All language subtitles for American Greed s07e06 Union Bu$ter The Fools Gold.eng

In this episode of American Greed, enter
the dangerous underground world of New

York's Sandhog.

These tunnel -digging construction
workers hire Melissa King to ensure the

safety of their retirement funds.

But the only one she takes care of is
herself.

One check for $50 ,000, another check
for $50 ,000, three checks for $50 ,000.

She steals millions, then uses the loot
to build a life of luxury.

This woman just earned through all the
money like it was Monopoly money.

And later, meet a Western con man.

I worked hard for every dime I made.

Carl Easter promises romance and a
golden opportunity.

One of the things you've got to remember
here is that you're not dealing with a

guy that's just an average person.

He bilks investors of their life savings
selling steaks in a gold refining

operation. But all he really has to
offer is dirt.

He is a kind guy to the core.

Until one victim decides she won't back
down and makes it her mission to put him

in prison.

He played right into this. He had no
idea what was going on.

Its streets are filled with the bustle
of millions.

Its skyscrapers reach ever higher.

New York's grandeur may reveal itself
from above, but down below lies an

impressive, though seldom seen, network
of interconnected tunnels, sometimes

called the eighth man -made wonder of
the world.

Some of these underground passageways
deliver cars full of commuters to jobs

high above.

Others are filled with the rumble of
subway cars.

All have been dug out by members of a
single union, the Tunnel Workers Local

147, also known as the Sandhogs.

He's now the business manager for the
Local 147.

But Eddie Mallon spent much of his 50
years with the union digging

He knows how important Sandhogs are to
the operation of New York City.

If it wasn't Sandhogs, there'd be no
water system, no subway system, no sewer

system. It wouldn't exist.

It's a grueling, dangerous job.

A man a mile, they sometimes say.

Man a mile was in the 70s. We were
losing a man a mile.

We did a job that was 15 miles long. We
lost 15 men building that job.

At one time, this most dangerous of
occupations was the last bastion for

who had nowhere else to turn.

Now, Sandhogs like Mallon enjoy high
wages.

Yes, I made a very good living doing it.
I put my children through college. I

paid for their weddings. I've done very
well.

And when it's time to hang up their hard
hats, they have union retirement funds

to count on.

I was looking forward to my retirement.
You know, days when it's all over, I'd

have enough money in the bank to retire
on.

But that dream has been put on hold.

Sandhogs like Mallon depend on a
pension, an annuity, and another fund

covers various other expenses.

We count on it. We count on it to put
our kids through school with it. We

on it to take it out when we're out of
work. If we're injured and we can't

we can take money out of it.

You know, if you get sick, you can go
into it and take money.

Then when you finally retire, you have a
decent pension and money in the funds

that you can draw on.

Like many smaller unions, the Sandhogs
turn to an outside third -party

administrator to run these plans.

It's an important job. And according to
Joseph de la Pena, a former Department

of Labor special agent, one that must be
filled by a trustworthy individual.

These benefit plans, there's millions of
dollars running through there daily.

There's a lot of transactions happening
in and out of those accounts every day.

And so that lends itself to being very
open to fraud.

For years, the Sandhogs turned to
Melissa King to look over their funds.

A college dropout in the 1970s, King
begins to work for her parents' company,

King Administrators.

Melissa King developed a strong
relationship with the unions based on

parents' involvement with administering
the benefit plans.

Though her parents own King
Administrators on paper, prosecutors say

eventually takes control.

Living in this home in Irvington, New
York, King has four children, and by the

early 2000s, she has just as many ex
-husbands.

Her last one is the son of a wealthy New
York financier. And IRS criminal

investigations agent Jimmy Hughes says
King acquires a taste for the good life.

She liked money. We interviewed her ex
-husband, who came from a wealthy

and she got used to luxury.

According to Della Penna, out -of
-control spending habits caused King to

declare bankruptcy in 1996.

But this hardly causes her to slow down.

Her response was to just keep spending
and find a way to satisfy the spending.

