Pay attention, because this scam is a tricky one.
Here's the quick and dirty: A company lures unemployed professionals to its fancy office with the promise of offering premier career-counseling services. The counselor is actually a salesman, who verbally and illegally guarantees the client a cherry job in as little as six weeks. The counselor-salesman tells the client the company has a secret list of all the good jobs. All the client has to do is pay a minimum of $5,000, sign a perfectly legal contract and circle "no" on a questionnaire that asks if he was promised a job. If the client asks about that, the salesman assures him that it's just legal mumbo jumbo. Vulnerable, afraid of tapping too deeply into savings, the client goes along with it.
The professional client is now a professional schnook. He has forked over five grand to a counselor who might as well be that Nigerian millionaire who wants your bank account. After a few months of not being bombarded with job offers from the Fortune 500, the client realizes he's been had. But when he tries to get his money back, the company points to the contract. If the client complains to the Better Business Bureau or the attorney general's office, the company might kick back one or two grand, but the client must sign a confidentiality agreement saying he will not disclose any info to a third party. The company has now bought the client's silence and cleared three or four grand. That silence allows it to continue at will.
Now, imagine if this private company were a franchise, with outlets throughout the United States and Canada. Imagine that its name ultimately became so muddied in the industry that it sheds it like a snake sheds its skin, leaving franchisees to grow new scales while perpetrating the same old scam. Imagine if the counselors used answering services and constantly switched e-mail addresses to keep the schnooks at bay.
Now, imagine that while attorneys general in other states finally figured it out and sued the franchisees and the higher-ups, the Texas legislature was deregulating the industry, making it easier for this company to perpetrate its scams. And finally, imagine that, while the three key players coalesce in the Dallas and Houston offices, the Harris County district attorney's office and the state attorney general's office could give a rat's ass.
This part you don't have to imagine: In Texas, it's every schnook for himself.
The posh offices of TCM International are located in the Wells Fargo building near the Galleria.
The firm purports to offer career-counseling skills to unemployed professionals accustomed to substantial salaries. Last year, it was called Bernard Haldane Associates; three months ago, it was BH Careers. Sometimes it was two different names at the same time. A May 8 classified ad in the Houston Chronicle calls it TCM International, but a May 25 confidentiality agreement signed by a schnook identifies it as Bernard Haldane Associates (Haldane).
Moreover, two TCM International classified ads that ran in the Chronicle in April listed TCM International's Web site as careerpositions.com, which is also Bernard Haldane Associates' site. The company's president, Ian McClure, told the Houston Press that the listing was a mistake on the Chronicle's part. But keeping the story straight is a bitch -- when the Press called TCM International's office in July, a secretary said their Web site was careerpositions.com.
The company's official name is Texas Career Management, according to articles of incorporation filed with the Texas secretary of state. Founded by three Haldane heavyweights, the company has since abandoned its Haldane/BH Careers monikers and kept TCM (which has a physical address and a Web site) and SAS, whose function is not clear.
The founding fathers are Ian McClure of Dallas, the former regional director of Haldane; Geoff Coy of Cincinnati, a onetime Haldane "Man of the Year" who operated Haldane offices in Ohio; and Jerold Weinger, whose background is so awesome that it'll have to wait.
For convenience's sake, the Houston Better Business Bureau -- like other BBBs throughout the country -- lumps all Haldane derivatives together under the Haldane umbrella. The complaints all mirror the scheme described earlier. Houston's Haldane files even include e-mail chatter among nationwide BBB directors about the problems they've had with the Haldane hydra.
Houston's BBB files are full of form letters from McClure to outraged clients, and the subsequent confidentiality agreements. Several complainants wrote that their counselors told them to fudge their paperwork. In some cases, clients initially circled "yes" to a question asking if they were verbally promised a job, but then crossed it out, initialed it and circled "no." (These questionnaires are in the BBB's files.)
One complainant wrote that her counselor said she would have trouble finding a job because she was an attractive black woman. One recent college graduate said she maxed out her credit cards to pay $5,560 for a "dream job" she was guaranteed in three months. She wrote that she had to get a second full-time job to cover her expenses.
