Whiskey investment scheme goes barrel-up

(MUSIC INTRO) [00:00:01] Bob: This week on The Perfect Scam. [00:00:04] Ray Stiefel: You own, you own the barrels. They're stored in a bonded warehouse generally in the vicinity of the

distillery, it's your property and typically what you do is you sell it either back to the distillery, and then they bottle it for you and put their label on it. Some bottles can sell

for hundreds of thousands of dollars you know if it's the right bottle. [00:00:27] Bob: Do you remember how you felt when you bought the whiskey? [00:00:30] Ray Stiefel: Uh I started

thinking, oh, okay, this was my future, this is my Social Security, this is my nest egg for 6 or 8 years. (MUSIC SEGUE) [00:00:43] Bob: Welcome back to The Perfect Scam. I'm your host,

Bob Sullivan. When we think of investments, we usually think of stocks and bonds, maybe even real estate, but there are many different kinds of investments like today's topic, whiskey.

After all, whiskey often increases in value over time. Now all investing carries risks, but these kinds of non-traditional investments really do come with some extra hazards. Never invest in

something you don't understand and you haven't fully researched, because as you'll see, scams can lurk in many places, even at the bottom of a whiskey barrel. But make sure

you're sitting down for the end of this story, perhaps with a tasty beverage of your choosing, because it's not something I ever recall happening on The Perfect Scam before. (MUSIC

SEGUE) [00:01:43] Bob: Tell me, before we get to our story are you or have you been a whiskey drinker? [00:01:46] I, I remain just moderate level drinker. I'm still learning to

appreciate the variety of whiskey. [00:01:55] Bob: That's Ray Stiefel of Ithaca, New York, one of those bad at being retired adults who is always looking for interesting opportunities

and interesting stories. [00:02:08] Ray Stiefel: I just like the lore, I like the, just the stories behind the creation of whiskey and the various techniques that are used. It's just

very interesting. That's what really allured me into the whiskey investing side of things, is just the, the lure of the uh industry. [00:02:28] Bob: And an ounce of whiskey is hours of

stories, right? [00:02:31] Ray Stiefel: Yes, it really is. There are something in the neighborhood of 120, 130 separate distilleries in Scotland. There's the, the Islands, which

includes Ila, which is a, a big producing area. There's um, Speyside, there's the Highlands, there's the Lowlands, there's Campbeltown, there's five. So I think

those are the five main ones. But the fact that whiskey in Scotland and Ireland takes three years to be able to be legally called whiskey, three years in a barrel before it's called

whiskey, before then it's called new make spirits. So it's a three-year process just to get the label of whiskey. In the United States with bourbon and Tennessee whiskey, it's

two years because of the weather and other conditions. But there's all these little bits of trivia that I find fascinating. [00:03:26] Bob: Ray's not the only one. Scotland is now

teeming with smaller distilleries as interesting classic small batch whiskey is experiencing a bit of a renewal. [00:03:38] Bob: Some of the have been sort of re--, reborn with old recipes

but new families, right? [00:03:43] Ray Stiefel: True, very true. The real estate and the buildings, they're still there. Sometimes they would go into nonuse, but yeah, I think with the

increased interest in, in the whiskey these days, some of them are being renovated and put back into production. [00:04:01] Bob: And as with all growing industries, there is an ever-present

need for investors. [00:04:08] Ray Stiefel: Well uh in simple terms, the distilleries are interested in recouping their costs, their production costs as quickly as possible, because a good

whiskey might take 8, 10, 12, 15 years before it can be bottled and sold. And that’s a whole long time to be holding onto a, a liquid in a barrel that's evaporating. [00:04:31] Bob: But

this is not like buying a stock that might pay you a dividend or something you could sell next week if you change your mind. You're, you're in it for the long haul, right?

[00:04:39] Ray Stiefel: Definitely, yes, yes. The uh, in the industry they call it your exit strategy. And that is the, the distilleries permission, well you own, you own the barrels.

They're stored in a bonded warehouse generally in the vicinity of the distillery, and you're holding on, it's, it's yours if it's done legitimately, it's your

property and when you want to sell it or you can have the barrel shipped to your house if you'd like to, you can even bottle it yourself, but typically what you do is you sell it either

back to the distillery, and then they bottle it for you and put their label on it, or some other conglomerate can buy up barrels and use it for blended. [00:05:27] Bob: But you, you buy a

barrel and ... [00:05:29] Ray Stiefel: Yes. [00:05:29] Bob: ... I mean I suppose if you want to, you could go visit your barrel, right? [00:05:33] Ray Stiefel: Yes, and taste it. [00:05:35]

Bob: And taste it, remarkable. [00:05:38] Bob: So whiskey investors actually own barrels of whiskey stored in a facility somewhere, often in Scotland. And it's possible to go visit the

barrel you own, to even taste it as it's sitting there aging. But is this a thing regular people really do? [00:05:58] Bob: That sounds almost like a hobby for rich people to me, but

first of all just roughly, how much, and I know that costs can vary, but how much could I buy a barrel of whiskey for? [00:06:07] Ray Stiefel: I would say the average price is probably

around $5000. [00:06:15] Bob: So not an obscene amount of money, and if people take that barrel of whiskey and bottle it, I mean how many bottles comes out of a barrel of whiskey roughly?

