I decided to do a little digging on Arthur Goldberg, the founder of the "conversion therapy" (read: pray away the gay) outfit Jews Offering New Alternatives for Healing (JONAH). Goldberg, for those who don't know, is being sued by four gay men who say that what he passed off as "therapy" to "cure" them of their homosexuality was an incredibly degrading bill of goods. What piqued my interest was the New York Times' piece on him, which mentioned he founded JONAH after being convicted on federal fraud charges back in the 1980s. Well, I peered into the guts of this fraud--and it's absolutely nauseating.
Back in 2010, Truth Wins Out teamed up with South Florida Gay News to investigate Goldberg. It turns out that in 1989, Goldberg, then the executive vice president of New York investment bank Matthews & Wright, admitted to masterminding a scheme to sell $2 billion worth of worthless municipal bonds to several cities. Read South Florida Gay News' writeup here, and Truth Wins Out's writeup here. One of the victims was the U.S. territory of Guam. From South Florida Gay News:
Goldberg and others also indicted at Matthews & Wright had knowingly conspired together to enter into a fraudulent scheme to sell fake bond issues but take commissions on them anyway. They arranged to bribe officials, deceive investors, and issue bogus checks to non existent parties.For this scheme, in 1987 a Guam grand jury indicted Goldbeg on 52 counts of fraud and conspiracy. However, so many of the island's 130,000 residents had been scammed that a fair trial there was impossible, so it had to be moved to Los Angeles. According to K. William O'Connor, the U.S. Attorney for Guam, Goldberg's scheme hobbled Guam's economy in "a conspiratorial fraud spectacular in scope."
In exchange for underwriting $300 million in bogus deals, Goldberg and his investment firm, Matthews & Wright, received a fee of $10.5 million. They created the impression these bonds would be used to help construct desperately needed single family housing in Guam and elsewhere.
Another victim was East St. Louis, Illinois--a city which has long been one of the poorest in the nation. According to a 1991 NYT article, in 1985 Goldberg underwrote $223 million in municipal bonds for a huge river port that he and his cronies never intended to build.
In 1989, Goldberg pleaded guilty to three counts of mail fraud in Los Angeles and one count of conspiracy to defraud in East St. Louis. He was sentenced to 18 months in prison and five years' probation, and ordered to pay a $100,000 fine. He was also permanently banned from the securities industry, and his firm was shut down. Later, he was disbarred in both New Jersey and Connecticut--though according to Truth Wins Out, he continued to bill himself as a "Doctor of Laws" for some time. He was listed as such on the Website of NARTH, of which he was executive secretary.
What makes this especially monstrous is that Goldberg's scheme deliberately targeted poor communities with large minority populations. Besides East St. Louis and Guam, his other victims were Chester, Pennsylvania; East Chicago Heights, Illinois and the Sac and Fox reservation in Oklahoma. He jokingly described his scheme as "selling bonds to cannibals." All this while holding himself out as a a champion of civil rights.
Sat Dec 01, 2012 at 6:24 AM PT: Since this made the Community Spotlight, I thought I'd share the New Jersey Supreme Court's 1995 order disbarring Goldberg, viewable here It lays out just how macabre his scheme was. Incredibly, Goldberg claimed the offenses to which he admitted weren't intentional misconduct.