Lucky for King, the union sticks with
her after she files for bankruptcy.

King changes the name of the company to
King Care LLC.

She runs it out of this now shuttered
office in the basement of her home.

Years after her work for the Sandhogs
has come to an end, evidence remains of

the many jobs she performed here for the
union.

She collects contributions to the funds
from the Sandhogs' employers, large

construction contractors.

She maintains bank accounts, determines
whether someone is eligible for a

benefit, and keeps a ledger.

The workers rely on her 100 % with
regards to their retirement funds.

For keeping things running smoothly from
her home office in Irvington, King

earns a hefty salary.

In 2003, the fund's trustees pay
Kingcare more than half a million

On top of this, King is also allowed to
charge for expenses, things like hiring

extra help, buying office supplies, and
renting office space.

And she does this for a few different
unions.

In making in excess of a half a million
dollars, you seem to be doing quite

well. And that's only with one of the
businesses that she was administering

So since she has multiple funds that
she's administering, she's doing very

financially. What few people know is
that King is doing even better than

be expected.

Though she works for the local 147,
she's part of a world that seems to be a

million miles from the underground
tunnels where they labor.

It's the world of high -end competitive
horse jumping.

A former cop, Richard O 'Keefe, has
hired his personal security for King

starting in 2003.

I have a security background, but it
turned into like a mani, if you will.

of my responsibilities were, a lot of
them were driving, would drive her to

meetings.

Then it got into, could you pick up
things at the butcher shop?

If they traveled to a horse show in
Florida, I would accompany them.

Traveling with King and her daughter to
horse shows across the country, O

'Keeffe sees a world few ever see.

It was a very wealthy crowd. I mean,
it's a very wealthy sport.

There were celebrities in the crowd.
Then you have your bankers, wealthy

business people. That's exactly what
it's like. It's keeping up with the

Joneses. With competition rosters
featuring the daughter of Bruce

and the daughter of New York City Mayor
Michael Bloomberg, this is a world where

cash flows freely.

Yet King still manages to stick out.

You know, she was always like a go -to
woman that you could get a possible

A trainer would come by and ask, how
many horses does she have now?

And I'm like, I don't know, 12 or 15.

In 2006, King wires a seller half a
million dollars for a single horse.

She spends more than $150 ,000 in one
month at the Ritz -Carlton in Palm

where she holds up to watch her daughter
compete.

She even pays $11 ,000 to fly her horses
around the country.

I think the cheapest horse she bought
was $125 ,000, and it ranged upwards of

$800 ,000.

It's a different world.

In total, King drops more than $5
million on horses and related expenses

six years.

But how is a union benefits
administrator living like a corporate

It's paid for by the sweat and hard work
of the men and women of local 147.

Up next on American Green, the true
source of Melissa King's wealth is

It shows $50 ,000, another one for $50
,000, another one for $50 ,000.

Though Melissa King has a number of
offices, she can most often be found up

Hudson River from New York City at her
home office in Irvington. She was really

more of like a recluse. I mean, she had
such a staff of personal aid and

assistance that would go out and get her
food, go grocery shopping for her, and

she had dog groomers show up here, pick
up the dogs, and so she would really

very rarely leave the residence.

Here, her security guard, Richard O
'Keefe, sees the extravagance firsthand.

There'd always be at least one domestic
maid, sometimes two, sometimes three,

sometimes four.

The masseuse would come to the house,
the hairdresser would come to the house,

think the dog washers, they would come
to the house, the doctors, they would

come to the house.

On dog groomers alone, King shells out
more than $25 ,000.

With the staff she keeps on hand,
prosecutors will later say, It's as if

running her own Downton Abbey, the
fictional British manor from her home in

Irvington. And like an aristocrat, she's
not afraid to shell out big bucks.

The Sandhogs pay King Care $540 ,000 a
year.

Yet she spends nearly a million dollars
at a California jewelry store.

She drops more than $300 ,000 on a
Porsche, two Mercedes, and a Range

This woman just earned through all the
money like it was Monopoly money.

