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World Perspective | CARIBBEAN

One Man's Utopia Is Sometimes an Enforcement Official's Fraud

March 02, 2001|MARK FINEMAN | TIMES STAFF WRITER

GEORGE TOWN, Cayman Islands — Lazarus Long calls it the Principality of New Utopia, a tax-free, trouble-free, enlightened and libertarian land that will rise out of the Caribbean on concrete pilings about 115 miles west of here.

New Utopia, the Oklahoma resident pledges on his Web site and in interviews, will be "a safe haven from runaway bureaucracy," a city-state of canals that will outdo Venice in beauty, Hong Kong in wealth and the Caymans in bank secrecy and tax freedom.

Two years ago, he announced on the Internet a $350-million bond offering to finance this brave new world that he and his wife will rule as prince and princess.

Long, a 68-year-old self-professed "millionaire several times over," acknowledges that some people think he's nuts and call New Utopia a pipe dream.

The U.S. Securities and Exchange Commission called his bond offering a fraud.

After Long signed a consent decree in 1999 admitting no guilt but promising not to violate securities laws in the future, SEC Commissioner Laura S. Unger cited New Utopia last year as "one of the more notorious" of a raft of "offering frauds" uncovered by federal investigators during the agency's first major sweep of securities on the Internet.

It was just one of scores of stock and security offerings over the Web, ranging from the seemingly silly to the sublime, that the SEC has alleged were scams since it created its Office of Internet Enforcement in July 1998. The office, which coordinates a "cyberforce" of 200 lawyers, investigators and accountants throughout the United States, has filed dozens of civil complaints alleging shady promotions on the Web.

A review of those cases shows a fondness among promoters for loosely regulated islands, especially in the Caribbean--a region favored for centuries by pioneers, pirates and dreamers.

Take, for example, the Kingdom of EnenKio and its head of state, Robert F. Moore. Using his Web site and an attorney's office in the Bahamas, the Honolulu-based Moore offered $1 billion in bonds issued by the "kingdom" he claims on five barren atolls in the Pacific Ocean--a "nation" the SEC said exists only in cyberspace.

Asserting that the bonds were "backed by gold reserves," which the SEC charged also existed only in the virtual world, Moore said the bonds' proceeds would finance his version of an idyllic state.

In October, the SEC filed a complaint against Moore and his "kingdom," alleging fraud. Three weeks later, Moore's Web site, http://www.enenkio.org, posted this advisory: "The EnenKio government is cooperating with the [SEC] to ensure that EnenKio bonds are not offered, marketed, transferred or sold to any persons or entities residing or established in the United States, including U.S. citizens wherever they may reside."

The hopeful Prince Long fought the SEC harder and longer. Nearly a year passed before he settled, signing the consent decree in late 1999.

Harold Degenhardt, who heads the SEC division that sued Long, this week said: "Our case was not about whether this type of country could be created. Our case was simply: This is what you said in your [offering] papers, and it was wrong and fraudulent."

Last week, however, Long said in an interview that his dream lives on. Developers will break water for New Utopia this month, he said, and a condominium complex that will anchor his new nation will be completed by year's end without the sale of a single bond on the Web.

"In fact, we never sold any bonds. We had a plan to do it, but we hadn't actually sold a single thing," said Long, who also said he made a fortune in anti-aging hormone therapy in the 1980s as Howard Turney before changing his name to that of his favorite character in a science-fiction novel.

The SEC, he asserted, went after New Utopia to generate publicity for its Internet enforcement program. His Web site, http://www.new-utopia.com, continues to proclaim, "The reality of New Utopia as a viable project . . . is so much greater than any fraud could possibly be."

Claiming he has commitments for more than 2 million square feet of office, retail and condo space, Long insisted that developers will cover all building costs. And New Utopia will overcome competition from similar tax-free meccas such as the Cayman Islands--where banking and taxation laws are designed to shield investors' assets from tax collectors at home--through its "uniqueness," he said.

"A lot of people think I'm nuts," he said. "But there are a lot who think I'm not. Anyway, you'll see."

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