Con man's $80 million scam exposed
Federal investigators say Bernie Pavone scammed investors, customers with "magic" credit history cleanup
In a nice Oakland County neighborhood with an expensive Mercedes parked in the driveway, the Local 4 Defenders found a smooth-talking man who had no problem lying.
He said his name was Tony Morocco when, in fact, it's Bernie Pavone. It should come as no surprise how comfortable Pavone is lying.
Federal investigators say Pavone stole between $40 and $80 million from investors in, and customers of, his "magic disc," a computer program which worked like a virus, wiggling its way into data banks at credit reporting companies. It miraculously cleans up credit histories.
"It generated millions of dollars and some people invested huge sums of money in this bogus scam to avoid having to live up to their own credit report history," said Keith Corbett, former assistant U.S Attorney.
Corbett said the smooth-talking Pavone was saying all the right things at exactly the right time. Fear was running rampant. The economy was in the dumps. People were losing their homes. Car companies were refusing to give loans. Even business owners could not borrow money without perfect credit. The "whiz kid" Pavone had the secret, illegal, solution.
"This guy created a scheme whereby he convinced people that he had access to a computerized system that allowed him to get into your credit report and take away any bad information on your credit report and all together get it out of the system," said Corbett.
Of course, there was no real "magic disc," only a story. Customers and investors bought the story up in droves.
"Just by some magical means, presumably, getting out of the system, and thousands of people invested thousands of dollars and wanted to prevail themselves of this service which did not, in fact, exist," said Corbett.
Pavone increased his credibility by producing his own autobiography. It is a touching story of how he turned from a life of crime to creating one of America's fastest-growing companies. Yet, it was all part of his record-setting scam. Before his run was over, Pavone had acquired a beautiful million-dollar home in the hills of California. His next-door neighbor was mega movie star Eddie Murphy.
"It's hard to believe that people gave away so much money as part of that scam," Corbett said.
His victims paid a huge price and now provide a lesson to all of us.
"We are a remarkably gullible people. People buy anything people are selling. The people that step back and say, 'Well, let me check this out,' they end up being the ones that don't get burned," said Corbett.
Pavone is headed back to prison, trading in his Mercedes and mansions for a cell.
"For the people whose lives have been ruined, for the people whose financial futures are destroyed because they bought into his theory, they may not think it's long enough," said Corbett.
Pavone is facing a lengthy prison stay between 8 and 10 years, depending on how much he cooperates with the investigation and how much money he can return. Sentencing is just a few days before Christmas. His victims' gift could be Pavone getting the maximum sentence.