Over seven years, King pays American
Express bills of more than $7 .2

She uses $900 ,000 on her mortgage. She
buys property in Maine and rents two

apartments in the same Manhattan high
-rise that she rarely uses.

I don't know if it's a status thing, but
we were dumbfounded at that. I mean,

the penthouse was $24 ,000 a month. The
other apartment was $4 ,500 a month.

just to rent these places and never stay
there.

Mind -boggling.

But where is all the money coming from?
The answer lies here at King's Irvington

House. She had, like, four or five
employees working downstairs.

And the room off to the right was where
she maintained all the corporate

checkbooks. Among King's duties is
writing checks to local 147 members.

When a union member wants to borrow
money from their account, they go to

Normally you would just fill out an
application, you would mail it in to

and a lot of times you'd have no
conversation with her at all. The check

be in the mail. To write these checks,
King is entrusted with a stamp bearing

the signatures of the union fund's
trustees.

She was in Irvington, and the union was
in the Bronx.

So to save time, it would benefit you to
give that authority over to a third

-party administrator that's outside of
your office.

Of course, there is a downside.

You're giving that person a lot of
authority to sign checks on your behalf

without oversight.

Starting in 2002, King begins writing
some big checks out of the union's

to King Care LLC.

She was writing multiple checks daily, a
few days per week.

At first, she takes care to note what
they are for.

In the memo line here, you see re.

And that, we believe, stood for
reimbursement. She was claiming it was

her for additional work that she
performed on behalf of the benefit plan.

If an auditor came and questioned why
these checks were being paid to King

her response would be, it's a
reimbursement of expenses I incurred.

authorities will later say these checks
far outweigh anything that King has

owed. In October of 2002, she writes 10
checks to herself that total $450 ,000.

Over the course of the year, she
transfers a little more than a million

from the Sandhogs' accounts into her
own.

I think initially she's worried about
getting caught, you know, so she starts

slow. She sees she gets away with
stealing a couple of hundred thousand

No problems getting away with it. Okay,
she gets more aggressive as the years go

by. The next year, she triples her take,
moving nearly $3 .2 million into her

account. And you notice the stamps of
the trustees.

Signatures on each of the checks.

Yeah, so here you can see that the
signatures are identical because it's

of a stamp.

As King's theft grows, she is careful to
cover her tracks.

Shows $50 ,000, another one for $50
,000.

Instead of writing herself one check for
$300 ,000, King will write herself six

checks for $50 ,000 each.

sometimes all on the same day.

My opinion is that she wrote multiple
checks on smaller dollar figures on one

given day to circumvent detection by
banking officials.

According to a lawsuit filed by the
union trustees,

King and accountants used creative
bookkeeping to make it appear that the

are not missing any money.

Individual union members like Mallon say
they never have problems getting money

out of their funds.

Anytime I ever ask for my money, I got
it. Like other members, he received

statements from KingCare.

In the bottom of it, you'll see my
balance. You have your expenses, your

contributions, and your benefits as of
this date and the ending balance.

Everything here appears fine.

The statements Sandhogs receive say
their accounts have much more in them

they actually do.

This gives you an impression
everything's fine. You know, you look at

statements, you see the contribution
from the employer, you add it up, it

fine. Coming up on American Greed,
facing arrest, Melissa King tries to

charges of wrongdoing.

She goes, I have no idea what you're
talking about. I was entitled to this

money.

For years, Melissa King has been getting
away with the massive theft from the

Sandogs' union, but there are hints that
something may be wrong.

King claims the money she is paying
herself is money she is owed by the

for services rendered.

It was unusual. Everything was always a
round number, 50 ,000, 65, 35.

It was never 34, 895, which would seem
to be more what would happen in the

normal course of business.

In late 2005 and early 2006, the
Department of Labor raises questions

paperwork that an accountant sends them
on behalf of the union.

It can sometimes indicate that there
might be a fraud, that they're hiding.

And so in this case, it did trigger some
inquiry into the plan.

The DOL issues a small fine and passes
the auditor's name to an accounting

ethics board.

