Tuesday, May 14, 2002

Law lagging


Why is Ohio stuck in 1913?

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        Imagine how you'd feel if you knew somebody was using your money to wallow around on Egyptian cotton sheets with umpety-ump thread count. Imagine him behind the wheel of a Ferrari, blowing Cohiba smoke over his shoulder. Picture him lolling on the balcony of his Aspen vacation home. Or sunning himself on the terrace of a Florida condo.

        There's a lot of that going around lately. Just ask the people who bought houses from Bill Erpenbeck. Or the people who bought Enron stock.

        Now, imagine you know where your money went, and government officials say it's fraud. But then they decline to help you get it back.

        About 200 people bought into something called the 10 Percent Plus Plan, billed as a no-risk investment with a tax-free minimum yearly return of 10 percent. Two years ago, the Ohio Division of Securities said the $15 million in promissory notes were fraudulent and ordered Cincinnatians George Fiorini and Stephen Ventre to stop selling them.

        It was too late for Mildred Finch, 77, who says she invested $264,000 on the promise that her money was safe. Instead, she claimed in a lawsuit filed last month, her money was squandered on “lavish lifestyles and expensive perquisites.”

       

Inventing the loophole

        If she'd been defrauded in any of 42 other states, state securities watchdogs would have gone to bat for her.

        But Ohio is still operating under a securities law enacted in 1913. By golly, if it was good enough for the people who voted for Woodrow Wilson, it's still good enough for the people who voted for Bob Taft.

        Coincidentally, the same year Ohio adopted its Securities Act, the federal income tax amendment was ratified. And the Sixteenth Amendment begat tax-free bond funds, rollover retirement accounts, 401ks, annuities — all the various ways people began trying to ensure that they would not outlast their money. And maybe even have a little bit left to give their children instead of their congressman.

        Investors who trusted their money to George Fiorini were not high-rollers. They were people like Jeff Ward's parents who will lose their house “just so they can have money for food and medicine,” he said.

        They were people like Dee Neeley. “You're talking to somebody below poverty level as far as income is concerned,” she told The Enquirer's James McNair. She lost $12,000, and “I don't have the money to pay an attorney.”

        State Rep. Wayne Coates, D-Forest Park, is sponsoring a bill that might drag Ohio into the 21st century. He says he just wants to make it possible for Ohio's Securities Division to help people get their money back. “The Commerce Department says it's not their job,” he says. “Well, let's make it their job.”

        This bill would simply allow Ohio to join 42 other states which have given themselves the power to seek restitution for their swindled citizens.

        I guess our legislators are still thinking it over. Maybe it will go to committee this week. Or next. Or maybe in another 89 years.

       E-mail Laura at lpulfer@enquirer.com or call 768-8393.

       



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