Missouri's mini Madoff may have struck again 

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In its cease-and-desist order, the state describes four unnamed Missouri residents whom Shepard approached between 2004 and 2006. Shepard convinced them to invest in companies that he controlled. One business purportedly bought and sold real estate. Another, Tow-Safe, marketed a trailer-hitch safety device that Wal-Mart, Bass Pro Shops and Cabela's supposedly wanted to carry.

Once again, Shepard was promising 15 percent returns. In some instances, investors liquidated IRAs, incurring withdrawal penalties, in order to be part of Shepard's low-risk, high-reward enterprise.

In 2008, a partnership of Shepard, his wife and another individual applied for a patent for the trailer-hitch safety device. The state, however, denies that major retailers were lining up to stock the item. The state also alleges that Shepard lied to investors when he described the nature of his real-estate activity.

Instead, Shepard appears to have used his investors' money to provide himself and his relatives with a comfortable existence. The state identified $938,633 that Shepard kept and allegedly distributed to family and spent on cars, jewelry and furs.

Not all white-collar crime is created equal. Many defendants do not set out to break the law. Instead, as Peter J. Henning, a law professor at Wayne State University and a white-collar-crime expert, explains, fraud becomes a means of avoiding the consequences of bad decision making. "What can start out as a small lie can burgeon into a huge Ponzi scheme, as Mr. Madoff demonstrated," Henning wrote on his blog, White Collar Watch, in April.

One does not get the sense that Shepard acted out of panic or desperation, however. The indictment in the Pell-grant case describes a business model based on fraud. His clients were wrong to go along with the charade, of course. The small size of their phony tax shelters, however, indicate that he was not dealing with the most sophisticated of consumers. Moreover, Shepard made efforts to create the patina of legitimacy, incorporating National College Foundation as a nonprofit.

A federal indictment would scare the pants off most conscionable people. But a civil suit alleges that Shepard continued to work his Ponzi scheme while facing charges in connection with the Pell-grant scam.

Kevin Vande Kamp and his wife, Valerie, invested $634,000 in Shepard's companies in 2008, after selling the assets of a Lee's Summit disposal business. The Vande Kamps expected to get back their money (plus interest) in 2009. But when it was time to collect, Shepard said the funds were tied up in a bank dispute, according to a lawsuit that the Vande Kamps filed last year. A judge ordered Shepard to pay up.

Shepard appeared in U.S. District Court on June 16 for a preliminary hearing on the revocation of his probation. Slump-shouldered and balding, he wore orange prison togs with a "St. Clair County Jail" stencil on the back of his top. He put on a pair of eyeglasses as he sat beside his attorney, Robert Calbi, and waited for the magistrate to enter the courtroom.

Shepard had company. Three men in their 40s or early 50s sat together on a bench reserved for the public. Shepard nodded in their direction at one point in the proceeding. One of the men acknowledged the glance by waving two fingers.

Shepard used earphones to better hear the magistrate judge, John Maughmer, read him his rights. Maughmer asked Shepard if he could read, write and understand English.

"I sure can," Shepard said.

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