The alleged grifter who duped corporate giants
Some executives thought it was their lucky day when Dina Wein Reis called with a lucrative proposition. It wasn't.
(Fortune Magazine) -- Just before dawn last October, around 50 federal law enforcement officials mustered in front of a six-story Beaux Arts townhouse on Manhattan's Upper West Side.
The agents, wearing blue raid jackets, stood in the rain outside the home of 45-year-old Dina Wein Reis, a self-described businesswoman, film producer, and philanthropist. For at least 15 years Wein Reis had made a fortune by allegedly gulling dozens of consumer product giants, including Procter & Gamble, Unilever, and Hershey, in exquisitely orchestrated scams.
"We're here to execute a search warrant," an FBI agent said. The agents swarmed into the first-floor salon, past the Modigliani portrait and the French provincial furniture. They marched through sumptuous rooms crowded with an eclectic collection of treasures, from La Farge stained-glass doors to canvases by Warhol, Frank Stella, and Thomas Hart Benton.
Wein Reis was arrested on charges of conspiracy and wire fraud. After fainting, she was escorted by FBI agents to a hospital for evaluation. Then she was arraigned, fingerprinted, photographed, and sent to federal lockup. Five associates of Wein Reis were also arrested for their alleged involvement in the fraud ring. The search warrant gave the government authorization to seize "fruits of the crime," which federal officials interpreted to mean just about everything. Besides scores of necklaces and watches, they carted off a pair of Louis XVI footstools, two Bugatti throne chairs, a pair of Empire sleigh beds, and a 1920s cast-iron vanity.
The feds needed two huge moving vans to haul away the trove. The job wasn't finished until three the next morning. The federal agents were utterly overwhelmed by the quantities of loot. Recalled Dennis Halliden, the FBI special agent supervising the case: "It was like King Tut's tomb."
The grifter, wrote David Maurer in his classic 1940 study of con men, "has a gentle touch." He takes his "toll from the verdant sucker by means of the skilled hand or the sharp wit ... Of all the grifters, the confidence man is the aristocrat."
Dina Wein Reis certainly lived like gentry. She has luxurious homes in Westhampton Beach, N.Y., Bal Harbor, Fla., and Jerusalem. Her Manhattan townhouse was featured in Architectural Digest. On a loan application she estimated her own net worth at $200 million, according to the government, although that figure is probably exaggerated. She cultivated friendships in New York society, hosting lavish parties for the Whitney Museum of American Art. With her polish, bling, and porcelain skin, she made a striking first impression. Said one former employee: "She looked like she stepped out of a Beyoncé video."
For sheer dollar damages, her alleged thievery cannot come close to matching that of Bernard Madoff or R. Allen Stanford. She didn't steal outright, fudge the books, run a Ponzi scheme, or leave investors destitute. She didn't rob charities.
But what she is accused of doing was fabulously brazen; she had the temerity to sting some of the world's biggest corporations -- not just once, but again and again. Her targets were middle- and upper-level marketing executives, including division heads and presidents. It was a simple scheme, though brilliantly choreographed, according to court records and people familiar with the investigations. Here's how it worked: Wein Reis persuaded the executives to sell her merchandise at huge discounts, promising to include the products in knapsacks or boxes of free samples to be handed out at schools, senior centers, Native American reservations, or military bases. She promised the sellers that if the sampling program were successful, the companies would gain exclusive access to these hard-to-reach markets through her "National Distribution Program." But there was no National Distribution Program, according to the deposition of a senior Wein Reis lieutenant. It was a fantasy. Instead, Wein Reis and her team sold nearly all of the goods to middlemen, who sold them to big retail chains, grocery stores, and wholesalers.
Wein Reis was what is known as a "diverter," a player in the little-known but large gray market in which consumer goods are bought and sold in channels unauthorized by manufacturers. Diversion is not necessarily illegal. But the way Wein Reis did it was fraud, prosecutors allege.
Wein Reis, who faces trial in a federal court in Indianapolis or New York sometime next year, declined to speak to Fortune. In a statement, her lawyer, Michael Sommer, said, "Ms. Reis has pleaded not guilty to the charges and fully expects to be vindicated. We share in her confidence, as the notion that companies as sophisticated as those at issue in this case were somehow deceived strains common sense."
This account is based on court records; internal memos, spreadsheets, and e-mails from Wein Reis's companies; wiretap transcripts; and interviews with former employees, targets, suppliers, family friends, and others familiar with the civil and criminal litigation against her. Wein Reis, it appears, is a person who thrives on complexity and illusion. She used multiple aliases to run more than 100 shell companies. She tithed. She gave millions to charities anonymously, yet she was often ungenerous with employees -- a practice that led to her downfall.