On the afternoon of September 15, after a meeting with a US embassy official at the Cafe Cafe restaurant on Avenida Balboa, American scam artist Thomas E. McMurrain was arrested by the PTJ.
Although McMurrain has for the past few years been using the Internet and the assistance of corrupt Panamanian officials to promote fraudulent real estate, noni and teak investment schemes, that was not the reason for his arrest. He was taken into custody at the request of the FBI, due to a 153-count federal indictment alleging a scheme by which McMurrain swindled more than 80 individual investors out of more than $9 million between 1997 and 2000.
The charges, filed in the Atlanta federal district court, describe McMurrain’s offenses as securities fraud, wire fraud, mail fraud, bank fraud, transportation of stolen moneys and engaging in monetary transactions in property derived from specified unlawful activity (better known as money laundering). The indictment alleges as aggravating special circumstances the amount of money stolen, the number of victims, the planning and sophistication of the scheme, that the offenses endangered the existence of a federally insured financial institution and that “the defendant was the organizer and leader of a criminal activity that was otherwise extensive.”
If he is convicted on all counts and the maximum sentences under the federal guidelines are imposed, McMurrain could spend the rest of his life in prison. It’s not that any of his alleged crimes carries a life sentence, and the large number of counts would be offset by the fact that prison terms for multiple offenses in the course of one scheme would largely be served concurrently. However, if the book gets thrown it would mean a sentence of several decades and an actuarial probability of McMurrain dying in prison.
Part of the criminal indictment is a forfeiture action, to recover as much of what it is alleged that McMurrain stole as possible. Typically in such cases, the revelation and surrender of all assets is one of the first things that prosecutors demand in a plea bargaining negotiation.
However, some of those assets are surely tied up in Panamanian real estate, beyond the reach of US authorities and in some cases sold or promised to innocent buyers. In the end there may be a series of legal battles in Panama between the US government and people whom McMurrain swindled in Atlanta on one side and people whom McMurrain swindled on teak and noni plantations in Panama on the the other, with Bocas del Toro real estate interests as the prizes. In any case, as McMurrain’s San Cristobal Land Development company was evicted from its Panama City banking district offices for nonpayment of rent last April, it appears that any proceeds of the alleged Atlanta scam have largely been dissipated.
The crimes for which McMurrain has been charged in Atlanta arise from the creation, operation and financing of a Georgia corporation, Emergency One Holding Corporation (EOHC), which was purportedly in the loan sharking business. EOHC was described as being in the business of “payday loans,” short-term loans at 25 percent per month or 300 percent annual interest rates. The company set up at least five storefront offices in Georgia. However, the usury racket as such wasn’t McMurrain’s money maker. That was just a front for an old-fashioned Ponzi scheme, wherein investments in EOHC were solicited, early investors were paid well from the money paid into the company by later investors so as to attract even more investors and meanwhile McMurrain was siphoning off funds for things like an Internet company that went bust when the dot-com bubble burst, generous “loans” to family and friends and a lavish lifestyle.
(No, McMurrain never described himself as a “loan shark.” However, that’s the proper colloquial American English term for EOHC’s purported business. Typically a mafia bailiwick, such operations exude aromas of sleaze and illegality. The sordid nature of the business worked to McMurrain’s advantage, because most people who have been swindled while investing in a business they know or suspect to be illegal are unlikely to complain to authorities about it.)
When the pyramid was about to collapse, McMurrain took the money and hopped on a plane bound for Costa Rica. There, he promoted a colonialist scheme of trying to make an independent country of a part of Costa Rica, which did not go over well with Tico authorities and thus prompted another move, this time to Panama’s Bocas del Toro province.
In Panama McMurrain created a series of companies --- a classic fraud artist’s shell game --- and purchased or otherwise obtained the support of former Vice-President Arturo Vallarino, former Bocas del Toro Mayor Eladio Robinson and the former regional IPAT director for Bocas, Mauricio López, all four of whom touted his noni and teak plantation schemes. He founded a Bocas Business Association, which purported to tell potential foreign investors who could or could not do business in the province. Along with López, he formed a vigilante group called the Angel Patrol, which local police accused of being a drug dealing front.
The basic frauds in which McMurrain indulged here were misrepresentations of the profit potentials of the teak and noni plantations he was selling, misrepresentations about the nature of the real estate interests he could convey and misrepresentations about the accessibility by land of a development at Palmira, on the Costa Arriba of Colon. For good measure, McMurrain threw in zingers like a claim that Bocas del Toro never gets any inclement weather. These misrepresentations were exposed in a series of articles in The Panama News.
The problem with promising good returns on Bocas del Toro teak is that the conditions in that area are not conducive growing those trees, as the Atlantic side dry season is too short. The problem with noni is that there is not a sufficient export market for the fruit, which tastes approximately like vomit but is said to have medicinal properties, to have produced the profits that McMurrain promised.
The problem with the real estate interests was that McMurrain was promising to convey titled land, but he had very little title to convey. Some of the land interests that San Cristobal acquired were in the form of derechos posesorios (right of possession, subject to the land’s occupation, use and improvement), but a lot of their real estate interests were in the form of land contracts with owners who held by derecho posesorio rather than by title. But in Panama, as in the Common Law jurisdictions, one cannot convey greater title than one has.
The problem with access to Palmira is that there is no bridge over the Cuango River, and though when the river is low enough it can be forded in a proper off-road vehicle, the track beyond Cuango does not reach Palmira, which is near the boundary between Colon province and the indigenous commonwealth of Kuna Yala. Yet McMurrain was telling potential buyers that the road to Kuna Yala --- a road that does not exist and was not then and is not now planned --- would soon be paved.
