For a while, life was good for George Fatt and others who entrusted thousands of dollars in savings to Michael E. Hart, a former Towson-area investment adviser who allegedly moved money around as if it were a pea in a carnival shell game.
In time, they discovered that Mr. Hart, 34, was even quicker at emptying their bank accounts. In all, he allegedly embezzled $801,000, then fled with his family to San Diego, according to Carolyn Henneman, an assistant Maryland attorney general.
Mr. Hart, who had changed his name and appearance, was arrested there two weeks ago and returned to Baltimore County to face numerous charges of theft, fraud and income tax violations stemming from a grand jury investigation.
He was being held at the Baltimore County Detention Center on an $800,000 bond pending a bail review hearing today in Towson District Court.
His arrest may offer little hope for those who, like Mr. Fatt, "trusted him like a son." They had hoped to live out their retirement comfortably on the profits Mr. Hart would make for them.
On the investment seminar circuit, Mr. Hart had appeared young but sophisticated to the crowds who hoped to make smart investments. Many were blue-collar workers who had acquired some savings or received lump-sum payments upon retirement.
They were practical people looking for someone who could put their money in annuities, blue-chip stocks, money market funds and real estate -- something profitable but not too risky and not too taxable.
Mr. Fatt, a retired boilermaker at Bethlehem Steel, said that for three years the Cockeysville-based firm of Michael E. Hart and Associates had "done just fine by me," having shuffled his savings into whatever investment had the best yield.
But in 1989, Mr. Hart allegedly deposited $111,000 of Mr. Fatt's savings in his own bank account while leading the Dundalk resident to believe he had placed the money in an annuity. Mr. Fatt became suspicious after Mr. Hart "kept putting [him] off" whenever he asked for papers confirming the transaction.
Mr. Fatt said Mr. Hart repeatedly made excuses that he needed more time to get the money or that it was held up in the bank. Finally, Mr. Hart admitted that he put the money in his account for safekeeping and that his secretary used it to pay his bills, Mr. Fatt said.
"He never said he stole it. He said he sort of borrowed the money, but that was a lie, too," said Mr. Fatt, who agreed not to file criminal charges in exchange for a portion of the proceeds from the sale of Mr. Hart's house in Hunt Valley. Valued at $350,000, the house brought $250,000 last year at auction.
"When there's nothing else to do, you've got to go along with it whether you believe it or not," Mr. Fatt explained. "I didn't want to put him out of action if he had more irons in the fire. If I cut him off completely, I knew I was never going to get anything back."
Mr. Fatt got $80,000 from the proceeds of the sale of the house. Other clients were not so lucky.
Mr. Hart seemed like an "OK Joe" to Raymond Florence when they met 10 years ago at an investment seminar in Timonium. The men did business until 1987, when Mr. Hart could not account for $25,000 that should have been invested in a government bond.
"He had a different story every time I asked for proof that the bond was in my name," said Mr. Florence, who lives in Hamilton.
Most of the eight people Mr. Hart allegedly swindled declined to comment because they were too embarrassed or concerned that they would say something to jeopardize the attorney general's case.
Among those who want to avoid damaging the state's case are Helen and Leslie Chellis, owners of Hillendale Press in Towson. They lost more than $250,000, including funds from their company's employee trust account.
In 1989, the National Association of Securities Dealers fined Mr. Hart $15,000 for improprieties in selling partnerships in a North Carolina real estate project and other transactions. These sanctions touched off a grand jury investigation last year that apparently prompted Mr. Hart to flee with his clients' money.
Richard Alley, 64, who lost more than $100,000, said he was bitter that there was no regulation requiring financial advisers to obtain bonding to protect consumers from fraud.
Melanie S. Lubin, a chief prosecutor for the attorney general's investment division, said that it was not until October 1990 that the state acknowledged widespread abuses in the investment industry and began to regulate financial consultants.
She said the law now requires financial advisers to be approved by the state Division of Securities and to disclose background information to clients.
According to the attorney general's office, Mr. Hart faces a maximum of 273 years in prison and $73,000 in fines if he is convicted. Since he failed to file state tax returns for 1988 and 1989, he also faces five years in prison for tax evasion.