In one of the more colorful complaints, a client wrote, "I feel like I have had the preliminary activities that lead to pregnancy visited upon me by [Haldane]. And, when I object, Bernard Haldane just offers more preliminary activities. They are slugs mining the financial resources of the out of work and dispossessed. And, doing it without conscience."
It appears that McClure and other Haldane reps sent out so many form letters in response to complainants that, in at least one case, a client received a letter with another client's name on it. None of the complainants received a full refund.
"There's a hot-spot in BBB hell" for career-counseling scammers, opines Houston BBB President Dan Parsons. Parsons has battled for tighter regulation of the industry since the late 1980s. He says fraud flourishes through greed and vanity, but it's particularly slimy when predators target desperation.
In many states, employment firms have to be licensed for their specialties, be it job placement or a hodgepodge of "sell yourself" skills called career-counseling. Career counselors are not supposed to say they can get you a particular job at a particular firm; rather, they tell you how to make yourself stand out among all the other competitors for a certain type of job. But by the 1980s, career-counseling services started doing just that, Parsons says. Complaints appeared to taper off in the 1990s, perhaps because of a better economy, or the fact that there got to be more career-counseling services than schnooks. Haldane's mid-1990s SEC filings (when it was a public company) warn of dwindling returns in the face of a saturated market.
Parsons says the scams are slowly creeping back up, hitting older outplaced executives especially hard. His crusade for tighter control over these companies was rebuffed in June, when the state legislature told the Texas Department of Licensing that it no longer has to license career-counseling firms. As a result, all pending investigations and disciplinary actions were eliminated, and the department had to refund the firms' bonds.
While Texas was cutting a check to Haldane, attorneys general in other states decided to sue the company for fraud. In Kansas, Haldane offices were forced to refund $300,000 to consumers in 2002. The offices did not admit any wrongdoing.
A year later, Illinois AG Lisa Madigan filed suit and appeared on a CBS special about Haldane, saying, "They are giving people false hope, but what they're getting is a lot of people's money for it." Last year, Minnesota AG Mike Hatch filed the most detailed suit yet against the company, including excerpts of a sales script highlighting the Minnesota offices' illegal tactics:
[During the initial interview] do not get into debates over how we work with clients. If they blurt out, "Do you charge a fee," or "is there a fee for this," or "who pays the fee?" You say "NO."
Tell the client the next two months are crucial, no matter what time of year it is. Clients who come in between Sept.-Nov. should be told "the market [is] heating up in January, you have to make all your contacts in the fourth quarter, or you will not be in the January rush." Clients who come in between March-May should be told "you need to get hired before school lets out." Those who come in during June or July should be told that "you need to get in before school starts." [This tactic appears in a Houston BBB complaint.]
Current and former Haldane franchisees outside those states say they shouldn't be lumped in with the bad eggs. McClure is not an exception. In a statement issued to the Press, McClure described his staff as "dedicated professionals whose only purpose is to ensure the career success of our clients TCM is not affiliated with Bernard Haldane Associates. We are a distinctly different company offering different services, approaches and benefits to our clients."
Which begs the question, What the hell is TCM International?
Its Web site doesn't do much to explain. The site claims that the company is "the Southeast Texas branch of a worldwide career management and marketing association," an awkward statement implying the "marketing association" has a name other than TCM International. But if that's so, it's never named, and there are no links to branch offices or corporate HQ. The only TCM Internationals that LexisNexis and Google turn up are a European tool company, a "traditional Chinese medicine" supplier and a Christian ministry in Indianapolis.
Furthermore, up until August 11, the only client testimonials posted on the Web site had been lifted verbatim from testimonials on the BH Careers site. Those testimonials purportedly came from satisfied customers, identified only by initials, from BH Careers' Tampa office. The day after the Press asked TCM International's attorney why that was, the testimonials were removed from TCM International's site, and the entire Tampa office disappeared from BH Careers.'
Confused yet? Just wait.
In his statement to the Press, McClure is identified as the company's president. But in a "Background Information Questionnaire," the president is identified as none other than Cincinnati's Geoff Coy. (Coy appears to have ditched the Haldane name in Ohio, settling on the bland but functional Geoff Coy Management Group. He did not return our phone calls.)
