NEWS RELEASE
Office of Maryland Attorney General J. Joseph Curran, Jr.


September 1, 2000 Media Inquiries: Sean Caine 410-576-6357

BALTIMORE CITY STOCK SWINDLER SENTENCED
Unlicensed Investment Advisor Defrauded Over 400 People

Baltimore - Attorney General J. Joseph Curran, Jr. announced today the conviction of an unlicensed Baltimore City investment advisor on criminal fraud charges. E. Robins Rich, 79, entered a guilty plea today before the Honorable Joseph McCurdy in Baltimore City Circuit Court in which he admitted swindling over 400 people out of over a million dollars in a complicated investment scam he operated for at least seven years. In light of his advanced age, the judge sentenced Mr. Rich, who currently resides in Temple Terrace, Florida, to a term of ten years, with all but three years suspended, to be served in a home detention program. He also ordered Rich to not give investment advice to others or handle the money or investments of others.

In September 1999, the Maryland Securities Division shut down Rich's investment company, Starboard Associates, of 516 N. Charles Street, and a judge placed Starboard into receivership. A Receiver appointed by the Court is continuing to marshal the company's remaining assets for eventual distribution to victims whose claims are validated.

The charges to which Rich pleaded guilty are that from 1992 until 1999 he operated a fraudulent investment scam in which he offered investors a pooled investment in monthly "programs." The "programs" were described as relatively risk free, because of the supposed "hedge" of investing 80% in a money market account and 20% in stock options. Each program was to mature in three to 12 months. At maturity, Rich would offer to roll over an investor's supposed profits into a new program. The investigation disclosed, however, that of $13.96 million in investor funds taken in, only $1.18 million was actually invested. The rest was used to pay off earlier investors, and to finance a failing T-shirt company owned by Rich's son. Over $1.4 million of investor funds were diverted to that company, which eventually went under. Moreover, the investments Rich did make lost money in the market.

Throughout the time covered by the criminal charges, Rich published fraudulent investment statements to his investors, misrepresenting the investments made and exaggerating their profits. These misrepresentations encouraged many investors to continue investing with him rather than liquidate their investments. Investigation has shown that Rich was steadily losing money on his investments and was using money from new investors to pay off earlier investors seeking to cash out. However, by mid-1999, there wasn't enough money to keep ahead of the withdrawal requests. Complaints were filed with the Securities Division, which began an investigation.

According to Attorney General Curran, "Mr. Rich was running a classic Ponzi scheme, encouraging new investors to give him money which he then used to pay off old investors rather than make the investments as promised." Curran said that despite Rich's advanced age, it was important to proceed with the prosecution on behalf of the victims; since Rich turns 80 this month, however, the State agreed that home detention was the most appropriate form of punishment.

Rich was not registered with the Maryland Securities Division as an investment advisor nor did he register any of the investments he was offering the public, as required by law. Curran recommended that investors call the Securities Division at 410-576-6360 before they invest to find out whether their investment advisor, broker and securities are registered.

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