[00:06:24] Ray Stiefel: So it's usually bottled into what's called a 5th, or a liter. You can buy whiskey in typically you know several different sized bottles, but I would say

that the average barrel would hold maybe 250 liters, something like that. [00:06:41] Bob: So if you get 250 bottles out of a barrel... [00:06:44] Ray Stiefel: Yes. [00:06:44] Bob: And

it's $50 a bottle, that's $12,500. [00:06:49] Ray Stiefel: Yes. [00:06:49] Bob: And you paid $5000, and that's in three years. [00:06:52] Ray Stiefel: Uh no, that's

probably a little bit more because... [00:06:56] Bob: Yeah, more like 6 or 7 years, yeah. [00:06:57] Ray Stiefel: Yeah. It might be more. Again, the really high-quality whiskey, they might

want to hang onto a little bit more because it actually, kind of like wine. I mean wines improve over age and some wines don't. But you're correct. Those (inaudible) [00:07:11]

Bob: So this is, but this isn't, this isn't just for fun, real money, people make real money doing this, right? [00:07:16] Ray Stiefel: Yes. And some bottles can sell for hundreds

of thousands of dollars you know if it's the right bottle. [00:07:25] Bob: That's amazing. [00:07:25] Ray Stiefel: Yeah. [00:07:27] Bob: Okay, so how does a person go about buying

a barrel of whiskey? Investing in whiskey. [00:07:34] Ray Stiefel: Typically you don't buy barrels directly from the distillery. You buy through a broker, because the distilleries

don't want to bother with all the paperwork and all of that. So I was given a call from the representative of a whiskey broker about midafternoon, and yeah, I was, I was building a

house. [00:07:57] Bob: Building a house? Now you're going to have to explain that. [00:07:59] Bob: Ray was building a house. I told you he's a bad retired person. During the tail

end of COVID which he planned to sell with a friend. That's another investment. [00:08:11] Ray Stiefel: Yes, well, I, I have some building skills, and I have friends that have building

skills, and I thought, well our workload has decreased because of COVID, let's do this, you know within the group where we all carefully vaccinated, and uh there were five of us. I was

the, the primary financier. The five of us were, took us about two or three years to build a house because all of us were looking for work having been uh unemployed because of COVID.

[00:08:41] Bob: Wow. So this was a house that you built and sold? [00:08:44] Ray Stiefel: Yes. [00:08:45] Bob: Wow. [00:08:46] Bob: But during a break while working on the house, he gets a

call from someone who says he's a broker for whiskey firms. [00:08:54] Ray Stiefel: I got a cold call from an individual who said, "I understand you're interested in

investing." And I had been investing in the stock market. And that was all, never commodities, always in the stock market. And we spoke about it and he was very professional and ...

[00:09:10] Bob: So the guy, this guy calls. He has an accent? [00:09;13] Ray Stiefel: Yes, he did. He had a British accent. [00:09:15] Bob: Did he seem well-spoken? Did he seem young, old?

[00:09:18] Ray Stiefel: He seemed uh maybe in his 30s, and well-spoken, well-educated. And well-versed in, in uh, investing in barrels of whiskey. [00:09:29] Bob: So how long did you talk to

him? [00:09:31] Ray Stiefel: Probably half an hour. [00:09:33] Bob: And where did you leave it at the end of that first phone call? [00:09:35] Ray Stiefel: We left it that I would be

contacted by another individual who was an actual sales broker. [00:09:45] Bob: And, sure enough, about a week later another man with an accent calls and says his name is Casey Alexander.

[00:09:53] Bob: Do you remember anything about the sound of his voice? [00:09:56] Ray Stiefel: I couldn't quite place whether he was Irish or English. And I guess he's uh,

he's mostly Irish but he's lived in England for a long time. So he definitely had a, an accent from that part of the world. [00:10:08] Bob: Um, sure. Also seemed in his 30s or

something like that? [00:10:11] Ray Stiefel: Yes. Yeah. [00:10:13] Bob: And, and also very well-versed in the whiskey business? [00:10:17] Ray Stiefel: Absolutely. Yeah, very professional.

[00:10:20] Bob: In-between these phone calls, Ray had started to weigh the idea of investing in whiskey, and well, it held a certain alure for him. [00:10:30] Bob: Did you, you know google

whiskey investing, or do some research or anything like that? [00:10:34] Ray Stiefel: Very little, very little. I was not at all familiar with all the different brands and labels and types

of whiskey. My grandparents were Irish. There was often a little bit of uh, Irish whiskey during family celebrations, so I was familiar with the product. [00:10:54] Bob: So Ray goes back and

forth with Casey for a few weeks, and eventually he decides to take the plunge. Well, more like take a sip. He buys six barrels of whiskey which is basically the minimum. [00:11:08] Ray

Stiefel: He sent me an invoice for my first purchase. I'm going to say it was, it was six barrels, so it was probably closer to $30,000. [00:11:20] Bob: Okay. Um, but, but six barrels

of whiskey, that sounds like a, a, you know, a moderate step into this thing. [00:11:28] Ray Stiefel: Yes. Yep. [00:11;29] Bob: Do you remember how you felt when you bought the whiskey?

[00:11:32] Ray Stiefel: Uh I started thinking, oh, okay, this was my future, this is my Social Security, this is my nest egg for 6 or 8 years hence I'll be able to sell this, and he

didn't give me specific numbers but I had the impression that I would probably double my money. [00:11:51] Bob: Double the money in six or eight years. You know that's hardly an

outrageous estimate. An investment that grows 10% every year, doubles every seven years. And by the way, an investment the grows 7% doubles every 10 years. It's what's known as the

7-10 rule in investing. It's just math. Anyway, so Ray is thinking a few barrels of whiskey that can help him diversify his portfolio, plus... [00:12:16] Bob: But also it strikes me,

you know it's kind of unsatisfying when you buy stocks, isn't it whereas, you know, you just bought barrels of whiskey. That seems kind of fun. [00:12:27] Ray Stiefel: Yes, yeah.

