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

part 1 of 2
The cancer, Brian Rusca remembers, seemed to devour John Savage from within, like a weevil inside a boll of cotton. In May, when Rusca flew out from Fresno to Colorado Springs for a final visit, his normally robust, six-foot-one-inch friend was down to a wire-thin 140 pounds. The point of the trip was to relive old times and say goodbye, but Savage spent most of the time fast asleep, oblivious to the welter of luxury he had built up around himself in the $490,000 house on Orion Drive. When Savage was able to get up and walk around, he had almost no strength at all. "His clothes looked like they were on a hanger," Rusca says. "It was a sad thing."

For Rusca, though, the final days of Savage's life remain a source of emotional solace. From his youth in Northern California to his mysterious career in England to his final years in Colorado, Savage had always been bent on material gain. How Savage amassed his wealth Rusca had never been exactly sure. But Rusca, a devout Christian, believes he was able to get through to Savage before the end--showing him that true happiness lay not in his possessions but in turning to God.

"I've seen a lot of people come to the Lord," says Rusca, who played Little League baseball with Savage when the two were boys, "but nothing that comes close to John. He was at peace--as happy as I've ever seen him. He recognized finally that his life was not in the material but in the spiritual. Now he had something to look forward to. I think the Lord just set him free."

It's impossible to know, of course, whether John Patrick Savage's deathbed conversion was sincere--or just another con.

According to documents filed recently in Denver's U.S. District Court, Savage, who died August 15 at a Colorado Springs cancer hospice at the age of 39, was a lead conspirator in an elaborate international financial fraud scheme. With a handful of British and American cohorts, he duped a long list of sophisticated investors out of more than $30 million over a period of several years. Working from England, Fort Collins and Colorado Springs, he concocted wild stories about himself, posing as an agent of the Central Intelligence Agency who had access to the money of Ferdinand Marcos and oil-rich Kuwaiti sheiks. He used a series of brazen ploys to target his marks, taking out ads in USA Today and forging letters from George Bush on White House stationery. At the time of his death, he was the target of investigations by the U.S. Attorney's office in Denver, the Internal Revenue Service, the Fort Collins Police Department, police in the English counties of Surrey and Staffordshire, and the Serious Fraud Office of the British government.

A list of Savage's victims suggests he was an extremely convincing liar: millionaires from England, Texas and Denmark, a German armaments concern, the pension fund of a well-known British kitchen-appliance maker and Ingman Foods, the largest food company in Scandinavia. "He was obviously a very plausible, very likable guy," says a British law enforcement official who investigated Savage for years. "The best con men have got to be."

So as certain as Rusca is that his friend is now in heaven, there are others equally sure that Savage's misdeeds have taken him straight to hell. "I feel sorry for the guy, because his life now is meaningless," says Gordon Erkfitz, a Texas businessman who gave Savage $1.4 million and lost almost all of it. "Whatever he hoped to accomplish in life is now marred by the people he's ruined. And when the scale is balanced Up There, no way is he going to make it."

As a boy growing up in Northern California, John Patrick Savage had only one ambition: to play professional baseball. And it wasn't just a pipe dream; an official with the San Diego Padres confirms the team picked Savage as a pitcher in the second round of the 1975 draft. But due to an injury and conflicts with coaches, Savage's pro sports career collapsed before it ever got started--a disappointment, his ex-wife says, that never ceased to haunt him. "When he couldn't do that anymore, I think that's when a lot of his happiness went," says Sharon Savage, who now lives in San Jose with the couple's thirteen-year-old daughter, Jennifer. "[Baseball] was his dream. When that bubble burst, so did John."

The third of six children, John Savage spent his youth in Saratoga, a pleasant upper-middle-class enclave not far from San Jose. His father, John Savage Sr., owned a local pharmacy, and there was enough money so his mother, Roberta, could stay home with the kids. Young John, a beefy left-hander blessed with a vicious fastball, stood out on baseball teams at high school and later at nearby West Valley College. "That's when his arm was the strongest," says Robert Steacy, who grew up with Savage and remained one of his closest friends. "He was throwing like Nolan Ryan."

Steacy, who kept in close touch with Savage during his years abroad and in Colorado, describes his friend as an enigmatic combination of charisma, intelligence, arrogance and insecurity. And he was driven, Steacy says, by an almost manic thirst for action, which he slaked in a variety of ways.

