Best-Selling Author Biggest Loser in Investment Scheme
Nov. 22, 1995
WASHINGTON (AP) _ Tom Clancy, the best-selling author who described an elaborate Wall Street fraud in a recent novel, now says he's the biggest victim in a $6 million securities fraud case in Maryland.
Clancy invested $1.4 million of his own money and $500,000 on behalf of a private school in Calvert County, Md., with Richard A. Scott of Alexandria, Va. Clancy and Clancy's wife, Wanda, struck up a friendship with Scott during a Baltimore Orioles baseball game in 1992.
Clancy was listed as the largest creditor when Scott's business, Goldie's Coin and Stamp Center in Camp Springs, Md., filed for bankruptcy protection earlier this month, said Scott Stapf, a spokesman for Clancy's family.
Although investors gave Scott more than $6 million between 1992 and 1994, brokerage accounts for Goldie's and Scott had about $408,000 remaining as of Oct. 31, court records say.
Clancy's involvement in the cases was reported in Wednesday's editions of The Washington Post and The Wall Street Journal.
The Maryland Securities Division filed a civil complaint against Scott on Nov. 10, alleging dozens of Maryland residents lost money in two investment schemes operated by Scott, who authorities say wasn't registered to sell securities in the state.
Scott operated two investment programs, one of which guaranteed a 15 percent return through investments in gold coins and stamps while the other was a fund controlled by Scott that invested in technology and pharmaceutical stocks, according to court records.
Maryland regulators allege Scott said the stock fund had an investment return of 30 percent a year.
Scott's attorney, Wallace Christensen, wasn't in his office Wednesday, a receptionist said. But Christensen was quoted by the Post that his client didn't intend to defraud anybody.
``Anyone who is aware of the facts is going to conclude this is just an issue of investments gone awry,'' Christensen was quoted as saying.
Maryland securities regulators charged Scott with numerous violations, including state antifraud laws, failure to register securities, operating an unregistered mutual fund and failing to register as a securities broker or investment adviser.
``This was not some high-roller, ultra-risky investment strategy,'' Tom and Wanda Clancy said in a statement. ``To the contrary, Scott presented it as an extraordinarily safe and solid investment program. We didn't intend to be part of speculative tactics like options or buying on margin. That's not how it was presented to us.''
The Maryland complaint alleges that Scott's stock investment fund relied heavily on volatile stock options trading and heavy borrowings.
Clancy, a best-selling author of novels such as ``The Hunt for Red October,'' is one of the nation's celebrity writers. In ``Debt of Honor,'' Clancy detailed an attempt to disrupt a computerized banking system central to the operations of Wall Street.
At a hearing on Goldie's bankruptcy petition in federal Bankruptcy Court in Greenbelt, Md., a judge removed Scott and his business partners as ``debtors in possession.'' That move clears the way for an independent receiver for the business, said Ellyn Brown, Clancy's attorney.
Judge Paul Mannas delayed until Friday a decision on whether to allow the case to be removed from bankruptcy court, which would let state securities regulators control the financial cleanup of Goldie's, she said.