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CONFIDENCE MAN

HE SAID HE WORKED FOR THE CIA AND HAD A HIDDEN PIPELINE TO KUWAITI OIL MONEY. BUT POLICE NEVER DID CATCH UP TO COLORADO SCAM ARTIST JOHN SAVAGE--OR HIS MILLIONS.TRUE LIES WHEN HE DIED IN AUGUST, MASTER CRIMINAL JOHN SAVAGE LEFT BEHIND A TRAIL OF UNANSWERE

In February 1986 Sharon Savage moved to England to be with John, but three days after her arrival she discovered he'd been having an affair with a 21-year-old British woman. She left him shortly afterward and moved home. "He'll always have a piece of my heart," Sharon Savage says today. "But there was another side to John--the side that made us divorce. I deep down believe there was something illegal about a lot of things he did. I block them out, because I would rather think of the good things than worry about what he did wrong."

Savage's first few years in England, the British official says, were largely unsuccessful; he spent most of his time engaged in small-time, "quite amateurish" fraud attempts, making only enough money to get by. Eventually he remarried, settling down with a British bank clerk named Sarah Jane Williams. The couple had two daughters.

Then--exactly when and how isn't clear--Savage met a man named Charles Deacon, and his luck changed. Because Deacon, a British lawyer from Newcastle-under-Lyme in Staffordshire, comes from a prominent family, he lent Savage a great deal of credibility with potential "investors," says the British official.

Between 1989 and 1991, Savage, Deacon and a handful of cohorts conducted a series of highly lucrative frauds, according to the British government affidavit filed in Denver. The gang allegedly targeted companies and individuals in dire need of cash, whose normal sources of credit had dried up. On some occasions, Savage purported to have access to hundreds of millions of dollars from a London-based Arab organization called the "Kuwaiti Group of Special Preservation." At other times, he claimed to control the funds of former Philippine president Ferdinand Marcos or proceeds from the sale of European artworks stolen by Nazis during World War II. Whatever the alleged source, the money was available at a reasonable interest rate, and none of the principal needed to be repaid until the end of the loan term. The only thing required of the client was the payment of the first year's interest--in advance.

In December 1990, Baums Holding GMBH, a German arms manufacturer, gave $3.5 million to Deacon as an advance fee on a promised $50 million loan, the British affidavit says. The loan was to come from a company called Global Prospect Funding, of which both Savage and Deacon were directors. Deacon passed the Baums payment to Savage, who spent half of it in the United Kingdom and transferred the rest to an account in his name at the Credit International Bank in Washington, D.C. The loan itself never materialized.

Baums threatened to pursue Savage and Deacon in court, says the British official, so five months later the men were forced to rip off another victim to raise the money to pay the German company back. They allegedly chose Belling & Co., an English manufacturer of ovens and other kitchen appliances. Belling, once a household name throughout Britain, was on the brink of collapse and in desperate need of a loan to shore up its finances. Again, the affidavit says, Savage and Deacon promised a $50 million loan from Global Prospect Funding in return for $3.5 million up front. Belling's directors secretly raided the company's employee retirement fund for the advance fee; once again, the loan itself evaporated.

When Belling finally went under, receivers for the company discovered there wasn't enough money in the account to pay the pensions of many of its retirees. "People retiring now are only receiving 75 percent of their pension [because] there's a shortfall in the fund," says Jim Wignall of Lancashire, England, a former Belling engineer. Most of the retirees, Wignall says, don't have much money to begin with and can ill afford the reduction in payments. "The bulk [of the victims] will be ordinary working people--the average everyday fellow," he says. "That's the worst part about it."

Savage rarely met his victims in person. Instead, the British official says, Savage purposely remained a "shadowy figure" during negotiations with investors, staying in the background and letting Deacon act as the front man. But Savage enhanced the credibility of the operation with Belling, Baums and other investors by claiming to be an American intelligence agent, the British affidavit says. His story varied over time. Some prospective borrowers were told that Savage was the CIA's "assistant deputy director, European Operations"; others simply were given his agency code name--"Hemlock." Savage's CIA connections were "proved," the affidavit says, with phony documents, including forged letters from then-president George Bush.

end of part 1

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