Because I, I did end up visiting a lot of distilleries, so you could actually, as you said earlier, visit and, and uh knock on wood, literally your own barrel. [00:12:43] Bob: Okay,

that's getting ahead of ourselves. Perhaps it should come as no surprise that after that initial $30,000 six-barrel investment, Ray got a real taste for, well that scotch whiskey. So

when Casey calls again, about a month later... [00:13:00] Ray Stiefel: He said, "You know, the whiskey you have purchased, some of it was aged four years or six years already, so it

could already be bottled and marketed." He said, "If you wanted to diversify a little bit, you can buy newer whiskey, you can buy whiskey from a different distillery."

[00:13:21] Bob: Diversify even more, Casey recommends. Ray is hooked. [00:13:27] Ray Stiefel: He could sense my interest, my curiosity, my enthusiasm, and he would call me maybe once a month

with some new offerings, because each distillery has, they decide when they will bottle their barrels, and so it's like laddering. When you purchase stocks sometimes you ladder, buying

it at different times to smooth out the ups and downs of the market. You can buy whiskey in a similar way. You can buy a variety of whiskeys and you can buy whiskeys from different areas,

different techniques, different types of barrels. So there's, you know, a lot of variety. And he would just offer me different options to diversify my investments. [00:14:13] Bob: So

each month for several months Ray buys another set of barrels. Pretty soon his whiskey tasting investment has swelled into six figures. And as Ray's curiosity swells, he decides

he's going to visit Scotland, see the distillery business for himself. And along the way, he can meet his new friend and fellow whiskey enthusiast, Casey Alexander. [00:14:37] Ray

Stiefel: I was on my way to Scotland, actually my actually intention was to visit some of these distilleries into which I'd invested money. And I was transiting through London, and I

had a couple of hours, so I contacted Casey, and asked him, you know, maybe we could meet. And he said, sure. So I, I flew into London. I had about a 4-hour layover before continuing on to

Scotland, and he sent a car to pick me up at the airport. The car brought me to a nice restaurant in London where I met Casey. We had a nice meal together. He was very professional, very

well-dressed, very well-spoken. He was, I'm about 6'3". He was probably 5'11". Well he had a well-trimmed beard. He was really, you know he presented really well.

Every time I saw him, he was wearing a suit. [00:15:36] Bob: I mean was he funny? Did you have a good chat? [00:15:38] Ray Stiefel: We did, yeah, we did. He talked about his girlfriend, we

talked about, a little bit about his family, a little bit about my family. Yeah, it was very personable, it was very personal. [00:15:50] Bob: He felt like a friend at this point? [00:15:51]

Ray Stiefel: Yes. He did, very quickly he felt like a friend who was, you know, really trying to help me out. They make you feel like they're going out of their way, you're

special, they're going to help you out, do special things for you. And then his driver took me back to the airport for my ongoing flight. [00:16:09] Bob: So Ray goes on to visit

Scotland, and he's really hooked now, but his trip leaves him a bit unsatisfied because... [00:16:18] Bob: But did you go visit your barrels during this trip? [00:16:21] Ray Stiefel:

No. No, because at that point, none of the distilleries where in the area of where the distilleries were that I had invested in. Now because of COVID, some of the distilleries are not open

to the public, some of them are on reduced hours. Um, there was one called Tullibardine, Tullibardine, which is a whiskey quite near Glascow. And I drove by it, but it said, "Not Open

to the Public." So no, we never visited any of my barrels. Nope. [00:16:56] Bob: Ray owns these barrels, but he cannot visit them. So naturally he plans another trip a few months later,

and that's even more fun. In part because he gets to spend much more time with Casey. [00:17:10] Ray Stiefel: And the second time I met Casey, very fancy restaurant. The tallest, one

of the tallest buildings in London is called The Shard, and it, it looks like a shard of glass, of glass and you go, and the restaurant was at the very top. Invitation only. He had two other

people there with him and the four of us sat around and, and sampled different whiskeys and had little bites to eat. So it was, his, his, his budget, his expense budget was, must have been

a pretty fat one. [00:17:42] Bob: After lunch, Ray takes off across the UK for Scotland again, but this time Casey agrees to meet him there. [00:17:50] Ray Stiefel: I had a rental car, so I

picked him up in a town where we had agreed to meet. We just spent the day together. We went to two or three distilleries. He bought me lunch at a, at a modest restaurant, and he, he seemed

very knowledgeable, uh he, he claimed to know some of the people at those distilleries even though he didn't introduce me to anybody. But he had lots of questions to the tour guide,

because when you go to a distillery, you often go on a tour. He had a lot of interesting and, obviously coming from a well-educated person, a lot of questions for the tour guide. [00:18:28]

Bob: So he certainly sounded like he was in the business. [00:18:30] Ray Stiefel: Yes. Yep. And yep, he also had sent me, he had taken a, a very serious course in whiskey production. And

from which he got, he claimed he got a certificate. But he sent me pictures. I think he actually went to this seminar. It was a multiday educational seminar to learn more about different

kinds of whiskey and just to be more informed. And he sent me a picture of him at this seminar. That, so I think that was valid. [00:19:01] Bob: To give you an idea of these tours, Casey has

a very slick video he produced of a tour. He's a part of it. [00:19:10] (video clip) Come in here and watch what I do. It really just reaffirms my love affair with whiskey. I mean

you've got the art of making it, you've got the science of making it, the history, you know from prohibition through two world wars and everything else, um, and that's before

you've even drunk the stuff. So you know today I just feel extremely inspired by this whole process, this whole business. The beauty of everything involved. [00:19:43] Bob: So you can

understand by the time Ray gets home from this trip, well he feels great about his ongoing investments with Casey. [00:19:52] Bob: So about how many of these purchases did you make over the

course of a year or so? [00:19:57] Ray Stiefel: Probably, probably, I'm going to say 15. [00:20:02] Bob: And were they all in the $20,000 range or so? [00:20:06] Ray Stiefel: Yes. Yeah.