In order to clear up the confusion, the Press went all 60 Minutes on their ass and sent in our own applicant. But first, we need to talk Jerold Weinger, the birth of Bernard Haldane and the truth behind the "secret" job market. And that's where things get really tricky.
In 1987, Jerold Weinger was the CEO of a Wall Street brokerage firm crushed under an avalanche of coke.
One of the firm's partners, six brokers and a receptionist were arrested in a massive U.S. Drug Enforcement Administration Wall Street sweep called Operation Closing Bell. A ninth employee was arrested in the firm's Florida office. Partner Wayne Robbins ultimately pleaded guilty to drug charges, and seven of the eight others either pleaded or were found guilty of possession, distribution or conspiracy to distribute cocaine, according to the DEA's New York office.
According to federal court documents filed in the Southern District of New York, brokers at Brooks, Weinger, Robbins & Leeds regularly traded stock tips for cocaine. In one instance, a broker gave cocaine to a principal of another company in exchange for $10,000 worth of stock in that company's initial public offering. At one point during the sting, a broker was arrested on drug charges and fired from the firm. A day later, he was rehired "because he was a good, trusted source of cocaine."
"Cocaine use and distributions were widespread in the Brooks premises during office hours," court records state. "Drug transactions were consummated on a daily basis, often in the men's room or in an area known as the 'board room.' "
Weinger, who was not arrested, issued a statement denying allegations of systemic drug use at his firm: "The firm of Brooks, Weinger, Robbins & Leeds, Inc. does not believe that cocaine distribution is widespread at the firm, or used as a medium of exchange for financial services."
The firm had been in trouble even before the 1987 busts, according to a New York Times investigation, which revealed that the U.S. Securities and Exchange Commission charged the firm with stock manipulation once in 1976 and twice in 1981. The firm settled each charge without admitting guilt, but was ultimately suspended from underwriting "over-the-counter" stocks for two and a half years.
And court records show that before and after the 1987 sweep, the SEC had fined and suspended Weinger for violations of the Securities and Exchange Act's antifraud statutes. States in which the firm had other offices had also fined and suspended brokers for fraudulent behavior. Weinger was personally suspended for 90 days, although he never admitted any wrongdoing.
The final blow came in 1991, when the National Association of Securities Dealers fined the firm $1.4 million for manipulating stock prices. The firm was booted out of the association, and its top officer, Michael Leeds, was banned from the industry.
The NASD expelled the firm after discovering it had marked up the price of stock in a medical supplies company by as much as 112 percent over market price. In its decision, the NASD stated: "In the first day of aftermarket trading, [the firm] exploited the ignorance of their customers by charging unconscionable mark-ups and mark-downs, the excessive amount of which well exceeded $1 million. Such conduct causes irreparable damage to the securities industry and undermines investor confidence in the NASDAQ marketplace. A strong message must be conveyed that the Association will not tolerate these malevolent schemes."
In need of help, Weinger turned to his friend and business partner Joel Nadel in sunny Boca Raton. But Nadel was experiencing some problems of his own.
The SEC had already banned Nadel from the stock market 20 years earlier, but now the commission accused him of accepting bribes to tout worthless penny stocks in his bogus newsletters.
The New York Times, the Boston Globe and several Florida newspapers ran stories on Nadel in the late 1980s and early 1990s, culminating with his participation in the Goldcor scandal.
In Nadel's newsletters, including one from the fictitious "Royal Society of Liechtenstein," he praised a company called Goldcor, whose founders said they invented a process to turn a 20-mile strip of black volcanic Costa Rican beach sand into gold.
"The sands that are removed from the beach are replenished by tidal action only after a few days," wrote Nadel, who was not a partner in Goldcor. The scam was so elaborate that, according to The Washington Post, Goldcor's principals flew prospective investors to Costa Rica in Learjets so they could visit the company's laboratories and watch white-coated scientists turn sand into gold.
