A few weeks after the segment aired, FBI agents arrested Scott on charges of defrauding his investors out of nearly $1 million. According to investigators, Scott worked two scams: promising a high return on investments, and charging fees for future loans. Nobody ever got what they paid for. The money all went to Scott.

For example, Scott told one investor about a major deal in a Chilean mining company that needed backers. The return would be quick and substantial: For a $350,000 investment, the client would get $450,000 — plus a 2 percent equity interest — back within ten days.

In another scam, Scott promised a business owner a $5 million loan for a $250,000 fee. Once the fee was paid, Scott told the businessman that the bank did not approve the loan, but Scott would be willing to personally provide the loan for an extra $125,000.

East St. Louis mayor Alvin Parks admits taking a chance on Scott but says it cost the city nothing.
Bill Greenblatt/UPI
East St. Louis mayor Alvin Parks admits taking a chance on Scott but says it cost the city nothing.
Evening Whirl publisher Anthony Sanders sensed that his golfing partner wasn't who he said he was.
Tom Carlson
Evening Whirl publisher Anthony Sanders sensed that his golfing partner wasn't who he said he was.

Part of Scott's ruse was to float names of black-owned banks as his financial sources. By working with Scott, clients would not only enrich themselves, but also the black community as a whole. Bernie Madoff used the same kind of affinity fraud to prey on Jewish investors.

Scott's con worked quite a few times, but not on everyone. One potential client notified the FBI, and another brought concerns to the Securities and Exchange Commission.

For those who did get scammed and then complained to Scott, they were met with threats and intimidation. Scott might have looked and sounded like Urkel, but he could quickly push that nerdy demeanor aside when confronted.

When a victim complained about not getting a loan he was promised, Scott threatened him: "If you badmouth us, I'll have an army of lawyers go after you!"

Another victim who realized he was scammed told Scott he would report him and ACI to the SEC. Scott laughed and said: "I have friends in the SEC. They won't take you seriously."

Scott was brazen in his theft, and he almost hinted at his true intentions in his e-mails to clients. In his auto signature, he had a quote that's often attributed to Albert Einstein: "Two things are infinite: the universe and human stupidity; and I'm not sure about the universe."

It's easy to see Fredrick Douglas Scott as nothing but a thief. But if his claims about growing up poor and being physically abused are true, perhaps there is some room for sympathy.

Scott, through his attorney, declined an interview request for this story.

According to a letter Scott wrote to the judge, his childhood was horrific. Growing up in Compton, California, Scott's mother was a drug addict, and his father was out of the picture. Scott had a stepfather, but he was the type who would only beat you harder if you tried to avoid a beating. Scott describes a time when he tried to use his foot to stop his stepfather's belt from cracking his skin. This only further angered his stepfather, who then burned Scott's feet with an iron so he'd learn to never do that again.

When his mother tried to interfere, she allegedly got a beating, too.

Scott claims he joined the army to escape the violence at home. While stationed in South Korea, he met his wife-to-be — the daughter of an Italian diplomat. They soon had kids, and by the time Scott was discharged, he had a family to support.

Eventually, Scott says he felt the pressure of needing to provide for his wife and kids, so he sought easy money — a lot of it. In his letter to the judge, he blames his childhood of abuse and insecurity for leading him to a life of fraud.

"This time I have been in jail has been a wake-up call. I see now that I had to hit that brick wall, and even though it hurt like hell, I am better for it," he writes. "I can see the triggers of fear that worked in my past — fear of being hungry or scared or homeless or alone. I can see how the rush of being admired and of having material things led to greed and infidelity. How true is the statement that 'hurt people hurt other people?'"

Now Scott says his family is hurting. His wife and three children are homeless, after several months of going back and forth between relatives' houses. Mrs. Scott is unable to work because of her immigration status (she's an Italian national), and her family disowned her because of her relationship with Scott.

At one point, things got so desperate that Scott's family stayed with his estranged biological father — the one who abandoned him as a child — in Georgia. Mrs. Scott had to leave once her father-in-law began walking around the house in the nude and made sexual advances toward her, according to a court document.

But all Scott can do now is be a model prisoner, which his attorney says he's doing by teaching other prisoners two things that got him into trouble: crunching numbers and selling yourself. That might seem ironic, but his fellow inmates need help with their math and job-interviewing skills. And Scott hopes the jailhouse tutoring will earn him some credit toward a shorter sentence.

« Previous Page
Next Page »