Because typically you buy in a lot, and a lot is six barrels. [00:20;14] Bob: Ah, okay. [00:20:15] Ray Stiefel: So six-barrel lots is kind of a typical purchase and when, when you're

offered whiskey, sometimes they require, because they don't want to deal with people just buying one or two barrels. So they will sell them in lots of six barrels. [00:20:28] Bob: So at

this point, Ray has invested about $300,000 with Casey during the past year or so. And perhaps it's no surprise, Ray starts looking into diversifying even more, buying from other

distilleries that Casey doesn't represent. Ray even makes a third trip to Scotland and that trip, well it's very different from his trips with Casey. [00:20:52] Ray Stiefel: I flew

back, again through London, but this time I was looking into another broker, and I called him up and I said, "I'm interested in investing, could I come visit?" And they said,

"Sure," and they, they picked me up and they brought me to their office. There was no food involved. There was whiskey tasting involved, but there was no, there was no food

involved. And I met, I met all the principals of the business, and they showed me their extensive uh collection of whiskey. So I felt very solid about that. [00:21:31] Bob: But suddenly, not

so solid about Casey. Remember, Ray and Casey had those fancy lunches, even visited distilleries, but Ray had never met the owners of any of the places he'd invested in, and he'd

never even met the barrels of whiskey. At this point, his concerns are still sort of vague, but only a few hundred miles away from Ithaca, someone else in the US is suddenly becoming very

concerned with whiskey investments. [00:22:01] Brian McDonough: My name is Brian McDonough, and I'm an Assistant United States Attorney in Cleveland, Ohio. [00:22:06] Bob: And what is

your territory? [00:22:08] Brian McDonough: So we cover the Northern District of Ohio which is the northern uh 40 counties in the state of Ohio. We have offices in Cleveland, Akron,

Youngstown, and Toledo. [00:22:21] Bob: And in those Ohio offices, there's a wee trickle of scam complaints coming in about investment opportunities involving liquor. One catches

Brian's eye. It sounds way too familiar. [00:22:35] Brian McDonough: We had a, a local referral from one of our uh local police departments of a victim who had invested money in, in

wine and in whiskey. And it was referred to a local department that referred it to some of our uh local law enforcement and community partners, and what we found out was that this scam was

actually a repeat of a scam that had occurred in the mid-1990s in California. [00:23:07] Bob: It was a remake. [00:23:08] Brian McDonough: It was a remake. [00:23:10] Bob: Oh my God.

[00:23:10] Brian McDonough: Here's the movie, The Sting, where Robert Redford and Paul Neumann and they, they have, the horse race, the posting, the post-action of a, of a running a, a

horse race, and it had that same flavor that we call that the wire. But in this case, the repeat of the scam was that there was rare champagne from France that was stored in bunkers, World

War II bunkers. [00:23:36] Bob: Oh wow. [00:23:36] Brian McDonough: Outside of London. And there was an opportunity to purchase this champagne. It was rare, it would only appreciate in

value, and as it turns out, it was a scam. There were no bunkers, there, there was no champagne, so that was the, the first inkling that uh this scam that started off with wine and then

actually evolved into whiskey, it was the first, the first inkling that something, something was wrong, that this was, this was a repeat uh on a cla--, a classic, uh, scam. [00:24:09] Bob:

So Brian and his team start doing their research, and they quickly find there's more than a trickle of complaints about liquor investments coming from all over. [00:24:20] Brian

McDonough: Yes, we then look to see uh, across the country, were there other reports of it, and in fact, there were. There were other state regulatory entities that were looking at these

suspect companies purporting to sell wine and whiskey, and there were numerous complaints across the country. [00:24:40] Bob: And many of the complaints named the same salesman. Casey

Alexander. So Brian and his team decide they need to dig into the case, but at the moment, they have a very big problem. Casey Alexander and everyone else seemingly involved in this scam is

in the UK. They can't go arrest them there. So they devise a plan to bring Casey to the US. There is a reason why Brian dropped mention of the movie, The Sting, earlier. [00:25:10]

Brian McDonough: Casey was a, from the United Kingdom and had actually flown uh from London to the United States to meet with investors in person. It was one thing to be able to get

investors to have an opportunity to, to talk with them on the phone, but to really get large scale investments, having someone in person would help the scam. So Casey came over and met in

person with various uh investors. [00:25:39] Bob: So the FBI speaks to another victim and asks, "Can you lure Casey to come to the US?" [00:25:46] Brian McDonough: So we had uh,

the way it worked was we had a, a victim investor ended up introducing Casey to another purported investor. And that investor was actually an undercover uh here in Cleveland, and then

through a series of text messages, Casey ended up coming to Cleveland to meet with this purported investor who was an undercover, and Casey had an opportunity to describe the investment into

whiskey. [00:26:16] Bob: Casey thinks he's flying to the US to land a big investment, but instead he's been lured by a victim who connected Casey with an undercover agent. But the

