The Wallstreet JournalBy M.P. MCQUEEN
It’s not just people like John Stamos and David Letterman. Even noncelebrities are increasingly being targeted in alleged blackmail plots, say security and law-enforcement experts.
Some private security experts say a growing number of clients are calling on them for protection from extortion threats. The severe recession and high unemployment rates, as well as general turmoil following last year’s economic meltdown, appear to be swelling the ranks of blackmailers, they say.
“The economy is at low ebb, and people are looking for a mark,” said security consultant Michael Guidry, chief executive of the Guidry Group, in Montgomery, Texas.
Paul Viollis, CEO of the security and investigations firm Risk Control Strategies Inc. in New York, says he’s seen a surge in blackmail cases among high-net-worth clients over the past year. He used to handle about eight a year, he says. Now he has 40 active cases, and is adding two to five more each month.
The surge started last November with the attempted blackmail of one of Mr. Viollis’s clients by a former business partner who had fallen on hard times. The ex-partner said he had knowledge of past Securities and Exchange Commission violations committed by the client. Mr. Viollis says he helped end the blackmail by meeting the extortionist and telling him he would report him to authorities unless he ceased. Mr. Viollis says the allegations were false and the extortionist knew it. Mr. Viollis’s account couldn’t be independently verified.
Sometimes it’s risky personal conduct that exposes individuals to extortion. Earlier this year, Stephen Dent, 55 years old, of Old Greenwich, Conn., complained to police and the Federal Bureau of Investigation that women he met through a Web dating site catering to wealthy men demanded money in return for keeping his online activities secret from his wife and others. Mr. Dent already had paid hush money in connection with a similar plot in 2007, according to police reports and court documents.
The alleged extortionists were arrested and charged last March, after a probe by the FBI and local police. A male defendant who was indicted in the case—the husband of one of the women—is now serving 18 months in connection with the plot, and his wife received a suspended sentence of five years, according to their attorney, Mark Sherman. A third woman has pleaded not guilty and is awaiting trial. Mr. Dent hasn’t been charged with any crime. His attorney, Steven Frederick of Stamford, Conn., didn’t return repeated phone calls for comment.
National statistics on blackmail are hard to get because extortion can be a federal or state crime and is charged under a number of different statutes, including larceny, wire fraud and mail fraud. The number of defendants in such federal cases has averaged about 145 per year since 1994, except in 2002, when they suddenly spiked to 205 during the last recession.
The most-publicized recent extortion cases have involved alleged attempts to obtain huge sums of money from well-known entertainers. Just this week, Mr. Stamos, a well-known TV actor, said he went to the FBI after a pair of Michigan residents allegedly demanded $680,000 in exchange for photos taken at a 2004 party in Florida.
According to an FBI affidavit, Mr. Stamos, 46, met the accused at the party and received a number of emails in November threatening to release the pictures to the media. “At the conclusion of the investigation and hearing, the photos will be available and the public will be able to see that the photos are simply John posing with fans,” says a spokesman for Mr. Stamos. The defendants were released on bond pending a hearing, according to court records.
Last month, federal officials said supermodel Cindy Crawford and her husband, Rande Gerber, were victims of an alleged plot by a former nanny’s boyfriend to extort $100,000 in return for a photo taken by the nanny of their young daughter tied up and gagged.
The boyfriend was deported to Germany but allegedly continued to make demands by phone and email. In mid-November, he turned himself in to German authorities and has been charged with extortion in U.S. District Court in Los Angeles. The U.S. hasn’t made any extradition request with Germany, and the nanny hasn’t been charged, according to federal prosecutors.
Ms. Crawford and Mr. Gerber said they didn’t know of the existence of the photo until they were contacted by the alleged blackmailer in July. They eventually reported the threat to the police, and the FBI began a criminal investigation, the couple said.
“Rande Gerber and Cindy Crawford intend to pursue any and all available legal action against anyone who aids the perpetrator in the distribution or sale of the photograph of their daughter,” their spokeswoman said in a statement.
In October, a television news producer was accused by Manhattan prosecutors of attempting to extort $2 million from Mr. Letterman, 62, in return for silence about the talk-show host’s affair with a female subordinate and other staff members. The defendant’s attorney contends that he was merely offering Mr. Letterman the chance to buy a screenplay based on his affair with the woman, who was also the producer’s ex-girlfriend. The producer says he is innocent, and his attorney has asked the New York state judge to dismiss the charges.
Earlier this year, film stars John Travolta, 55, and wife, Kelly Preston, 47, said they were targets of attempted extortion by a Bahamian paramedic and lawmaker after the sudden death of their son, Jett, 16, there in January. The alleged conspirators threatened to imply that Mr. Travolta was culpable in his son’s death by releasing a medical document unless they were paid $25 million dollars in cash, according to Mr. Travolta’s attorneys. A criminal trial in the Bahamas ended in a mistrial in October. The defendants contend they are innocent.
Security experts say that a growing number of incidents are more about punishing or humiliating the victim than getting money. Often, blackmailers are angry about the success of an associate that they believe is undeserved, say crime experts and academic researchers.
“More than 90% of our cases were opportunistic greed along the lines of [the allegations] in the Travolta case,” says Mr. Viollis, the private investigator. “But since October, it has been more anger, resentment and retribution. It is vengeance. Some involve money, and some are just outright, ‘I want to see you suffer. Resign your position, admit to the board you are a blank blank blank, and I will go away.’ “
In one recent high-profile extortion case, difficult family relationships appeared to play a role. Stuart Ross, 73, of Aventura, Fla., and Stuart Jackson, 80, of Manhasset, N.Y., are accused on felony charges of grand larceny for attempting to extort as much an $11 million in 2008 from David Blitzer, a London-based senior managing director of the Blackstone Group LP, a private-equity fund. Mr. Ross, an entrepreneur who is credited with first importing the popular Smurfs dolls to the U.S. from Belgium in the 1970s, is Mr. Blitzer’s father-in-law. The defendants, who are scheduled to go to trial soon in New York, face up to seven years in prison if convicted.
Mr. Ross had initially approached Mr. Blitzer for money to start a new business, but his demands continued to escalate after his son-in-law paid him tens of thousands of dollars. Mr. Ross was also upset because Mr. Blitzer didn’t send him a family photo at Christmas or invite him to Mr. Blitzer’s villa in Italy, among other perceived slights, according to statements he made to investigators in the district attorney’s office.
Mr. Ross couldn’t be reached for comment, but at a court appearance in August 2008, he told Dow Jones Newswires that “we believe this [prosecution] is totally unlawful and totally malicious.” Mr. Jackson, an attorney, also contends he is innocent. “The case is about an effort by Ross, who was my client, to visit his grandchildren,” he said in a recent telephone interview.
A spokeswoman for the Blackstone Group said the company and Mr. Blitzer had no comment.
Security experts are advising clients to be guarded in their personal activities and communications—especially electronic communications—and to beef up their defenses. They suggest conducting periodic background checks on key advisers and household employees, because they and their associates are often the perpetrators of such crimes.
They also say victims of attempted extortion should immediately seek help, because payoffs seldom end the threats. But they also warn that if police or federal investigators are notified, the matter will become public.http://online.wsj.com/article/SB10001424052748703819904574555651192059822.html