In April 1991, the government froze $6.6 million of Nadel's assets; in August, Goldcor President Richard Brown was found in his home with a bullet behind his left ear; in November, a federal judge ordered Goldcor representative Carl Martin to refund $10.8 million to investors. An estimated 3,000 investors lost at least $50 million in the scam. (Martin later opened an herbal products company and was subsequently kidnapped by five men who handcuffed him to a motel toilet and demanded a $3.5 million ransom. Their plan was thwarted when Martin escaped.)
Nadel ultimately was ordered to refund $400,000 to investors.
So, now that both the Royal Society of Liechtenstein and the Royal Society of Cokehounds were kaput, Weinger and Nadel focused on their quiet little company, Quantum Ventures. (Weinger and Nadel did not return our phone calls.)
According to SEC files, Quantum Ventures became Bernard Haldane Associates, a publicly traded company whose subsidiary owned the rights to the Bernard Haldane brand. (At this point, we should point out that there was an actual Bernard Haldane, who was a pioneer in the employment field, and who opened his first, eponymous office in New York in 1947.)
Through a serious of cannibalistic, incestuous maneuvers, Weinger and his wife, and Nadel and his wife, created a series of privately managed subsidiaries and management companies under the Bernard Haldane umbrella, passing around shares to one another like M&M's. One of these side ventures granted the Weingers and Nadels (and a few of their partners) the controlling shares of Bernard Haldane Associates.
They informed investors in January 1999 that their privately controlled side venture was going to buy out Bernard Haldane Associates, and -- because this new venture controlled the most shares -- investors had no choice but to sell out or sue.
Things went as the Weingers and Nadels had planned -- sort of. They acquired Bernard Haldane, but the firm's shares dropped so low that it was delisted from NASDAQ.
The variety of names these offices used, as well as the names of their parent companies and their parent companies' subsidiaries, makes it difficult to tell what's what.
Weinger's Manhattan office number has voice mail (no one's ever there) for the corporate headquarters of Career Services Management, which is the Bernard Haldane Associates subsidiary that owns yet another subsidiary that licenses the Bernard Haldane brand. But if you press the extension for the Career Services Management's vice president, her voice mail (she's never there either) says she's with BH Careers.
Curious still is a section in the January 1999 SEC filing stating that Bernard Haldane Associates "does not operate any Haldane offices. However, several licensed offices are owned by entities in which Jerold P. Weinger serves as either an officer or director or is a shareholder."
Those included offices in Dallas and Houston, known as Texas Career Management, a.k.a. Bernard Haldane Associates, a.k.a. BH Careers, a.k.a. TCM International.
Our applicant met with TCM International's Stephen Daugherty twice in August.
As with every other salesperson in the Haldane family, Daugherty's title is "vice president."
Daugherty told our applicant that the seven-year-old TCM International has been around since 1947, which is precisely when the first Haldane office opened. He also told her that the company had an exclusive job database that cost $28,000 a week to "maintain."
She was told that for $4,900 up front, she could access the company's database, which was full of hidden, exclusive jobs, such as IT spots at JP Morgan. If she found a job with a salary of at least $60,000, she would have to pay an extra $2,000 after her first year of employment. (A quick, free job search on JP Morgan's Web site showed 461 available technology-related jobs as of August 10. Plus, you can apply online and create a profile so the company will e-mail you any job matches.)
Her fee also would allow her to hear a "confidential speech" she could give to potential employers. Daugherty would not utter even a tidbit of this enigmatic speech, which appears to be as well-guarded as the Skull and Bones handshake.
Daugherty also couldn't reveal examples of top-notch companies where TCM International has placed clients, or what kind of contacts the company has, until she paid the fee. Daugherty was surprised by our applicant's questions; he told her that no one had ever asked those things before. He also said the company had never received any complaints, which is probably true, since the company keeps changing its name and has been known as TCM International for only a few months.
But our applicant needed to be assured that she was getting something for all that cash, so Daugherty later left her a voice mail with the names of two people he said had found jobs through TCM International. He explained in his message that he didn't know who the people were, when they were clients or where they were placed.
The Press was able to reach one man. We told him we were doing a story on TCM International, but this is where it gets confusing. He said he was a client in January. But in January, the company was called Bernard Haldane Associates. We explained that TCM International has been through several name changes and asked him what the company was called when he went there. He said he didn't remember.
