'Evil' conman jailed for $5m scam

File photo / Kenny Rodger

LOS ANGELES - An "evil" US con man who portrayed himself as a "Hanoi Hilton" prisoner of war survivor to scam victims in New Zealand, Australia and the US out of almost US$4 (NZ$5.6) million has been jailed.

Robert William Searles, 71, was sentenced in a Tulsa, Oklahoma, court on Tuesday to four years and nine months in a US federal prison.

The Tennessee-based Searles worked with New Zealand fraudster, Wayne Leslie Davidson and two other American men to con 475 victims, including a Northern Territory couple who handed over A$350,000 ($449,300).

The scam involved 159-year-old bonds issued by the now defunct American railroad company, Galveston, Houston & Henderson, and 100-year-old Republic of China bonds.

The scam's victims were told hundreds of millions of dollars in interest had accrued on the bonds and for a cash investment they could share in the fortune.

The reality was the bonds only had nominal value as collector items.

Davidson, 63, originally from Wanganui, New Zealand, is a fugitive and the focus of a worldwide manhunt led by the FBI. He is believed to be in the Middle East.

Davidson was well known in the New Zealand farming community and used personal relationships to gain the trust of victims, with almost 400 of the 475 victims from New Zealand.

Searles benefitted in court from pleading guilty to a money-laundering conspiracy charge in April and agreeing to testify against his American co-conspirators, Joseph Thornburgh and Steven Fishman.

Thornburgh and Fishman were jailed last month for 24 and 21 years respectively - the longest white collar crime sentences handed out in the northern district of Oklahoma.

US assistant attorney Charles McLoughlin, who co-prosecuted the case, said Searles was in poor health with diabetes and a heart problem and may not survive the jail stint.

"One of the things I told the judge today was I'm not telling you this (Searles) is a good man. This is a very evil man," McLoughlin told AAP.

"But, he was someone who once the jig was up, did the right thing."

Davidson was the scam's man on the ground in Australia and New Zealand and would have face-to-face meetings with victims.

During the meetings he would call Searles in the US and put him on a speaker phone to pitch the bond money-making scheme.

Prosecutors said in order to give Searles more credibility, Davidson came up with a fictitious story that Searles was an American POW in the Vietnam War and was held at the Hoa Lo Prison, nicknamed the Hanoi Hilton, with former US presidential candidate John McCain.

The story was designed to tug at the heartstrings of Australian and New Zealand victims aged in their 50s and above.

"Searles went right along with it and portrayed himself as a POW and a war hero and went to great lengths talking about how he had to decide each day who would live or die," McLoughlin said.

"It was outrageous the detail that he added to this thing."

It is likely the victims of the scam will receive just a fraction of the money they lost.

The only hard asset US authorities have been able to trace is Fishman's Californian home, worth a little over US$300,000.

It has been seized but when divided by the 475 victims amounts to little compensation.

- AAP