salary, pay an additional salary to his wife and to buy a $650,000 oceanfront home in Carlsbad.
When investigators started checking into First American, he then sent millions of dollars to the BCCI-affiliated bank in Panama where it would be out of reach. First American also gave rise to other suspects who would go on to play prominent parts in later scams, according to the prosector.
“It’s like watching an old movie and seeing the people in the bit parts who went on to become stars,” Bauer said.
Martinez said other men actually took the bulk of the funds from investors and that Traylor was a victim, too. Authorities are still seeking former First American co-owner Eric Bryan Kuvet and the accountant who allegedly arranged for the transfers to BCCI, William Carl.
Judge Ideman was not amused when Martinez suggested that the company’s investors were “not babes in the woods” when it came to knowing the risks.
“I can scarcely believe what I’m hearing,” Ideman shot back. “This company was a big fraud. They never bought precious metals.” Bauer supported the judge, saying most of the investors were simply “people who just called up on the phone.”
Ex-sales manager Thompson, who lived in Riverside, tried to portray himself as unaware that investors’ funds were being diverted. His lawyer, Mike Mansfield, said Thompson only pulled a commission-based salary that never exceeded $97,000 a year and that he lived modestly.
Bauer, however, pointed out that Thompson had bought a Mercedes-Benz and a cabin in the Big Bear mountains.