But despite the fact that union members'
money is at risk, the union trustees

don't find out.

I think that if the union did find out
about the audit and the particulars of

that audit, I think that definitely
would have raised the flags.

With no one to stop King, money keeps
flowing out of the union's accounts and

into her own.

On a single day in October of 2008, King
writes herself eight checks for $65

,000 each, totaling more than half a
million dollars.

By 2009, the check she's written to King
care from the union's accounts.

add up to more than $42 million.

I think she developed the sense that no
one's watching, and I just think it was

to maintain that lifestyle she started.

But the cash cow she's been milking is
about to dry up.

In the fall of 2008, union trustees hire
a new auditor.

Immediately, King's deceit becomes
clear.

After 32 years working for the union,
King's tenure comes to an end. The union

fires her and files suit against her in
federal court.

For Sandhogs like Eddie Mallon, news of
her deceit hits hard.

She knew how we were earning our money,
you know.

The work is dangerous.

Your lungs aren't the best if it's 20
years of, 30 years of working down

breathing that kind of dust that's in
the hole.

She knew it. She knew how we worked.

That summer, the Department of Labor
receives a call from the union.

Della Penna and Hughes begin to
investigate.

As they start looking at King's books, a
clear pattern of theft emerges.

Once I subpoenaed the bank records and
was able to trace the monies that were

coming out of the union's benefit plans
into her account, and then out of that

account, this was clearly a slam -dunk
case.

Della Penna and Hughes see that King has
transferred more than $42 million from

the Sandhogs' accounts into her own.

and it's hardly being used for union
work.

These are from the KingCare account that
she put the embezzled funds into and

then utilized the account to pay various
household expenses.

Here's the check payable to Cloud9, and
in the memo section, it says for Versace

in the amount of $1 ,800.

This is a check for $558 for tech
grooming.

Looking through these accounts, it
showed how every day she was spending

thousands and thousands of dollars.

to uphold this lifestyle of hers. What's
more, King now has tax problems, too.

She's been claiming many of her luxury
purchases and her household staff as

business expenses.

She had a personal chef, and she had the
chef listed as a financial advisor on

her KingCare papers.

We interviewed the personal chef and
said my job was just to cook for her and

her family.

Court records indicate that King owes
the government at least $4 .6 million in

back taxes.

As they continue to investigate, King
hunkers down in her Irvington home

where she is arrested shortly after
Thanksgiving 2009.

I told her she was under arrest.

She asked, what do you mean I'm under
arrest? What's this for? I said, well,

stealing $42 million from the Sandhawks.

She said, I didn't steal any money.

She said, did you read my contract? And
I said, I read your contract, but the

contract that I read didn't say that you
can steal $42 million.

Even after her arrest, King continues to
maintain that she was just billing the

union for services rendered.

She kept telling the same story. I'm
entitled to the money. I did nothing

But she presents nothing to prove her
claims.

Three months later, a grand jury indicts
her on one count of embezzlement and 11

counts of money laundering.

Eventually, charges of mail fraud and
tax evasion are tacked on as well.

In October 2011, King pleads guilty to
one count of embezzlement and one count

of making false subscription to an
individual U .S. tax return.

The next summer, a judge in New York
sentences her to six years in prison.

Even at her sentencing, she claims in a
statement read by her lawyer that she

tried to be a, quote, fair voice for all
of the participants.

She took an average of between $55 ,000
and $80 ,000 per worker, and she's an

advocate of the workers.

I didn't see that.

I watched her in court.

She had no remorse at all.

She never turned around, told us how
sorry she was. She was just... I don't

think she has a conscience.

Now the horses paid for with union money
have been sold off, but the Sandogs

have gotten back just a small fraction
of what King took from them.

For years, she spent millions on horses
and the salaries of her staff.

Joe Della Penna, who is now with the
Federal Housing Finance Agency, says

left little behind to seize.

Melissa King clearly did not plan for
the future on the beach, sipping

and having money overseas.

