Greed on Trial

Did Teresa Rodriguez and her well-heeled investors deserve one another?

The long-awaited trial of accused investment scamster Teresa Rodriguez debuted last week in Judge Sim Lake's federal courtroom amid dorky pastel pie charts, surreal tape recordings and a burnished parade of witnesses who left the distinct impression that the rich really are different from you and me.

For one thing, they could write $100,000 checks to Rodriguez with scarcely a blink, lured by the exceptionally juicy monthly returns she guaranteed on phantom government contracts -- fixed rates that mostly ran from 15 to 20 percent. From blond social X-ray Rose Mary Malone to a silver-haired gospel singer from Cincinnati, they wrote so many of those checks that when Rodriguez was busted by FBI agents in 1993, the onetime bookkeeper's accounting system was keeping track of more than $69 million in investor funds.

The woman who managed to divert a whopping $8 million of those funds to her personal use sat before the jury, demure and still, in suits as pointedly somber as widow's weeds. Her pouf of society Big Hair had melted into a fringed cap that tapered down her neck. The extravagant jewelry that was a Rodriguez signature in her early '90s heyday had melted away, too; now her earlobes shone naked in the courtroom's fluorescent glare. Even some of the abundant Rodriguez flesh seemed to have evaporated since her fall from grace. During intermissions, she clung to the defense table as if to a life raft, eschewing the schmoozy hall-walking some prominent defendants are prone to. When she did make an exit -- usually behind a hedge of lawyers -- it was in a scrunch-and-scuttle mode. Tiny, chunky, almost mousy save for her long, scarlet fingernails, she seemed an unlikely figure to have authored such financial chaos.

The Rodriguez investors who led off the government's case, on the other hand, hardly appeared to be hurting once you subtracted their general air of aggrievement. Socialites Malone, Betty Shindler and Virginia Ewing might have been dressed for a charity tea, so prosperous were their expensive suits and designer glasses and flashes of gold. Shindler, her posture as regal as any duchess, even sported one of the Chanel handbags Teresa once brandished as a way of bonding with her affluent marks.

The absence of hapless orphans and old folks in reduced circumstances put some helpful English on Rodriguez attorney Joel Androphy's opening volleys. His defense to mail fraud, wire fraud and money laundering charges was an audacious twist on a strategy common to murder cases -- the one that says the victim deserved to die. Rodriguez's investors, Androphy told the rumpled and shirt-sleeved jury, weren't investors at all: they were bad ol' fat cat loan sharks. At every opportunity, he tried to work the loaded words "River Oaks" into the record.

"Look," said Androphy during a break in the proceedings, "our argument is simple. Texas law says if you promise an unconditional rate of return, that is, a fixed rate, then that's interest, and that's a loan. An investment is not fixed. So by law these were loans." Moreover, Androphy contended, they were loans that paid an illegally high rate of interest, which would make the recipients guilty of the Shakespearean-sounding crime of usury.

He didn't deny that Rodriguez operated a Ponzi scheme, paying early investors off with funds culled from later investors further down the pyramid. He simply asserted that the investors had known what was going on and suggested that greed had prompted them to turn a blind eye. Ergo, no fraud. "You can't defraud someone by paying them the usurious interest rate you've promised them," declared Androphy, all muted intensity. (One courtroom wit, alluding to Androphy's more famous and excitable partner, likened his demeanor to "a David Berg who drank from the decaf pot.")

Denial, however, has yet to be made a federal felony, and denial -- or perhaps a willing suspension of disbelief -- was what seeped from the investors' testimony like sour milk. Malone, the former owner (and current landlord) of the upscale Rotisserie for Beef & Bird restaurant, testified in a scratchy voice suffused with traces of her native Germany that she had found it hard to believe Sophia Williams -- a neighbor at the posh St. James high-rise -- was really getting such large returns on her investments with Rodriguez. But after inspecting her friend's books and meeting with Rodriguez "for 20 or 30 minutes," Malone invested a total of $450,000 with very few questions asked, and lost it all. Why didn't she ask to see some of the government procurement contracts Rodriguez claimed to be getting under the 8(a) minority program? "I had faith she was doing all these things," maintained Malone, who was wowed by Teresa's "impressive jewelry," her "beautiful clothes," her social contacts and that notorious seat on the city's parks board conferred on her by Mayor Bob Lanier.

Why, Androphy wanted to know, was this the one investment of her life that the Wall Street Journal-reading, real-estate-dealing Malone hadn't bothered to thoroughly check out? Wasn't it because she was getting such an "astronomical" rate of return? Noting that (on paper, anyway) Malone had earned $60,400 in two months, Androphy accused, "You rolled that money over into a new contract because you wanted to make more money," managing to make America's pastime sound like some new form of obscenity.

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