While still in college, for instance, Savage made money moonlighting as a bouncer, cracking heads in a Los Gatos cocktail lounge. Later he took up skydiving, completing hundreds of jumps before he died. He even tried to become an aerobatic pilot--an ambition that nearly killed him when his $200,000 stunt plane crashed near Colorado Springs last year.

"There's a chemical in your brain called dopamine," says Steacy, who now lives in San Jose. "If you have a lot of it in your head, you can sit there and watch the grass grow, and you're fulfilled. He [Savage] had absolutely no dopamine in his head. He needed to do things constantly, he needed to feed his brain full of excitement. Otherwise, he would just kind of wilt."

Savage left West Valley College and went on to earn a degree in political science from the University of California at Berkeley. He graduated in 1979, marrying Sharon, whom he'd met at the cocktail lounge, the same year. A year or so later, the couple and their new baby were on their way to Colorado, where Savage had landed a job as a stockbroker in the Boulder office of E.F. Hutton.

It was at Hutton that the criminal streaks in Savage's personality first began to show through. Setting up his wife and baby in a comfortable Longmont home, he soon earned a reputation as the office oddball.

John Holland, the former manager of Hutton's Boulder office, says Savage frequently boasted that he was a close friend of rock star and former Beatle George Harrison. It was a tale most of his co-workers chose not to believe. Says Holland, "I thought he was on drugs."

Savage left the firm under a cloud in 1984. Holland recalls that Savage angered a client who accused Savage of trading his money in an "unsuitable" fashion. Holland says he doubts Savage was up to anything criminal. But a former Hutton broker, who asks not to be identified, disagrees, saying that Savage got caught "churning"--engaging in excessive trading for clients in order to inflate his own commissions.

"He was dangerous to his clients," says the former colleague. "He was doing all kinds of things to rip them off." There was "no question" that Savage was defrauding clients and that Hutton had to spend significant sums of money afterward to make his victims whole, says the broker. The matter was handled in-house, the colleague recalls, and Savage was never charged criminally.

Nor was he fired, Holland says. When questions arose about him, Savage simply stopped coming to work. "He literally disappeared," Holland says. "One day he didn't come in, and we never heard from him again."

The so-called "pigeon drop" is a favorite scam of confidence men around the world. It's been going on for hundreds of years, says Terry Vaughn, a fraud detective with the Aurora Police Department. Still, like clockwork, Vaughn gets two or three complaints from "pigeons" every month, many of whom have just lost thousands of dollars by giving it to people they've never seen before.

Vaughn describes a typical scenario: An elderly woman comes out of her bank, where she is approached by a stranger who shows her a briefcase full of cash. The stranger says he's just found the money in the street but claims not to have a bank account. He offers to split the jackpot with her if she'll agree to deposit it in her own bank. There's only one catch: The stranger requires the lady to give him some money up front to show "good faith." While the victim trots back into the bank to withdraw her money, the scam artist dashes to his car and switches briefcases. By the time the woman realizes she's been handed nothing but an attaché case full of cut-up paper, the con man and her savings are long gone.

The pigeon drop works so well, Vaughn says, because it appeals to the victim's own avarice. "It's preying on greed," he says.

An affidavit by the British Serious Fraud Office, filed in U.S. District Court this summer as part of a request for American assistance in investigating Savage, shows that Savage perfected the pigeon drop--only on a massive scale. Instead of little old ladies, his targets were jet-set millionaires and international corporations. And instead of thousand-dollar "good-faith" payments, Savage wangled seven-figure "advance fees" from his victims with false promises of huge, low-interest loans.

"If you break it right down into its component parts, it's just a variation on a theme," says the British law enforcement official, speaking on condition of anonymity. What sets Savage's scam apart is "the scale on which it was operated in the latter days, and the audacity of it. Savage was a con man par excellence."

The stage was set for Savage's new career in 1985, when, in the wake of his disgrace at E.F. Hutton, he decided to move to Europe. "He figured his reputation here was shot," Sharon Savage says. "He [knew he] could never get another job at a brokerage firm." Sharon says she moved back to California temporarily with the baby while her husband flew off to England, where he set up a business in the county of Surrey, south of London. He never told her exactly what had happened at Hutton or what he was doing in Surrey, says Sharon, and she didn't ask. "John was a very secretive man," she adds.

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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