FBI doesn't arrest Casey right as he gets off the plane. The Feds want even more solid evidence of the crime, so... [00:26:36] Brian McDonough: He was actually uh in Cleveland, and

the, the meeting was, was set up and after he had met with the, the undercover, there was a follow-up meeting after that and Casey Alexander was arrested in downtown Cleveland en route to a,

another meeting. [00:26:51] Bob: You guys actually did set up a, a fake horse uh betting salon for him. [00:26:56] Brian McDonough: (laughs) That really would have been a Hollywood setting

on it, but considering the, the gravity and the scope, at this point, Casey was the front person in the United States for this investment scam. His name was on the bank accounts, he was the

face of this investment opportunity. If investors went to a website, they saw him on the, on the website. So the ability to uh take him down was very gratifying. [00:27:23] Bob: Was he

surprised? Was he, you know, resistant? Or how did it go? [00:27:27] Brian McDonough: For the actual takedown, he was shocked and surprised as well uh when he, he was arrested, he came and

gave up the whole story. He, uh he took responsibility and when questioned uh by the FBI about his role and, and what he did, he took responsibility and admitted exactly what, what he was

doing. [00:27:50] Bob: Brian meets Casey later the day of the arrest, and he is struck by mixed feelings. [00:27:57] Bob: Okay, so they brought him into your offices. [00:27:59] Ray Stiefel:

Correct. Uh, he was arrested on a complaint and he was uh, brought in that, that very day. And I looked and saw him and thought, how can this young kid be involved in, in international wine

and, and whiskey, uh, fraud conspiracy? [00:28:17] Bob: A young kid, I mean was he tall, lanky, did he looked scared? [00:28:24] Brian McDonough: Tall, thin, uh good-looking, uh had a

British accent. Was respectful, courteous, was uh intelligent and spoke very well. [00:28:36] Bob: Hmm, it sounds like you had, you felt a little sorry for him that day. [00:28:40] Brian

McDonough: Uh, it's a mixture. Uh, one is to get justice for victims, and that means just stopping the fraud itself. And yet, at the same time in any case where you're, you're

prosecuting a, a, a fraudster it's, I think part of the, the thought is what led them to this? How did they end up on this path? How could someone who obviously was very personable,

very likeable, had the ability to create instant rapport with people such as Ray, how do they end up choosing a, a life of dishonest, that there were obviously others involved. He was not

the only one. He was not the mastermind of the operation. But that he admitted uh what he did was wrong. He was a, a young, opportunistic kid who was looking for a way to better himself uh

financially, and this area of investing in whiskey uh or in wine was kind of a gray area when it came to, to Europe. It wasn't a highly regulated uh industry. So in this space, he

looked at, at it as an opportunity to go ahead and, and make some money and uh and better himself. [00:29:51] Bob: The arrest of a man running a classic scam, but updated for the whiskey

renaissance age. It's local news and Ray spots the story. [00:30:01] Ray Stiefel: The article said, "young..." let's see, how did it go? "Young whiskey scammer

steals $13 million from investors," something like that. [00:30:16] Bob: And who was the young whiskey scammer? [00:30:18] Ray Stiefel: Casey. [00:30:20] Bob: It's the Casey you

knew. [00:30:20] Ray Stiefel: Yeah. [00:30:22] Bob: Was there a picture of him in the story? [00:30:23] Ray Stiefel: I'm going to say no, but it had to be him. [00:30:27] Bob: You knew

it had to be him. What did that feel like? [00:30:29] Ray Stiefel: Like a punch to the stomach. [00:30:32] Bob: God, it's terrible. I mean you must have had some reaction like

there's got to be some mistake, right? [00:30:36] Ray Stiefel: Yep. That's why I started calling the distilleries about, you know, within a couple of days I would imagine I started

calling, yeah, I was, it was a panic, a time of panic. [00:30:47] Bob: And in that panic he starts to call the distillers that are supposedly holding his investments. [00:30:54] Ray

Stiefel: I had a list of all the barrels that I had from this one distillery, it might have been 10 or 12 at that point from, from this one distillery. I called them up and I had, I had

barrel numbers, and I spoke to the manager of the distillery and I said, I just want to verify that these barrels exist, and I gave him the numbers, and he said, "No, that's not

our numbering system. No, we don't have any barrels with those numbers." When they said no, there's no such nu--, numbering system in our warehouse, then I realized what had

happened and that, that I'd lost, you know I thought well maybe I lost some of my money, maybe it was just this one distillery. But I pretty quickly confirmed that all of it was a scam.

[00:31:35] Bob: God, that just terrible. [00:31:38] Ray Stiefel: Yeah. [00:31:39] Bob: Did you try to reach out to Casey? [00:31:41] Ray Stiefel: Yes, I did. And initially the uh, the

company remained reachable by phone in London. And he was always, you know, too busy or not available. The, there was also a representative here in the States who I believe subsequently was

also named as a scammer, and I couldn't reach him. So very quickly I could not reach anybody. They still had people in the office. And but I, I didn't unload on them because I

figured they were unaware of what was going on. [00:32:22] Bob: Ray is now worried that all his investments, some 15 sets of six barrels of whiskey worth supposedly $300,000, well it's

all a fraud. So what does a person do in that situation? [00:32:37] Ray Stiefel: What did I do. At some point I called Brian McDonough, he's, he's very supportive. He did say,

"Don't expect to get any of your money back." [00:32:47] Bob: How did you find him? [00:32:49] Ray Stiefel: Let me think. I, he, he might have been named in one of the

articles. [00:32:53] Bob: Okay, got it, yeah. [00:32:55] Bob: So now they have Casey in custody, but he's still a UK citizen, so that makes prosecuting the crime very complicated.

