Swindlers Trail Led Through Nashville
By Jeremy Heidt
The City Paper
November 14, 2002
Nashville, KY. --- 800America.com, a hodgepodge of failed dot-com businesses, was actually being run by an international con artist after all, say both the Securities and Exchange Commission and the U.S. Attorneys Office in civil and criminal suits filed Wednesday.
800America is alleged to have issued bogus financial statements and lied last January when it claimed its chief executive officer wasnt a felon, shortly before moving its headquarters to New York from an office building on 21st Avenue, south of Hillsboro Village.
This was truly a company controlled by hardened criminals and it committed a pervasive fraud, said Barry Rashkover of the SECs northeast regional office. The company allegedly claimed $22 million in fictitious sales last year - more than 100 percent of the $21.4 million in revenues it reported in the audited financial statements in its 2001 filings, the SEC said.
The SEC says CEO David Rabi, 62, and his girlfriend, Tillie Steeples, who secretly runs the company out of a house in Mount Juliet, have sold $2.7 million worth of shares. Some of the money has gone to 800America, while the couple has pocketed at least $330,000, according to the SEC.
Rabi and Steeples have both been arrested and are being held by federal authorities, Rashkover added. They are each facing two counts of criminal charges relating to conspiracy to commit securities fraud and securities fraud, according to documents obtained from the U.S. Attorneys Office in New York.
Steeples, 55, served nearly three years in jail after pleading guilty in 1996 to delivering cocaine into a Tennessee prison, the SEC said. Steeples illegally sent cocaine to her husband in prison, apparently with the intention of allowing her husband to overdose, the SEC complaint says, citing a judicial ruling in the criminal case. Since her husbands insurance policy did not have a suicide clause, (Steeples) was able to collect more than a half-million dollars as a result of her husbands death, the complaint reads.
Steeples has also assumed the identity of a woman named Ruth Walley and has claimed to be secretary of 800America.com under that name, the SEC said. The actual Ruth Walley died in 1997, the agency said.
After moving out of its Nashville office, 800America maintained a local presence in Mount Juliet, in a home connected to both Rabi and Steeples. The SEC has asked a federal court for an injunction, the appointment of a receiver, and an order forcing the return of the defendants ill-gotten gains. The SEC stopped trading of 800America at midday Wednesday simultaneously with the filing of its civil suit.
Company shares, which trade over-the-counter, closed at $1.76, down 53 percent this year. The SEC also is asking the court to appoint a receiver for 800America.
The court will hear the SECs injunction motion Nov. 21. Rabi, then known as Elie Rabie, was convicted of securities fraud in Paducah, Ky., in the late 90s. Rumors that Rabi was the same man convicted in Kentucky surfaced last January and sent its stock price plummeting. Company officials were vigorous in their denials about the rumors truth. We were told (by Rabi) there wasnt any proof and we really did think there was nothing behind (the rumor) when it went away, said Jerry Kavoun, 800Americas chief marketing officer.
Kavoun, who operates an 800America subsidiary in Ottawa, Canada, said he and the 23 other employees are now waiting to see what happens. Well see how deep the damage is and if theres anything left to salvage, Kavoun said. Investors who were duped by Rabi and Steeples are in shock.
We suspected, but not to this extent, said Randi Shinder, whose struggling dot-com company, YouTopia.com, was acquired using stock in 800America. How did the auditors state they had $22 million in (revenues) and its not really there? How did they miss that? SEC official Rashkover said the alleged fraud had Rabi and Steeples fabricating monthly bank statements, checks and sales invoices to support their claims to the auditor.
800America and its divisions had banking accounts with Wilson Bank and Trust in Mount Juliet, according to the U.S. Attorneys office. Search warrants for the residence in Mount Juliet and the New York offices of 800America have been executed to obtain records relating to the alleged fraud.
Youtopia.coms assets yesterday included $880,000 worth of 800America shares. Shinder personally held nearly $350,000 worth of shares in the company. I expect Ill be doing the same things as the SEC, she said. Suing the company and Rabi.
Bloomberg and Reuters contributed to this report
Con artist running scams for decades
Whats in a name? Plenty when youre running con games in several countries. David Rabi, aka Elie Rabie, has used more than a dozen aliases in the 7 decades hes allegedly been ripping off the unsuspecting.
The most recent charges against him stem from a sophisticated shell game with a public company that bought failing dot-com ventures and miraculously turned them into profitable operations. A U.S. Postal Inspectors report details numerous machinations aimed at manipulating 800Americas stock price while secretly selling off large numbers of shares through dummy accounts by Rabi and his girlfriend/accomplice Tillie Steeples, of Mount Juliet.
800Americas reported sales last year were a complete sham - all $22 million worth, according to the Securities and Exchange Commission.
Its not the first time, Rabi has been in trouble with the law, according to published accounts and public records.
He has a criminal record stretching back to Israel in 1953, where he was convicted of using the threat of force to make a victim sign over shares in a company and a managers position to Rabis brother. Rabi, age 20 at the time, was sentenced to six weeks imprisonment.
In 1958, the Republic of Italys records show Elie Rabi was convicted of fraud and maintaining his companys books in a confused and chaotic manner so as not to permit their reconstruction. He was sentenced to seven and a half years in prison.
In 1966, he was arrested in Toronto, Canada, with a Lebanese passport issued to Elias Yassin Rabbiah of Baghdad, Iraq, and charged with defrauding a copier company of $480,000, according to published reports. He collapsed claiming to be paralyzed and vanished a month later after being discharged in a wheelchair from a Canadian prison hospital, forfeiting a $30,000 bond. Four years later, he made Canadas 10 Most Wanted List.
In 1981, Rabi was also convicted of bilking a Mexican heiress out of nearly $150,000 and was sentenced to up to 14 years in prison.
In 1996, Rabi pled guilty and was convicted on 33 counts of securities fraud and sentenced to 4 years in jail for a fraud he perpetrated in Paducah, Ky., with a company called Onecard Health Systems. Rabi raised nearly $1 million dollars from investors for Onecard Health Systems, while concealing it had more. The court accepted the four years he served in a Tennessee jail fighting extradition as sufficient penalty.
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