Matthew McManus of Glenside and Nantucket and Arizona-based Andrew Bogdanoff, an ex-Philadelphian, started brokering business loans through the firm now known as Remington Financial Group in the mid-1990s.
On May 4, federal prosecutors in Philadelphia released an indictment accusing the pair of fraud. Just since 2005, according to the indictment, the pair has ripped off business owners by charging fees starting at $10,000 for locating loans they never actually intended to find. Several brokers who worked with them have also been charged; two have pleaded guilty. McManus and Bogdanoff are fighting the charges.
The prosecution surprised Philadelphia developers who had hired McManus to raise money from banks and investors and were pleased with the results.
From 2008-11, another firm McManus ran, NAI BlueStone Real Estate Capital, raised millions for at least a dozen Philadelphia-area projects. McManus closed deals while at both Remington and Bluestone, says his lawyer, Lisa Mathewson: “The McManus team closed as many large deals while operating as Remington in Philadelphia as it did while operating as Bluestone.”
"I'm shocked" at the charges, Ken Assurian, of Capital Realty Group, Media, told me. Bluestone raised $13 million in Beneficial Bank loans and equity from other investors for the 85-unit Arbors at Buck Run assisted-living community in Feasterville in 2010, Assurian confirmed. McManus "did a good job for us."
Leonidas Addimando, managing partner at Kensington-based 806 Capital LLC, also spoke highly of McManus's work helping raise $27 million for 806 and its partners to renovate the former Robert Morris Building and the former Northeast Hospital in separate projects. Bart Blatstein, who used McManus to help raise a total of over $100 million for Piazza at Schmidt's, Erbe Apartments, The Edge at Avenue North, and other projects, was also surprised at McManus' troubles.
Across the country, Remington clients tell a radically different story.
"I'm a victim," Ingrid Robinson, a retired therapist in San Anselmo, California, told me. Robinson says she sent $10,000 to the Remington office McManus headed in the expectation it would help raise funding for a development project she hoped to name after her late daughter. But "they did nothing." Angered, she began researching the firm - and found other Remington customners who thought they'd been ripped off around the world.
"They took our money," Gene Teigland., a Minnesota filmmaker, told me. He said he and his partners, at the recommendation of a New Jersey firm run by a Better Business Bureau officer, in 2006 mailed $28,000 to an account in Philadelphia on the promise that McManus' firm, with a "90 percent" success rate, would help raise millions. After the firm demanded additional cash, and failed to show it had done anything to attempt to raise funds, Teglind said he had to repay his partners the fee from his own scarce cash.
Teglind eventually heard from Robinson and helped collect more stories on alleged Remington frauds. She collated it and shipped it to reporters and law enforcement agents across the U.S.
Among them was Daniel Kristie, a former FBI agent who's now a lawyer with the Pennsylvania Securities Commission in Philadelphia. "Our regulatory counterparts in California had issued a cease-and-desist order" against Remington in 2007, "but Remington was ignoring it," Kristie told me. "They had an office here in Philadelpha... I realized under Pennsylvania law (these loans) were not securities. Therefore we did not have jurisdiction."
But when he looked at the apparent high failure rate of Remington's clients, "with my background as an FBI agent, I realized this was something called an advance-fee scheme," Kristie told me. "If you make representations" and charge fees, but have no intention of funding someone, "you can be criminally prosecuted."
He told Robinson the FBI wasn't likely to take the case unless agents suspected there were many victims or big losses. "She worked with us for nine months to get a list of victims" -- more than 800 '' and a dollar amount -- more than $10 million -- "that would get the attention of federal authorities."
Kristie praised the US Attorney's Office in Philadelphia for following through on the information, leading to the indictments. He suspects there are many similar cases. "We're trying to put together a unit in this organizatoin to help local prosecutors get securiteis fraud prosecuted." Gov. Corbett plans to merge the commission with the state Banking Department, which in the 2000s expanded fraud enforcement, though it has yet to tackle alleged fraud against business owners.