Meyer Blinder was born in New York in 1921. He worked in his parents’ sweet shop and then as a travelling salesman, later serving in the US Army during World War II. After the war he started various companies, including a coffee vending firm that was eventually sold for enough money to enable him to retire. In 1970, however, he set up the brokerage firm Blinder, Robinson and Company in Westbury, New York before moving it to Denver, Colorado eight years later. At its peak it was the largest penny stock brokerage in the US, and the tenth-largest broker overall, employing 3,000 people in 80 offices in America and other countries.
What was the scam?
Blinder, Robinson and Company was known for its “three call” method, where brokers would build up the client’s trust by calling them multiple times before making a recommendation. It would use these sales tactics to sell shares in fraudulent shell companies, which Blinder and his associates had set up, at inflated prices. Meyer’s firm would further cheat its customers by charging them up to 140% commission on every trade, far more than the legally allowed 10%, without telling them. All this allowed Blinder to amass a $100m ($196m today) fortune.
What happened next?
Mounting investor complaints attracted the attention of the authorities, with the US Securities and Exchange Commission charging him with fraud in 1986. Meyer refused to back down, arguing that the investors were responsible for their own losses, and initially managed to delay the trial. However, the firm, which had become known as “Blind ‘em and Rob ‘em”, was hit by a class-action lawsuit set up by two former customers. By 1990 it was forced into bankruptcy, with debts of over $75m. By 1992 Meyer was himself convicted of racketeering and money laundering and would serve over three years in prison.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Lessons for investors
Prosecutors believe investors may have lost as much as $500m ($978m) from the various scams that Meyer was involved in. It’s always good to check the small print of any fund, scheme or brokerage service to see how much money you are being charged, and avoid those with high charges, because there is little evidence that high-cost services do any better than cheaper ones. It’s also a good idea to stay away from brokers or advisers who cold-call you (which is now against the rules in most cases in the UK).
-
Savills: Average house prices to grow by 22% over next five yearsHouse prices in Scotland, Wales and northern England are forecast to experience the biggest uptick
-
How to shield your money as Reeves refuses to rule out income tax hikes and warns of ‘necessary choices’Chancellor Rachel Reeves appeared to lay the groundwork for higher taxes in the Autumn Budget on Tuesday morning and refused to stand by her manifesto pledge not to increase income tax.
-
The Stella Show is still on the road – can Stella Li keep it that way?Stella Li is the globe-trotting ambassador for Chinese electric-car company BYD, which has grown into a world leader. Can she keep the motor running?
-
Investing in UK universities: how to spin research into profitsUK universities are a vital economic asset, but they are also Britain's 'equivalent of Gulf oil.' There are opportunities here for investors
-
Lessons from Nobel Prize winners in economics on how to nurture a culture of growthThe Nobel Prize in economics went to three thinkers who show us why economies grow and how we can help them do so. Governments would be wise to heed the lessons
-
Yoshiaki Murakami: Japan’s original corporate raiderThe originator of Japanese activism, Yoshiaki Murakami, was disgraced by an insider-trading scandal in 2006. Now, he's back, shaking things up
-
Albert Einstein's first violin sells for £860,000 at auctionAlbert Einstein left his first violin behind as he escaped Nazi Germany. Last week, it became the most expensive instrument not owned by a concert violinist
-
Who is Rob Granieri, the mysterious billionaire leader of Jane Street?Profits at Jane Street have exploded, throwing billionaire Rob Granieri into the limelight. But it’s not just the firm’s success that is prompting scrutiny
-
David Ellison: America's new media mogulDavid Ellison is building a mighty new force in old and new media. Critics worry that he will prove to be a Trumpian patsy. Is that fair?
-
Alok Sama on AI and how to invest in the future of technologyInterview Alok Sama, the former president and chief financial officer of Masayoshi Son’s investment vehicle SoftBank Group International, explains AI’s potential
