Home-Stake Swindle

THE HOME-STAKE Production Company was an oil-drilling tax shelter company based in Tulsa, Oklahoma. Its founder, Robert Trippet, was a well-educated Tulsa lawyer. Trippet's company began offering[Page 401] investments to the public in 1964. Home-Stake promised investors that their ventures were tax deductible. Investors were told to expect returns of at least three times the monetary value of their original investments. When Home-Stake did not deliver, lawsuits were filed against the company. Many of the plaintiffs were well-known Hollywood actors, actresses, and other television and entertainment industry personalities. The victims also included many top U.S. corporate executives.

An in-depth investigation by reporter David McClintick revealed that Home-Stake was a classic Ponzi scheme where money collected from late investors is used to pay off the early investors. The term comes from the late Charles A. Ponzi, an Italian immigrant and 1920s swindler who managed to fleece victims of more than $15 million with his postal coupon scandal. McClintick referred to Home-Stake as “the biggest Ponzi scheme” due to the large number of would-be investors who fell for the swindle.

McClintick was originally tipped off to the scheme by a tax-lawyer friend. McClintick's investigation suggested that, although Trippet appeared to be the mastermind behind the Home-Stake swindle, his close associates were also heavily involved. These included Kent Klineman, a New York tax lawyer who collaborated with Trippet to divert over $3 million out of Home-Stake. Several other prominent lawyers and accountants were also part of the scheme, including David Melendy, Home-Stake's financial vice president, who was well aware of the money mishandling problems.

McClintick also discovered that several U.S. law and accounting firms received payments from Home-Stake after advising several of their wealthy clients to invest in the company. Martin Bregman, a financial manager for many entertainment performers, provided the link to the vast number of celebrity investments in Home-Stake. Bregman received kickbacks after steering a multitude of clients toward Home-Stake.

After a thorough investigation, McClintick concluded that the numerous investors had been duped out of more than $100 million. Although several of them did file lawsuits, Home-Stake convinced many of the earlier investors to cut their losses by donating their shares to charity. As a result of McClintick's inquiries, as well as probing by officials, a Los Angeles federal grand jury investigated Home-Stake. In 1974, 45 counts of conspiracy, tax fraud, securities fraud, and mail fraud were handed down against Trippet and 12 others.