Adding to the confusion, he did credit the company with finding him a job in the oil and gas industry, but then moments later said he got the job through his own contacts. He said the company's database gave him access to corporate listings on D&B and Hoover's, which are available in public libraries. But before we could ascertain exactly how TCM International had found him a job, he hung up.
Daugherty also asked our applicant to fill out a "Background Information Questionnaire," an unprofessional grab bag of photocopied pages that appears to have been assembled by a stoned high-schooler the night before the big assignment was due.
After processing our applicant's answers, Daugherty gave her a personality profile overflowing with insightful statements like "because you are so logical and analytical, you are usually good at anything that requires reasoning and intelligence."
Daugherty did not return phone calls seeking his accounts of the meetings.
Our applicant was unable to access TCM International's database, but if it's anything like the database the office used under the Bernard Haldane name, she was wise not to cut them a check.
That database, Career Services 2000, was, in part, a list of job openings posted by recruiting firms. Several firms told the Press that those jobs were not exclusively posted on that database, and were available on free sites like Monster.com.
Along with providing access to jobs clients could find for free, Career Services 2000 offered a section on "The Birth of the Internet" and a tutorial called "The World Wide What?" The latter was a black-and-white drawing of a computer, external modem, telephone and telephone jack, with helpful captions like "You need a modem. The modem allows the personal computer to make a connection to the Internet through common phone lines." But perhaps the most helpful tool was Career Services 2000's link to "Internet Smileys," a list of emoticons categorized as "Basic Smileys," "Mega Smileys," "Midget Smileys" and so forth. With this link, the client could now determine the difference between "bucktoothed vampire" (:-E) and "bucktoothed vampire with one tooth missing" (:-F).
One former employee, who worked under McClure in Bernard Haldane's San Diego office, says he left over concerns about salespeople guaranteeing jobs. (He asked not to be named, so we'll call him Sam.) As a counselor, Sam tended to the clients after the sales staffers got their money. He was supposed to help clients market themselves, improve their résumés, sharpen interview techniques and so forth. But, he says, his clients complained that he wasn't getting them the jobs they were guaranteed.
Sam says he told McClure about the problem. He says McClure promised to fix it but never did.
"I left without having another job, because I wasn't going to work for such people," Sam says from San Diego. "To me, that's how bad it was. You give up a full-time job because you just can't take another day of these clients coming in, talking about 'What are you doing for me?' That was a lot of pressure on me, when that wasn't part of my job. It was pressure on the other counselors, too. Like we're supposed to pick up a phone and call the CEO of a major corporation and line up a personal interview for these people."
Meanwhile, back in Dallas, Dirk Spencer wasn't taking similar bait.
Two years ago, Spencer followed an online posting for an analyst position that led him directly to Bernard Haldane Associates. There, he says, he met the über-salesman.
"He looks like the thin, tennis-tanned guy with the perfect teeth," Spencer says from Dallas. "Not bad caps. I mean perfect teeth. Angled features, flawless skin you could tell why he was in sales."
The salesman proceeded to butter Spencer up, praising his résumé and saying that he'd be a perfect fit for Haldane. Then came the pitch.
Spencer says the salesman pulled out a sheet of paper and told him, " 'For about six K, I think we could work something out for you.' And I'm thinking, 'No shit. For six K, I could work something out, too. I could buy a billboard.' "
He continues: "So I'm sitting there with my jaw hanging open, and I realize the reason he's been powdering my ass the whole conversation is he had to ask me for six grand. And the last time anybody's powdered me that much, I was wearing diapers."
Unwilling to fork over $6,000 without more assurance, Spencer says, he asked the salesman to prove that he really had the contacts he said he had: " 'For 6,000, who are you going to talk to on my behalf?' The answer was 'We have various industry contacts around the metroplex' or something like that."
He adds: "When it happened, I was so pissed, I could've bent steel you feel like a stupid-ass for showing up to what you thought was a job posting."
Therein lies the key ingredient to Haldane's success: the Stupid-Ass Factor.