Eddie Mallon and other union members
planned for retirement based upon false

account balances sent to them by King.

After her fraud was revealed, they see
their savings reduced between $55 ,000

and $80 ,000.

Yeah, well, you know, it's a shock when
you got the kind of money I was missing

over $80 ,000 out of your fund. At that
time, it was probably 50 % of what I

maybe thought I had, and other people
could have been most of their money

For Mallon, King's fraud means that as
of 2013, there's one thing he's been

unable to do.

Retire.

You know, like I said, I'm going to 70.
I didn't want to work as many years. You

know, I have a, you know, my lungs right
now are not the greatest in the world.

And I had to, you know, work more years
just to get that money back in there.

Mallon is certain the Sandhogs will
recover from Melissa King's theft.

But down in the tunnels, her name is
Mud.

What they think about it, you know, I
couldn't mention it right now on TV what

they think about it.

Next on American Greed.

A Western con man uses promises of gold
and romance to lure in elderly

investors.

The gold's going to take a run.

It's starting to climb now.

The sooner you do it, the more money
you're going to make.

It's December 2008 in Naples, Florida.

As holiday cheer spreads across the
land, a 69 -year -old woman, who we will

call Valerie, is at home alone.

She is asked to remain anonymous so that
future business prospects are not

adversely affected.

A recent divorcee and cancer survivor,
she has decided to give Internet dating

try. I was trying to meet somebody, a
nice gentleman who was

financially successful, who was
interested in getting married.

Though she is not a Mormon, she signed
up with a site for members of the church

called LDSSingles .com.

Because I had been on some of the single
dating sites that were strange and

strange people.

And so I figured relating to the church,
it would be okay.

In the middle of December, Valerie gets
a message from a man in Montana.

His screen name points to his love of
hunting dogs, H2O Dogman.

At first, the two send each other
virtual boxes of chocolates and flowers,

the site calls flirts.

Then they begin to email.

He says, my name is Carl Estep. When the
weather breaks, you should come to

Montana on me.

Thanks for the flirt, Carl.

To Valerie, he sounds like the perfect
mix, someone who can offer stability and

excitement. Well, he was saying that he
was a millionaire.

that he was building a new house that
was worth $1 .5 million and that he was

looking to get married.

As they begin to talk on the phone,
Estep wants to chat about more than just

romance. That's when he started to say,
you know, I'm involved in the gold

industry. I can make you a lot of money.
Do you have any money that you might

want to invest?

As Christmas approaches, Estep talks
more and more about the gold business,

which he says made him rich.

He said that he had worked with Howard
Hughes in Las Vegas.

They had paid him in gold, the Hughes
family.

And that's how this all started.

Enthralled with romance, Valerie sees no
reason Estep's gold refining operation

might be a scam.

I didn't think that it was. I thought it
was an investment in gold.

It's not until much later that she
realizes this is all part of a pitch

has been giving for years.

I don't think there was anything he told
me that was true.

A farmer's son from Idaho, Estep has
bounced around the American West all his

life. According to Mike Carter, U .S.
attorney for the state of Montana.

He had a typical ag upbringing. He was
in 4 -H.

He knew livestock.

He bucked bales.

He fed cows.

Over the years, Estep works at a variety
of jobs.

He's an insurance man, a window
salesman, and endowed with the gift of

a high school debate coach.

But wherever he goes, allegations of
criminal activity follow close behind.

He was a person that was actually
involved in schemes before he was

with embezzlement.

In 2001,

two women in Las Vegas sue Estep for his
role in a scheme involving supposed

barrels of gold ore.

Estep makes the move to Bozeman,
Montana, two years later.

FBI agent Brian Van Doon says it may be
the perfect place for him to go digging

for victims.

Montana's nickname is the Treasure
State. It is known for a mining

among other things. So if he was going
to perpetrate an investment scheme

utilizing precious metals and mining,
this would be a place that would be able

to support such a claim.

Estep starts a company called Montana
Metals, M .T., and starts looking for

investors.