These issues made for some interesting business journalism, but the origin of the first articles about McMurrain and San Cristobal to appear in The Panama News was when Dutch journalist Okke Ornstein happened across the tale of a fugitive from Costa Rican child molesting charges, who was arrested here and deported. It turned out that the man had been one of McMurrain’s key employees, and Ornstein began to dig deeper into the surrounding circumstances. The resulting two-part story, which delved into McMurrain’s Atlanta past and some of the hoodlums in his entourage, was devastating.
In an attempt at damage control, McMurrain, through his publicist, University of Panama journalism professor Tomás Cabal, tried to acquire The Panama News. In another attempt, he unsuccessfully attempted to impersonate this publication’s owner and the author of this article to get the web server Datarealm to reveal access codes that would have allowed him to erase the critical stories.
McMurrain’s most audacious attempt to silence criticism, however, relied on the support of Attorney General José Antonio Sossa and prosecutor Julio Laffaurie Forero. The erstwhile Atlanta hustler, through his company San Cristobal International rather than in his own name, brought a curious criminal defamation (calumnia e injuria) charge against Okke Ornstein, author of the first two Panama News articles about McMurrain and his operations here and in Atlanta, and this journalist. Two noteworthy features of that criminal complaint were that it purported to attribute stories that were published by El Siglo, with which The Panama News and its editor/publisher have nothing to do, to this journalist; and that the complaint failed to identify any specific passage in the articles that formed the basis of the complaint which was alleged to be untrue.
Despite these flagrant defects, prosecutor Laffaurie ran with the complaint, going so far as to serve this reporter with an improper boleta de citación (summons), which purportedly called for a diligencia judicial (questioning by the prosecutor of a person who has not been charged with a crime) while at the same time listing this reporter as the accused. This summons was set for Carnival Friday. Because an accusation was already made, a diligencia would not be legally possible. But the Public Ministry has gained a certain amount of notoriety for calling people into prosecutors’ offices for some other reason, announcing that the real purpose of the appointment is an indagatoria (formal questioning under oath for purpose of use at trial) and then jailing the person for contempt if he or she insists on calling a lawyer before submitting to an indagatoria. To spring such a trap on a Carnival Friday would mean a week in jail, because due to the Carnival and Ash Wednesday holidays the courts would not be open again to hear a habeas corpus motion until the following Thursday.
And thus, in addition to the protection that Attorney General Sossa affords to virtually all criminals who use Panama as a base of operations for international fraud, his subordinate Mr. Laffaurie went well out of his way to assist McMurrain’s fraud by attempting to suppress criticism of it.
With Sossa and Laffaurie thus on his side, McMurrain made another attempt to acquire The Panama News, this time through an emailed extortion note threatening imprisonment if this reporter did not sell McMurrain this publication for $10,000. The offer was not only rejected, but The Panama News published the extortion note. The notoriety prompted many would-be buyers to demand their deposits back or otherwise break off dealings with San Cristobal, and subsequently the final collapse of McMurrain’s teak and noni plantation scheme and the closure of the company’s Panama City offices.
After that defeat, McMurrain tried to convert one of his would-be teak and noni developments, Big Bight on the Bocas del Toro mainland, into a tropical tree house development. Using a British company called Blue Forest as a front and keeping his name completely out of the publicity, McMurrain used Roger Gallo’s EscapeArtist.com to advertise $200,000 tree houses set on one-hectare forested lots --- to gullible foreigners who never considered such concepts as shallow-rooted tropical trees, the termites we get down here or Panama’s arboreal snakes. However, whether it was due to an incapacity to pay for the publicity, the bad name that its association with McMurrain was giving EscapeArtist.com or some other reason, about one month ago the Blue Forest promotions disappeared from that online publication.
Meanwhile, The Panama News published a four-part business section analysis of McMurrain’s Internet appeals. Following that, the US Consulate here issued a warning about real estate and commodities investments in Panama, which although it did not mention McMurrain or San Cristobal and which is also applicable to some other shady operations in this country, fairly well advised Americans to avoid the scam that McMurrain was running.
The criminal defamation charge brought by McMurrain’s company was partially vitiated on August 25, with the inclusion of this reporter’s name on Mireya Moscoso’s pardon list. However, Okke Ornstein’s name was not included. His prosecution could theoretically continue, albeit at tremendous risk of embarrassment to prosecutors.
The end of Tom McMurrain’s run here came not, however, as the result of his flagrant and notorious violations of Panamanian law. It was due to the pressure of a US extradition request.
That leaves a number of McMurrain’s accomplices in Panamanian criminal activities at large down here, and it’s possible that some of them may try to pick up the pieces of the Atlanta scamster’s empire.
Assuming that either legal or social pressures force McMurrain’s wife to leave Panama, that would leave Barry Miller, an attorney from Farmington Hills, Michigan who is not a Panamanian citizen and does not speak Spanish, and Dennis Smith, a US-Panamanian dual citizen, as the two McMurrain accomplices who are probably in the best position to assume control of San Cristobal’s assets. Then there are the members of the Angel Patrol, who as local people may have sufficient connections in Bocas to get some of the real estate transferred into their names.
The odds are, however, that when everything settles out the only asset that will be left behind in Tom McMurrain’s wake is a booby prize of eternal litigation.
Also in this section:
Panama News Briefs
Mireya's crowd gets audited and investigated
PRD picks up a legislative seat from the Darien
Argentine terror trial revives questions about Panama
Tom McMurrain arrested for massive fraud in the US