Out of ten or so Haldane complainants we contacted, only two agreed to talk to us on the record. In their written complaints to Haldane filed with the BBB, the clients displayed agony and anger, and in several cases threatened to contact the media if they didn't get a refund. But when all was said and done, Haldane bought them off on the cheap, and the combo of the confidentiality agreement and the Stupid-Ass Factor kept them from sharing their experiences. As long as they got one or two grand back, they were perfectly content to let other people get screwed.
One thing that might have helped in Houston is if local and state authorities had taken an interest in Haldane's mounting complaints.
The closest they came was in 2001, when Harris County ADA Russel Turbeville wrote McClure a letter in response to a complaint his office had received.
"Please provide me with a written explanation of what services your company has actually provided [for the complainant] and why he is not entitled to a full or substantial refund," the letter stated. "Also, please provide me with full contact information on at least ten similar clients you have assisted in the last ten months who have had satisfactory experiences with your company, and information on any bond you hold as a licensed career counselor under the laws of the State of Texas."
Although Haldane's advertising has for years boasted of a 98 percent rate placing thousands of clients, McClure did not reply to Turbeville with the names of just ten. In fact, he didn't reply at all, Turbeville says. And that put an end to Turbeville's investigation.
Granted, filing criminal charges against career-counseling scammers is next to impossible, since the contracts are usually airtight.
"They make the people think what they want to hear, but they never specifically say it, and then they put a disclaimer to that effect in writing, which has always made it very unattractive as a criminal prosecution," Turbeville says. "To sue them as an attorney general might or to enjoin them is a completely different matter. You don't have to show individual culpability. You can show that the program as a whole tends to work a fraud on the people, or is deceptive."
So what about the Texas AG's office?
Its representatives didn't appear too interested until the Press informed them of other states' actions against their Haldane branches. Then we were told that the office is "actively engaged in this company."
In the meantime, consumers need to know what to look out for, and where to go for legitimate career counseling.
Greg Ash of the Federal Trade Commission warns against any companies that ask for fees up front. In most legitimate firms, the employer pays the fee.
"The problem is, you know if you're unemployed or underemployed, you're a little bit vulnerable," Ash says from his D.C. office. "That's when you should be most vigilant, because you are in a more vulnerable spot, and these executive recruiters are probably saying, 'Oh, you know, what's $6,000? We're going to get you a job where you can get $200,000 The dollar signs start floating in your eyes and you let your guard down."
Ash also warns that "There's no hidden job market -- that's a red flag. When they say, 'We have an inside connection to these job markets' that's a red flag to me, because legitimate companies are very proud and will boast of the employers that they've placed people in."
And, simply put: Find out what the company actually is licensed for, not what it claims to be. Some companies will tell consumers they're in job placement but will tell the state, "We just counsel people."
The biggest red flag is if the salesperson verbally promises a job but tells the client to indicate otherwise on the contract.
"These salesman talk up a story," Ash says. " 'This is what we're going to do for you. That's just legalese our lawyers tell us to put in there.' It's like, there's a reason why the lawyers told you to put it in there so when you don't get a job and you want your $6,000 back, you can't get it."
One place consumers might want to check out is the Texas Workforce Commission's free job site, www.workintexas.com, where employers and prospective employees can make that special love connection. According to the commission's Ann Hatchitt, roughly 109,000 of the state's 400,000 employers are registered on the site (these numbers are updated weekly). Competition's fierce, though: While the site recently listed about 45,000 open positions, there are more than 630,000 registered job seekers.
The commission also offers free career-counseling services. All you need to do is walk in to your nearest branch, and they'll help with your résumé and show you how to better market yourself, Hatchitt says.
Another free resource in Houston is Career and Recovery Resources, a United Way agency that provides career counseling for people from all walks of life.
There appear to be good, free resources out there. There does not appear to be a secret list.
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But if you have a few G's to drop, you still might want to check out TCM International.
Before he stopped returning our phone calls, McClure assured us that his company had nothing to do with Haldane's history of shenanigans.
"We run a very clean, very straightforward operation in Houston," he said. "Please look at what TCM has done. That's all I'm asking."
Asked, and answered.