While Bernie Madoff is sitting pretty in his New York jail cell, a new alleged Ponzi scheme is being revealed halfway across the nation in Minnesota. Currently making headlines is Minnetonka businessman Tom Petters, who has pleaded not guilty to swindling $3.5 billion from investors across the globe. A couple of Petters' associates have already pled guilty to aiding him in his alleged swindling. But one man stands out from the rest -- Larry Reynolds.
Reynolds, known in Brockton as Larry Reservitz, has stepped out from his witness protection shadow and, according to the Minneapolis Star-Tribune, admitted to helping Petters launder billions of dollars over the years. Reservitz is no stranger to scamming and money-laundering, having had his own run-in with the feds 25 years ago. In fact, Reservitz has a record of fraud that stretches back to 1970 -- and more than 20 years ago, we warned that he was free to strike again. (In fact, our story on Reservitz has become a must-read for the Minneapolis media.)
In 1986, the Phoenix reported at length about a bizarre scam in which Reservitz had a starring role -- a shady deal involving a phony check written on Scientology founder L. Ron Hubbard's account. At the time, Reservitz was well-known to the authorities as a former lawyer who'd been disbarred for his role in a 1970 insurance scam in which he concocted phony auto accidents. He fled to Europe after learning a grand jury had been convened to investigate, and evaded authorities for a year while traveling to Spain, Scotland, and Israel. Snapped up in England in 1971, he was eventually returned to Massachusetts, where he served 18 months in jail. But by 1980 he was at it again, and he eventually cut a deal with the Feds after being nabbed in yet another multimillion-dollar bank scam. (Around the same time, he'd also attempted to buy a truckload of weed from a DEA agent.) Around 1984 he became a federal informant, and in conversations recorded for the Feds he claimed he was involved in the 1986 Scientology scam.
Incredibly, though Reservitz eventually served more time for the pot bust and the 1980 bank scam, by 1986 he was in the witness protection program and, essentially, free to resume his life of crime. "As FBI agent Dennis Carney testified at the recent McNatt-DiFronzo trial," the Phoenix wrote that year, "the saga of 44-year-old Larry Reservitz may be far from over. 'He’s free to engage in other scams right now,' Carney said."
It now seems that statement was far too prescient.
FLASHBACK: What's the scam? Trying to bilk the Scientologists [Boston Phoenix, June 3, 1986]