Recorded at the Bozeman Airport, this
video obtained exclusively by American

Greed shows Estep giving his pitch.

He starts with his qualifications,
claiming to have run the mining

for billionaire recluse Howard Hughes.

I mean, I did this for 15 years for
Hughes.

I made him hundreds of billions of
dollars.

He says that Hughes paid him with
barrels full of concentrated ore rich in

Now, the barrels you're going to see
today have platinum in them and gold and

several other metals.

But there's about...

1 ,200 ounces per barrel.

So you're going to have a barrel
probably worth somewhere around $5

Estep claims to have 200 barrels stored
in a tightly secured warehouse near

Bozeman. It says in this warehouse
you're going to have an address on your

contract. Okay. And it's there for you
to take it if you want it.

He shows potential investors an assay, a
chemical analysis of his mineral

holdings. What this assay demonstrates
or shows anybody that the ore is very

rich in precious metals of gold,
platinum, palladium.

The con man says that all he needs now
is investors' money to run the operation

and build gold -extracting refineries.

This

exciting

new opportunity is in reality an Old
West con job that's been around since

49ers headed west.

It's called a dirt pile swindle. But
Estep has his own twist.

He claims that the gold he extracts will
then be used as collateral for overseas

trading. It's purportedly done through a
European count living in Switzerland

named Ugo di Carpagna.

He was saying that some of the funds
that he was generating out of this

operation were being used to invest in
something called medium -term notes in

Europe, specifically in Switzerland.

By referring to the overseas investment.

As well as to the Italian count, what he
is doing is giving the victims the

sense that this is a very successful
businessman.

Despite these impressive sounding
connections, Estep presents himself as

another country boy who got lucky.

However,

he's anything but humble.

They're just an average person.

Yes, because this person is willing to
do what most people won't.

When American Greed returns, Valerie
learns that the man who's been romancing

her is nothing more than a charlatan.

Once he had my money, the romance was
gone.

It was never mentioned again.

Find more of the pitch that Carl Eastep
used to lure in investors at

AmericanGreed .CNBC .com.

Feeling greedy?

Want more than your share of behind -the
-scenes dirt?

Follow at AmericanGreedTV on Twitter.

We'll be right back.

It's been just over two weeks since
Valerie met Carl Eastep online.

As Christmas draws near, he barrages her
with a flurry of phone calls about his

gold -refining business.

Longing for companionship, she's more
than a willing listener.

I was alone, I didn't go home for
Christmas, and I was unemployed, and

was kind of down.

This was like hope.

Valerie says that after years of
suffering through unemployment and

treatment by herself, She is looking for
a partner to care for her. With Estep,

she thinks she's found her ticket to a
better life.

And then some.

Well, it was how much money I was going
to make. It was the investment and also

the romantic end of it.

At this point, Valerie says things are
heating up. And then Estep has told her

they'll be spending the rest of their
lives together.

I actually went over to the Mormon
church and thought about joining the

church.

so we could get married because I wasn't
baptized in the Mormon church.

And that's why I went.

Valerie says she gets a phone call from
a man claiming to be Estep's lawyer.

His reviews are nothing short of
stellar.

He said that he had known him for 20
years, that he was a wonderful,

person, and that I should definitely
trust him and send the money. I believed

him, and that kind of, like, pushed me
over the edge.

At Christmastime, Valerie dips into her
retirement savings and wires Estep $100

,000. A day later, she doubles down and
wires him $100 ,000 more.

It was about 80 % of my life savings.

It was what I was going to live on the
rest of my life.

Valerie is not alone anymore.

She's now part of a group of Estep
victims all across the country.

An avid hunter, Estep entices people he
meets through the sport.

Others are acquaintances from church.

Many, though, like Valerie, are elderly
women who he meets on the LDS dating

site. Though Estep's profile has now
disappeared, U .S. Attorney Michael

shows American Greed how the con man
once trumpeted his religious

online. And he identifies himself as
having taken a mission, that he is

endowed, temple -recommended, and temple
-worthy, which to the receiver.