[00:33:04] Bob: So what kind of complexities did that create for the case? [00:33:07] Brian McDonough: For the case it was a little challenging because of the federal system. There are only

two options available and those options include being detained, being in custody or uh being permitted on bond. Well the logistics of having him on bond would have him, him go back to the

United Kingdom were, would be difficult. So the logistics of it was that he was ordered to be released on bond, but he had a geographic restriction in being uh required to remain in the

district. So he remained in the Northern District of Ohio during the pendency of his case. [00:33:42] Bob: It takes about a year to work through the case, and during that time Brian starts

reaching out to all the victims. [00:33:49] Bob: Okay, so once he pleads guilty, then you start reaching out to more victims and so did you talk directly to Ray? [00:33:57] Brian McDonough:

Yes, I, I talked to Ray throughout the pendency of the case. Ray had a uh, I would say a, a unique connection. He spent a lot of time talking with, with Casey. And I had the pleasure of just

spending a lot of time talking with, with Ray as well on it. [00:34:13] Bob: After more than a year of procedural wrangling, Casey pleads guilty, and Ray makes the trip for sentencing. And

that's where you'll find the surprise ending I've promised you. [00:34:24] Ray Stiefel: I drove to Cleveland, which from Ithaca is about a 4-hour drive, and coincidentally,

that's where I went to university. [00:34:32] Bob: So you know it, yeah. [00:34:34] Ray Stiefel: So I drove from Ithaca, and I, and I went to the courthouse and I met Brian, I met some

of the FBI agents, and finally Casey walked in. I hadn't seen him except for that, those two times. And he didn't make eye contact with me. He walked right to the, the, the uh

defendant table. The defendants were on one side and the uh district attorney, the prosecutors were on another side. And the judge who was a very uh, very nice guy... [00:35:06] Bob: Ray is

there to have his say. [00:35:09] Ray Stiefel: And everybody seemed fine. Asked some questions and at some point, he said, "I understand there's somebody here who would like to

give a, a victim statement." And that was myself. So I got to stand up at a little microphone and I told the judge and others my experience. There wasn't a jury because he was

already guilty, he already claimed to be guilty. I just said how it affected me, my finances. It was a blow to my finances, but I'll be okay, but it just, it hurt, and also my lack of

trust in, in people. Like I really thought I had trusted this guy, I thought he was a friend, and then he did this to me. So I made a couple of remarks. I spoke for a couple minutes about my

experience as a victim of this scam. [00:35:57] Bob: Because of the particulars of the case, namely Casey's UK citizenship, the judge orders Casey to leave the country and pay partial

restitution to the victims. And then something remarkable happens. [00:36:12] Ray Stiefel: The interesting thing is, as the court ended and I stood up and talked again to some of the, some

of the people, Casey walked by with his lawyers. He look at me and stopped, and it, it looked like he had a, a pained expression on his face. And he reached out. He was close enough to reach

out, to shake my hand, and at that point I was kind of feeling a little bit sorry for him. I mean here's a guy, I think he was in his late 20s, and he really messed up his life. Even

though I'm not 100% sure at what point he knew it was a scam. I don't know. There's... no one knows how culpable he really is except the fact that he sold things that

didn't exist. We shook hands and he looked at me and he, he was kind of tearing up a little bit, and he, he stepped forward and gave me a big hug. And he said, "I'm really

sorry, I didn't know this was happening." And then he walked away. [00:37:07] Bob: Wow. [00:37:08] Ray Stiefel: Yeah. [00:37:09] Bob: I mean that's just something that, that

never happens in the stories that we do here in the podcast that a victim and the criminal have a hug. [00:37:17] Ray Stiefel: He uh, and I, I received it. I accepted it. I didn't push

him away, I didn't hit him in the head. (chuckles) I just thought, you know, this guy, he's young, he, he was well-trained, mostly self-trained, and I think he was, it, it, it

could be that he was really looking forward to a long career in whiskey. And the people he was representing had other intentions. So I, I still don't know, I may never know, but it, it

could be that he was completely innocent and is paying the price of, of his future. [00:37:50] Bob: And by completely innocent, it's possible you think that he was a salesperson who

really thought there were whiskey barrels. He was unaware that there were no barrels. [00:37:59] Ray Stiefel: Yes, that's, that's a possibility. [00:38:01] Bob: Brian is bowled

over by the hug exchange between victim and criminal. [00:38:08] Brian McDonough: Ray was mer-, very merciful. He had forgiven Casey uh for Casey's conduct, and that is, that is rare.

Many times uh victims that have lost tens or hundreds of thousands of dollars, having that just severe emotional devastation the, the lack of financial stability, an uncertain future, often

there is, there is anger, uh there is, there is hatred, there is vitriol. In this one what impressed me was Ray's resilience throughout the, the process and that Ray had on that

journey, had, had arrived at a place where he could be heard and really wished the best for Casey and, and part of that could have been to Casey's youth on it, but really wanted him to,

to be better. [00:39:01] Bob: You know it's amazing and he, Ray described me a scene during the sentencing where they act--, he and Casey actually hugged and people around him were

mystified by that, but he meant it. [00:39:10] Brian McDonough: He really did. There's a, there was a connection and, and part of me as a federal prosecutor is always concern when uh

someone has that, that ins--, that rapport, that connection with a fraudster. Is this something that they obviously used, they feel emotionally connected and, and in this case, obviously an

investment of considerable magnitude on that part. Is this, is this someone who's exploiting someone for their own gain? But in this case, the, the, the path that Ray took to get to the

