Metro Display Company - Notorious Frauds and Schemes

A Display of Greed

A 54 year old businessman with a history of criminal activity, began the Metro Display Company, with the idea of selling bus-stop shelters, with advertising space, throughout Southern California.

The advertised investment strategy was as follows: he claimed that you could buy a bus shelter for about $10,000. He promised you $170 in monthly dividend payments and that Metro Display would buy back the shelter from you for your initial $10,000 investment after five years.

Plus, the company pledged to give you a 20% share of that shelter's advertising revenue for the following five years. This process would supposedly double your original investment.

He pitched his plan to individual investors and soon received about $48 million from them. The majority of his investors were retirees on fixed incomes who were hoping the investment could better their financial futures.

Soon they became one of the largest and fastest growing public bus shelter firms in Southern California. The company owned 2,600 shelters in more than 60 cities and counties in Southern California and Southern Nevada. However, he quickly began losing control of his investment scheme. Over 1,600 shelters remained to be built and other financial problems were beginning to mount. Only about half of the shelters sold were ever installed.

He failed to advise his investors, among other things, that 25% of their investments were being used to pay sales commissions, and that funds from new investors were used to cover the monthly payments due to longtime investors.

He claimed he was selling ads in the shelters for about $1,000 a month per shelter when actually the price was closer to $200. In addition, only 10-15% of the shelters carried paying ads, not the 85% that he claimed.

Business grew dismal, new investor funds trickled to a halt, and longtime investors clamored to get their monies back from the collapsing business. He quickly began losing control of his fraudulent scheme. Over 1,600 shelters remained to be built and only about half of the shelters sold were ever installed.

The files revealed that in just six months, Metro Display recorded losses of more than $7 million. In its petition filed in United States Bankruptcy Court, MDA showed more than $100 million in debt and less than $1 million in assets.

The files also showed that he and his wife had diverted more than $800,000 from the bus shelter business to make improvements on their luxurious home. They also paid generous amounts of money to relatives employed at the business.

He was sentenced to 46 months in jail and was ordered to pay restitution to his victims. Three of Metro Display's salesmen, indicted for their parts in the scheme, were convicted and received prison terms ranging from three to seven years.

Investors were only able to get back less than half of their original investments. About 200 Metro Display investors, many of them retirees, did not want to take their losses lying down. They formed a group to try to get the company back on sound financial ground in the hopes of ultimately selling it, in order to recoup their losses. Mostly volunteers, they did everything from answering phones to selling ads until, slowly, it emerged from bankruptcy and was sold. They were only able to get back less than half of their original investments.