Raejean Bonham in Perspective



A few days before Christmas, in 1995, WC had a telephone call at work from Larry Compton, the Anchorage-based bankruptcy trustee. WC had recently worked opposite Compton in a bankruptcy reorganization case. We knew each other, but not well.

Compton said he had just been appointed as Trustee in a Chapter 11 reorganization case. Bankruptcy Judge Herbert Ross had taken the unusual step of appointing a trustee to investigate a debtor, even before the debtor had been found to be insolvent. Compton said he was coming to Fairbanks the next day, and wanted to know if WC would be available if needed. WC assured Compton he’d be happy to help if he could.

WC had a second call from Compton the following morning. He was at the debtor’s place of business, something called “World Plus,” and the situation was dire. The debtor wasn’t there, the safe was open and empty, all of the bank accounts appeared to be overdrawn and the place was a real mess. Neither of the two employees had any idea what was going on. Could WC come over?

When WC arrived, there was a line of about thirty people outside the door, despite temperatures in the -30s F. All of them were there to “get their money.” A very worried looking employee let WC in through the locked door.

There was a reception area, a file room and the debtor’s private office in the back. Compton was in that office. WC walked in.

The sight was extraordinary. There was a desk, filled to overflowing with telephone messages, letters and facsimile messages. The heap of messages was at least two feet high in the center. Hundreds of messages had cascaded off onto the floor.

There was a cheap couch along one wall, also completely covered with hundreds more telephone message slips, fax messages and letters. Many had fallen to the floor in front of the couch. All the envelopes had been opened.

On top of the heap of messages on the desk was a paperback book, open a few pages and laid face down. The title of the book was Will God Forgive Me?

That was WC’s introduction to Raejean Bonham’s Ponzi scheme, and it consumed much of WC’s time for the next two years, and the case itself lasted some 13 years.

As the case developed, it turned out there were

  • Total number of claims filed – 1,084
  • Total dollar value of claims – $59.9 million
  • Largest claim – Delta Airlines, not less than $10 million
  • Largest investor claim – $1.5 million
  • Total investor claims – approximately $48.7 million

It was and remains by far the biggest Ponzi scheme based in Alaska. Bonham’s claimed business was selling travel miles, almost exclusively Delta Airlines travel miles. She claimed to be purchasing frequent flyer miles from major corporations, and then reselling the miles as discounted tickets. The ticket sales were in violation of Delta’s own rules; they had been chasing her in the Federal courts for a couple of years. To use one of the discount tickets in those pre-9/11 days, you had to pretend to be the true owner of the miles.

Bonham was working a double fraud: defrauding her investors and defrauding Delta Airlines. It took thirteen long years to sort it all out. She inflicted a lot of misery on a lot of folks. Parts of her case went all the way to the Ninth Circuit Court of Appeals as folks who had made money fought having to pay it back. There are other folks who, to this day, deny Bonham was a crook.

It was briefly a national story. The Wall Street Journal ran a feature;1 the National Enquirer hooted about it;2 and CBS News hung around a while, although WC was never sure if they actually did a story.

But as big as Bonham’s Ponzi was, it has been dwarfed by subsequent cases. Consider this small sample:

  • Joseph Shereshevsky of Norfolk, Virginia and Steven Byers of Oak Brook, Illinois operated  WexTrust Investment, a $100 million Ponzi scheme that  targeted the Orthodox Jewish community, particularly in Norfolk, VA and New York City. Shereshevsky and Byers pleaded guilty to securities fraud, mail fraud and conspiracy, and were sentenced to 21 years and 10 months and 13 years and four months imprisonment respectively, in addition to being ordered to make restitution and disgorge their gains.
  • Tom Petters, of St. Cloud, Minnesota, was busted in 2008 for a  $3.65 billion Ponzi scheme that bilked investors over a 13-year period. Petters lived an extravagant lifestyle supported by his Ponzi scheme. Petters ran a hedge fund Ponzi, based on false financial documents. Petters scheme collapsed when one of his management staff, Deanna Coleman, went to the FBI. Petters is serving a 50 year sentence.
  • And then there is the grand champion, Bernard Madoff. On December 10, 2008, Madoff made admitted to his sons that his investments were “all one big lie”. The following day he was arrested and charged with a single count of securities fraud. As of December 2008 the losses were estimated to be $65 billion, making it the largest investor fraud in history. Madoff was sentenced to 150 years in prison on June 29, 2009.

Remember, this is just a small sample of the many, many Ponzi schemes that have been run in the United Sates since Bonham. Bonham, in a real sense, was a piker.

At one point, WC thought he might even write a book about the Bonham case. But, ultimately, Bonham just wasn’t that interesting as a crook, the con was just not big enough and the story just not sufficiently compelling to expose the folly of Bonham’s victims to the public eye yet again.

For many years, WC had a dart board with Bonham’s image on it. The dart board seems to be lost. And it turned out the newspaper article scanned above was stuck under the bulletin board by his desk, hidden behind layers of more recent, more interesting stuff.

The lesson is still there: if something sounds too good to be true, it probably is. Otherwise, Bonham’s story has nothing to teach Alaskans today. She’s just another dumb crook.

  1. “Highflying Ponzi Scheme Angers and Awes Alaskans,” August 13, 1998, page B-1. 
  2. “High School Dropout Housewife Scams Fancy-pants Lawyers,” May 23, 1997, page 1. The first and only copy of National Enquirer WC bought.