point where yes, he was financially assaulted in this scam, but then had the ability to accept that and look to, to move on and, and the power to forgive. One thing for financial fraud

victims is the ability to have some grace, uh, the ability for fraud victims often are blaming themselves. They, they feel that they're stupid, they feel that they really beat

themselves up over it and the idea is that no, the fraudsters are sophisticated, there's a script, they use psychological manipulation and techniques on it. And for Ray to have the

grace to forgive Casey is in a way forgiving himself and the ability to move on which is huge. It really is. You, these types of cases victims can get stuck in the inability to move forward

and the ability for Ray to, to do that, it's rare at that point in a courtroom to see that happen, but it's certainly so much for the better for Ray and for, for other victims as

well. [00:40:49] Bob: You are saying such a mouthful here. That's remarkable, this, this idea that the hardest person of all to forgive is yourself, but if you can forgive the criminal,

it's easier to forgive yourself and, and then you can move past it and get on with the rest of your life. That's remarkable. [00:41:04] Brian McDonough: Yeah, one technique is to

write a letter of forgiveness and to forgive yourself, and then at the end of writing that letter do something memorable with it; burn it up, throw it away. Close that chapter and allow

yourself the ability to move on. [00:41:21] Bob: Brian's got a lot of wisdom when it comes to scams. [00:41:25] Brian McDonough: One thing about investment scams is that they are really

targeted for, for people. If, if people think that their future is up to themselves, that it's based on hard work and determination, and people who think that they have an internal

locus of control, investment scams are for them, and scammers know that, and will target those people as opposed to others who might think that their future is up to fate and that whatever

happens will happen. And that there is an external locus of control. For those victims, lottery scams are specially tailored for them whether it's the Irish Sweepstakes or the Jamaican

Lottery. So in Ray's case having that in-- investment fraud scheme tailored and directed uh to him, for him to be able to go ahead and be able to move forward is, is, is huge.

[00:42:26] Bob: It's so interesting the way you put that, however. Um, we talk a lot on The Perfect Scam about how first of all anyone can be a victim, but also that there's a scam

for everyone based on who you are and where you are in life and whatnot, and that there are different kinds of people who might be targeted either by a lottery scam or by an investment

scam. That's fascinating. [00:42:44] Brian McDonough: Yes. [00:42:44] Bob: The most important part of these conversations of course is, is what takeaways you want listeners to have. So

when somebody hears you talk about this situation, when somebody hears, hears Ray, what do you want them to learn from it? [00:42:56] Brian McDonough: Any time that someone is offered an

opportunity to invest, uh it's such a good idea to talk about it with another person, whether that be another financial advisor, an accountant, a banker, any trusted person, that's

important always to have someone else's input and guidance. Investment fraud is tricky. Some of the resources available would include going to FINRA uh and FINRA uh is the Financial

Industry Regulatory Authority. And one can look up a particular broker or investment advisor or dealer, or in your own individual state to look up. And, and by doing so, to look up and ask.

The other thing to be aware of is anything regarding is this investment opportunity, is it regulated? And in, in terms of wine or whiskey or even today, cryptocurrency, those aren't

regulated. So as investors, there's absolutely much more risk involved in that. And then if someone does invest, and they, it turns out to be a scam, the most important thing is to

report it. Sadly, many older Americans feel ashamed, embarrassment, and fail to report it. So to be able to report that scam, and whether it be to your local police, whether it be to the

Federal Trade Commission, whether it be to the Better Business Bureau, any reporting of it, including IC3.gov, the Internet Crime Complaints Center, allows for authorities to investigate,

and they were able to go ahead and link up these bad actors and whether they're domestic or whether they're international, uh as part of transnational crime, that's the most

important thing. [00:44:59] Bob: Sometimes it's hard to know where to report the crime to. You, you mentioned state securities regulators for example. I don't know that most people

would know that there's a state office they could complain to for something like this. [00:45:09] Brian McDonough: Yes, yes, and there is an overlap on some services between federal

and state and you would simply check with your local state. All financial institutions are regulated, but they're, typically every state has a division of securities, so if

someone's selling stocks, bonds, annuities, or like in this case, a commodity, there will be a state agency and simply by consulting with another person or, or checking with another

entity can find out a little bit more about the investment. Is this legitimate? Have there been complaints about this broker? What are the risks that are involved? There's no 100% way

uh to, to make sure but there are ways to at least reduce the risk. Uh, there's no way to prevent a dishonest broker, but the ability to talk to others and to look at state or federal

regulators could help lessen or, or mitigate that risk. [00:46:16] Bob: Ray is trying to move on with his life. Of course, still reeling from the theft of $300,000, hoping he'll see

some of that restitution Casey was ordered to pay, but not holding his breath. [00:46:29] Bob: He's now free in the UK, right? [00:46:31] Ray Stiefel: I believe so. But if there are any

international agreements that felons are free, but they had to make compensation. I did speak to Brian a couple of weeks ago, and I said, you know, has anybody heard from Casey? And Brian

said no. I don't know, I'm going to call him again because he's very approachable. And if, if I call him at a time when he's not available, I leave a message and he,

he'll call me typically the same day, even on his way home from work he will call me. He's that kind of guy. [00:47:05] Bob: The pain he feels from the crime lives on as does the

impact. [00:47:12] Ray Stiefel: The immediate emotion is fear. Not for my own uh physical well-being but for my financial well-being. I do a lot of international, domestic and international

welfare. You know I've been to Ukraine several times helping out with construction and renovation and food distribution, so I give a lot of my money to charity. I've worked for the

World, The Kitchen, I don't what they call it... anyway International Food Service and donate money and time and labor to different organizations. So the biggest thing, my biggest

concern, 'cause I'll, I'm fine. You know I wasn't planning on buying a yacht. World Central Kitchen is the... [00:47:57] Bob: You mean José Andrés' thing, right?