It's something that shows that he is
honest in his business dealings. He is

Christ -like. He's virtuous, and he's
somebody that I can really trust.

Like all good con men, Eastep knows how
to show victims what they want to see.

This is me at one of the mines up here.

He brings many of his marks to Montana,
where he shows them his mines, which are

just mines owned by others, or in some
cases, little more than dirt piles.

He had continually asked me to come to
Montana, and I had thought about

going out there at one time, and then we
ended up deciding to meet in Las Vegas

in February.

Florida investor Valerie travels to Las
Vegas to meet Estep two months after

they first chat online.

By this point, she has given him nearly
a quarter million dollars and considers

him a sure bet.

But when she arrives at her hotel...

and meets him face to face, it's clear
that her gold play is a bust.

Well, I thought that this guy doesn't
look like he's rich.

He doesn't look like he has a lot of
money. Why are we staying in this dumpy

hotel? And why is he driving a pickup
truck?

The truth begins to sink in.

Valerie has all her money tied up with a
con man.

I didn't say much while he was there,
but it was revving up inside of me.

I'm not sure that this guy's for real. I
really didn't know what I was dealing

with. Valerie's intuition turns out to
be right. The only precious metal Estep

has to offer is his silver tongue.

He never worked for Howard Hughes or the
corporation.

The secure warehouse was in fact a
dilapidated barn on another victim

property. These barrels of gold ore
were, they were sand and

rocks. There is no truth to anything.

E -Step's 31 victims come from Montana,
Florida, Texas, and Washington State.

The amount they pony up ranges from a
few thousand dollars to almost $300

In all, it's believed he took in some $1
.7 million selling people on this

chance to get rich quick.

For many, there are hints that something
is awry.

But when they try to get their money
back, the only thing Estep gives them

excuses. The stories that he gave ranged
from Department of Homeland Security is

holding overseas funds due to the
Patriot Act and I can't give you your

back, to I need it for ongoing company
operations. He always had a ready excuse

to not return money to the investors.

In truth, there's a simpler reason Estep
is not giving people back their money.

Well, the reason that people aren't
getting their checks is because he's

spending it on himself.

Eastep is using other people's cash to
live a Western outdoorsman's dream.

In this case, until he got caught, crime
paid, and he had a good time doing it.

He buys a small hunting property in
eastern Montana, a pickup truck, four

wheelers, and a Ford Thunderbird.

He also pours a lot of cash into his
prized possessions, hunting dogs.

He was an outdoorsman. He did have quite
a gun collection. It was worth $20

,000.

He had three dogs.

that he spent a lot of money on.

And one of his dogs, he spent $80 ,000
training this dog to be a good bird dog.

For investor Valerie, the shock of what
has happened turns to disappointment.

But eventually, the disappointment turns
into resolve.

I wanted him to be found out. Was he for
real? Was he a liar? How many people

had he lied to?

And I wanted my money back.

In April 2009, Valerie contacts the FBI
in Montana.

She's actually the first victim to come
forward and lay out the details of

Estep's scam.

I think many people become embarrassed
if they invest in a scam that's not

They realize it. They feel ashamed that
they were duped into making this

investment. And rather than further
embarrass themselves by making it public

reporting it to law enforcement, they
just eat the loss and never report it to

anybody. Next on American Greed,
investor Valerie plots to take down the

conjured out of her life savings.

It was more than anger.

It was hate. It was like now it had to
be revenge.

After coming face -to -face with online
Lothario Carl Estep, Florida investor

Valerie realizes she's been scammed and
contacts the FBI in Montana.

There, agents follow the money and
realize it's not being spent on any sort

gold mining operation.

Estep's business appears to be a fraud,
and so does the assay he's been using to

show investors otherwise.

As you can see here, it shows Mr. Estep
doing business with Montana Metals.

The font where the company information
is is very different from the font of

rest of the document, which would
indicate that it's not a legitimate

Agents enlist Valerie's help. They
listen in as she calls Eastep from

and gets him to rehash the details of
his scheme.

