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Largo office seeker disowns bad deal

When Ernie Bach was a Largo city commissioner in the late 1980s, he sold unregistered stock in a cruise line that had no boat, a Pinellas judge ruled, in a case that received little or no news media attention.

Bach, 68, who is running again for City Commission, was found by Judge William H. Overton to have sold a Clearwater woman $2,500 worth of stock in Royal Fiesta Cruises, a startup company that bilked investors nationwide of $1.3-million and whose president was sent to prison for racketeering, grand theft and fraud.

Susan Wilhelm said in a lawsuit filed in 1988 that Bach introduced her to the company and sold her 2,500 shares at $1 each.

Bach maintained then, as he does now, that he told people about the company and "recommended" the stock opportunity but did not sell any stock.

"I was a sucker with this," he said last week. "I got burned like everybody else."

Overton disagreed. After presiding over the case for two years in small claims court, he ordered Bach, Royal Fiesta and company president William Folz to pay Wilhelm $8,167 - her $2,500 investment, plus interest and $4,850 in attorney fees and costs.

She never got her money.

The cruise line had no assets. And Bach filed for Chapter 7 bankruptcy in November 1991, listing debts of $24,658, including $2,500 owed to Wilhelm and $4,500 in unpaid legal fees.

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Bach, a former private investigator who refers to himself as a semiretired consumer advocate, was a city commissioner in Largo from 1987 to 1990.

It was in July 1987 that the new Royal Fiesta Cruises company of Clearwater made headlines in the Tampa Bay area with its announcement that its recently purchased ferry would be converted into a cruise ship named the Fiesta Princessa.

But neither the ferry nor the cruise ship ever materialized. Hundreds of investors lost money, and after a 14-month probe by county and state investigators, the Pinellas-Pasco state attorney accused Folz of using false and misleading information to lure investors into buying unregistered stock.

In 1989, Folz pleaded guilty to racketeering, grand theft and more than 30 counts of securities fraud.

Bach was not charged with any crime.

He insists his involvement with Royal Fiesta stopped short of selling any stock.

Judge Overton, however, ruled that the evidence showed Bach received $5,000 worth of stock as a sales commission. Bach had testified the shares were a gift.

Shown a document from the court file last week, dated May 13, 1987 and listing his name with the notation "Commission 5,000," Bach again said he was not a sales agent for the company. He said he was told he would receive a commission if he sold $50,000 worth of stock.

"I was supposed to get $5,000 worth of stock," Bach said. "That was my commission. I got zip."

Bach also said he did not work for Folz. But during his campaign in 1987, Bach told reporters he booked cruises for All Aboard Travel, a company owned by Folz and his wife, Carole Ann, and dissolved in 1989. Mrs. Folz also donated $50 to Bach's 1987 City Commission campaign.

In her small claims suit, Wilhelm wrote in a sworn statement that Bach told her he was a major stockholder and working for Royal Fiesta as a seller of stock sure to increase in value.

"Mr. Bach is a City of Largo Commissioner, and he had said that the deal was so good that other commissioners were buying stock," Wilhelm stated in her affidavit.

Bach now says he knows of no commissioners who bought stock.

Wilhelm also wrote that Bach told her a prospectus would be sent to her the next day, but she never received it.

Wilhelm's stock purchase was recorded on a fake stock certificate mailed to her and dated July 20, 1987, about four months after Bach was elected to the commission, according to court records.

Bach testified in Wilhelm's case that he contacted several potential investors, resulting in the sale of about $25,000 worth of stock, records say.

"In addition, the Defendant's photo and name was also used in a mail out that was sent to prospective investors," Overton wrote in his final judgment.

That flier, contained in the court file, invites "friends and associates" to invest in the company and share a glass of wine and some cheese. It said:

This may be the last chance to take advantage of this limited stock offering at one ($1.00) dollar per share. Our European bankers are demanding that it be raised to $3.00 per share very soon. You owe it to yourself and your future to check into this multi-million dollar corporation.

"That was part of my thing to notify people: Hey, here it is, come on and have a glass of wine and I'll tell you all about this," Bach said last week.

Overton concluded the evidence established that Bach sold the stock.

"All these facts, the number of people contacted, the money invested and the mail out are sufficient to find that the Defendant (Bach) was a seller under the Federal Securities Act and therefore liable," Overton wrote.

Bach's attorney, James A. Napier Jr., argued it was Wilhelm's responsibility to verify the stock was registered. But Overton noted the law did not create that duty for an investor.

Bach still insists "there was no sales arrangement."

"This was a verbal thing that went on with everybody," he said. "If we got a certain amount of people to invest, he (Folz) was going to give us a bonus of a certain amount of stock."

Bach said last week he doesn't believe he had a heightened level of responsibility because he was an elected official.

A private investigator at the time, he said he did enough research before recommending the investment to others.

"We saw everything he brought in. He brought papers from Europe. He brought contracts from Europe about the boat and the dry dock. The man did a very convincing con," Bach said.

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Today, Wilhelm and her husband, William, live in Tallahassee. William Wilhelm, a lawyer, represented his wife in her suit against Bach and Royal Fiesta. He said recently he remembers getting a solicitation for the investment before his wife bought the stock, but he can't recall who sent it.

"I thought, "Boy, here's a real securities violation,' " said Wilhelm, 63, and head of the Florida Bar's Attorney Consumer Assistance Program.

A couple of weeks later, he learned his wife had invested in the cruise line, he recalled.

"She came home one day and said she had a surprise for us," William Wilhelm said.

The Wilhelms said they were upset with Bach at the time.

"I was very angry at Ernie at first. I thought "Oh, he's rooked me into this thing,' " said Susan Wilhelm, 51.

But both said they are not angry with Bach now.

"I think he got a little overzealous in his enthusiasm," William Wilhelm said.

Bach said he "bowed and scraped and apologized like crazy" to earn the couple's forgiveness.

Today, Susan Wilhelm lays some blame on herself.

"Nobody gets into something like that without getting a copy of (a) prospectus," she said.

Bach, who was ordered to repay Mrs. Wilhelm one month after leaving the City Commission in 1990, said that debt wasn't what pushed him into bankruptcy.

"It had to do with me putting 600, 800 and 900 hours into different boards and charities I was working for and not spending enough time making money for myself," Bach said.

Times researcher Caryn Baird contributed to this report. Lorri Helfand can be reached at (727) 445-4155 or lorri@spttmes.com.

LARGO ELECTIONS

Largo will hold elections March 7.

Candidates for mayor are Robert E. Jackson and Pat Gerard.

Candidates for commission Seat 3 are Ernie Bach and Rodney Woods.

Candidates for commission Seat 4 are Gigi Arntzen and Jean M. Halvorsen.

To receive an absentee ballot, call 464-6788. For information and polling place locations, call 587-6710 or visit www.largo.com.

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