[00:47:58] Ray Stiefel: Yes, yeah, I volunteered with them a couple of times in both Poland and, well mostly Poland 'cause they pulled out of Ukraine, but I've worked with him in

Poland, World Central Kitchen. And so part of my biggest disappointment is not being able to help out as much as I had hoped to. And I can pretty much guarantee that all the money that I

lost would have gone towards those kinds of organizations. [00:48:19] Bob: Ah, that's just a terrible thing. So whoever stole that money, they literally stole it out of the mouths of

people who really need help, right? [00:48:27] Ray Stiefel: Yep, yeah. It would probably cost lives. Again, I did some renovation of bombed buildings over in uh, over in Ukraine and

that's the biggest hurt is, oh my God, I can't do everything that I've been wanting to do and planning to do. [00:48:40] Bob: Wow. [00:48:40] Ray Stiefel: So again, I'll,

you know, it puts a ding in my own personal lifestyle but not terribly impactful, but just I'm the kind of person that I, I like to give. I like to give away, and it just, I mean

there's less to give away. [00:48:56] Bob: And he's left feeling more distrustful than ever. [00:49:00] Ray Stiefel: So my investment in whiskey was an attempt to make sure,

'cause as my income goes down as I get older, I wanted to have other sources of income, and that's what the investments were for. So it doesn't affect me or my willingness to

give, or my trust in other people that I'm giving to, uh yes, I, I'm, I'm more distrustful of anybody that comes to me with an offer, but it just makes me sad that I, I

can't help. So that's the most impactful thing is the people that I could have helped that I won't be able to. [00:49:31] Bob: What sort, sort of advice do you have for people

who might be listening to your story? [00:49:36] Ray Stiefel: I would say, you know some people operate more on intuition, but do, do everything you can to inform your intuition and to

inform yourself as a good investor. Visit, do as many visits as you can. I mean there are all kinds of investments. Um, this one is not regulated by the US government. I mean most of our

stock market activity is regulated by the government and I, I trust my government, but yeah do, do all the vetting, do and, and visit, look at people, go to the site. You know if

they're making something, go to the factory. You know $300,000 is a lot of money for a lot of people, and so don't invest any more than you can afford to lose, which is an adage

that we hear all the time. [00:50:25] Bob: Sure. [00:50:25] Ray Stiefel: And do all the research that you can, meet the people, look them in the eye, and yeah. [00:50:31] Bob: When it comes

to whiskey investments, it turns out there are some regulations Ray didn't know about designed to protect investors. [00:50:39] Bob: And did you ever get any kind of like statements or

in, like receipts or any, any kind of paperwork on these things? [00:50:45] Ray Stiefel: Yes, and that's the other thing that people investing, particularly in whiskey, need to be in

the lookout for. There's something called a delivery order. I never got one and they never sent me anything close to what was a industry-wide accepted proof of purpose. That they did

send me invoices and paid statements which anybody could make up, which apparently they were doing. But I never received what was called a delivery order, which is a very official

government-certified document stating that this is your barrel, this is the number of the barrel, and hang onto it until you sell your barrel. [00:51:32] Bob: Sounds kind of like a car

title. [00:51:33] Ray Stiefel: Yes, yep. Something very official. But I was too naive to... [00:51:40] Bob: But, but you didn't, you didn't know that existed at the time, right?

[00:51:42] Ray Stiefel: I was told that, you know I would, eventually I went online and googled for whiskey investments, and there are a number of, I would say reputable teachers,

professionals who can warn you of, 'cause they don't want the, the whole industry to get a bad name. So there's plenty of information out there should you avail yourself of

it, so doing a lot of research, even though I thought I had, did not safeguard my investment. [00:52:14] Bob: And let's just make sure to say this; any investments in these kinds of

industries are very risky. You shouldn't consider them unless you do a lot of research, and even then, know that you could lose all your money. Most people should just stick to

straightforward investments like those available like a 401k or a IRA. And also, most of all... [00:52:36] Bob: You had also said something about cold calls. [00:52:39] Ray Stiefel: Yes.

Cold calls are, we're told, are an indication, you know, that if they're reaching out to you instead of you reaching out to them, don't respond. [00:52:50] Bob: If you

didn't do the reaching out, just don't answer the phone or return the call. That's the best, simplest advice. For The Perfect Scam, I'm Bob Sullivan. (MUSIC SEGUE)

[00:53:12] Bob: If you have been targeted by a scam or fraud, you are not alone. Call the AARP Fraud Watch Network Helpline at 877-908-3360. Their trained fraud specialists can provide you

with free support and guidance on what to do next. Our email address at The Perfect Scam is: [email protected], and we want to hear from you. If you've been the victim of a

scam or you know someone who has, and you'd like us to tell their story, write to us. That address again is: [email protected]. Thank you to our team of scambusters;

Associate Producer, Annalea Embree; Researcher, Becky Dodson; Executive Producer, Julie Getz; and our Audio Engineer and Sound Designer, Julio Gonzalez. Be sure to find us on Apple Podcasts,

Spotify, or wherever you listen to podcasts. For AARP's The Perfect Scam, I'm Bob Sullivan. (MUSIC OUTRO)__ _END OF TRANSCRIPT_