Well, I almost felt like I was an FBI
agent pulling this out, never letting

know what was going on. And he never,
ever picked up on this. And I don't know

how many tons of phone calls I made for
weeks.

The FBI sets up a sting at the Bozeman
Airport.

They have Valerie introduce two Montana
agents as her wealthy relatives from

Chicago. She says they will be flying
into Montana and want to invest $400

He played right into this. He had no
idea what was going on.

I think he interrupted me and he was out
to make more money. On the appointed

day... FBI agents pretending to be
Valerie's relatives walk down the jetway

passengers who have just arrived from
Chicago.

Estep is there waiting.

Estep doesn't even leave the airport
before he begins his pitch.

He sits down with his marks at a
restaurant and goes over the lies he's

many times before.

Is the gold in the form of a...

Like the stuff you see in the jewelry
store?

It's a flaky looking stuff. It's
granular.

So what you're saying is that the gold
that's in the barrels came from Howard

Hughes' company or from Howard Hughes
himself?

Well, Hughes himself. He was the one who
traded for him, for the company.

But I wanted a percentage.

And that's how I got my barrels out.

Like he did with their supposed aunt in
Florida.

Eastep tells these investors that he's a
wealthy man.

You probably live a pretty good
lifestyle in from that investment. Well,

bought a new home for a million four.

Wow. And he assures them that an
investment with him will offer huge

Bottom line, if we invest $400 ,000, how
much exactly are we going to make, do

you think?

You're guaranteed 40 % for one year.

After he gives the pitch, agents follow
his step to the supposed secure

warehouse where the barrels full of gold
are stored.

It's nothing more than a bar.

Should we go ahead and go in? Why don't
you go ahead? Come on in.

These are all tagged with these red
tags.

Now, a red tag means that the barrel is
certified.

In other words, there's X amount of gold
in there, there's X amount of platinum,

and, you know, this type of stuff. Wow.
So this barrel right here, the tag here,

would probably have your initials on it.
Wow. A little more than half over a

billion here in these barrels.

It's not long before FBI agents
accompanied by local law enforcement are

the barn and Estep's residence.

Still, Estep can't stop spinning. As he
has with investors, the con man claims

that his money is still tied up overseas
in the hands of Count Hugo de Carpena.

We were not able to determine if Count
Hugo de Carpena was a legitimate

individual or a figment of Mr. Estep's
imagination.

The feds have two different labs sample
the gold ore that Estep has been

peddling. Both come to the same
conclusion.

It was basically dirt and rocks that
were in each of those barrels. When the

confronts him with the fact that he's
selling sand, Estep makes no such

concession. At one point, Mr. Estep did
claim that the government wasn't testing

the... substance correctly to determine
what was there. Despite his protests,

Estep is arrested and admits that he's
been using investor money for himself.

In March 2010, the scam artist is
indicted on charges of wire fraud, mail

and money laundering.

But this hardly slows him down.

Out on bail, Estep tries to scam $6 ,000
from a couple whose farm is struggling.

They are about to pay him when an
Internet search reveals his recent

they go to the FBI.

He is a kind guy.

To the core. In October, Estep pleads
guilty to one count of wire fraud and

count of mail fraud.

He is sentenced to four years in prison.

Years after this scam has come to an
end, Estep's victims have recovered just

pennies on the dollar.

They speak of personal betrayal and
financial ruin.

I mean, the whole dream fell apart.

Nothing was true.

Everything was a lie.

Valerie is now in her 70s. Since losing
her life savings, she has gone back to

work in the ad sales business.

She once had a very different idea of
where she would be today.

I dreamt that I would be living in
Montana and I would be retired and never

to work a day in my life.

Now I'm still working full -time, and
I'm going to have to continue to work

maybe the rest of my life.

Since Estep's arrest, Valerie has not
spoken with the man she thought she

one day marry.

But she knows what she'd say if she ever
does.

You should be in prison for a long time.

And I hope that you never do this again
to anyone.

And I hope actually that you have a
miserable life.

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