Wall Street's Most Ruthless Financial Cannibal More than just a con man, Dennis Helliwell cold- bloodedly ruined relatives and friends. His employers ignored the clues.

(FORTUNE Magazine) – He seems so harmless in his prison khakis, in rural Pennsylvania, so many miles from the financial powerhouses--Marine Midland Bank and Donaldson Lufkin & Jenrette--that gave him his stature. His hair is golden, his body plump, his voice high, his face almost cherubic. Dennis Lindsay Helliwell will soon turn 40, but when his blue eyes grow moist and he says, "Well, you don't think I'm a bad person, do you?" he seems barely 10 years old, the age when he was orphaned. A visitor feels a sudden urge to comfort this man-child, to give him whatever he wants. Like most great con men, Helliwell has that special power, plus a whole lot more, enough to earn him a niche in the history of financial evil. He is the Hannibal Lecter of Wall Street: a monetary cannibal who devoured his own loved ones.

Most Ponzi schemes fall apart after a year or two. The master himself, Charles Ponzi, paid his investors with money from new clients for a mere eight months before he was caught in 1920. But Dennis Helliwell, who was sentenced to federal prison last October, ran his Ponzi for 11 years. He raised nearly $5 million. And he did it by promising some 50 investors lucrative returns from an exclusive fund at Marine Midland Bank that turned out to be his checking accounts.

That feat aside, what most distinguishes Helliwell's scam is how ruthlessly he plundered his closest friends and relatives. He started with his wife Gigi's sister and eventually her husband, whom he persuaded to invest their entire savings, $225,000, in his special fund. Now it's all gone. "I was raped," says the brother-in-law, Michael Heffernan, who runs a small landscaping business in Massachusetts. "That was my kids' college money. Today I don't trust anybody--anybody for anything. That's a bad way to live. I never talk about it. No one in this office knows anything about this." For months after the scam he found it difficult to sleep without alcohol or pills.

Later Helliwell bilked Gigi's elderly grandmother of $635,000.

He took Gigi's parents for $140,000, plus their share of the grandmother's estate. They were forced to sell a vacation cottage that had been in the family since the 1920s. ("I cried," says Gigi's sister. "My mom cried.") Now they may have to sell their primary home and move into something smaller.

The man Helliwell called his best friend, and made godfather to one of his daughters, he bilked of $667,000.

Diane Gardner was elderly and recently widowed when Helliwell began to pour on the charm; in poor health, she needed supplemental oxygen. Her husband had always handled the investments, and she knew little about them. Offering to help, Helliwell took $565,000 off her hands.

His uncle John and aunt Mary, both in their 70s, invested $334,000 with him; it was for their three children and the education of their seven grandchildren. "Dennis knew this," says John.

When one of Helliwell's cousins left his wife, she struggled to raise their two young children. She had only $12,500 in savings, which she wanted to hide from her husband. Helliwell said he knew just the place for it.

When his brother died of leukemia, leaving a 7-year-old daughter, Helliwell announced he was setting up a trust fund to which friends and relatives could contribute for his little niece's future. Not surprisingly, the fund does not exist today.

When he met a former nun, now married, he impressed her with the depth of his Catholic faith and said he would be happy to handle the $50,000 she wanted to invest for her stepchildren.

Wife Gigi, once a glamorous regular on Manhattan's black-tie charity circuit, is on food stamps and living with her embittered, elderly parents in Buffalo.

Like Oscar Wilde's Dorian Gray, Helliwell's baby face betrays no sign of the carnage he has left behind. Why did he do it? "I truly don't think that greed was my motive," he says, over and over. "It was more trying to please people." Told that many of those people are devastated by all this, he explodes, "So am I! They should try coming into prison if they want to know devastated!" He does say he loves the prison food, and it shows. He talks of remorse but sends no letters begging forgiveness.

Helliwell is serving a four-year sentence, but his judge was so moved by the victims that he ordered the felon to take the rest of his life, if necessary, to pay them back the $3,446,378.40 that he squandered. "No, no, no!" proclaimed the Honorable Eugene Nickerson as a prosecutor rounded off the numbers. "I want every cent.... I'm going to take every nickel he has if I can!" It's rare for federal judges to order full restitution along with maximum jail sentences, but this was no ordinary case. "This ranks up there with the best crimes," says Patrick Colgan, a recently-retired 27-year FBI veteran, who supervised the agency's fight against white-collar criminals. "I've never seen a Ponzi scheme this large in dollar volume last this long."

But the Dennis Helliwell story is more than a tale of how a man bilked the people who loved him. It's also a tale of how "his employers ignored the warning signs," says Helliwell's prosecutor, Mark Ressler, now in private practice. FORTUNE conducted dozens of interviews and reviewed numerous documents, including records of government regulators and internal, confidential files of Marine Midland, one of America's largest regional banks. Evidence is strong that Helliwell could easily have been stopped, and enormous suffering averted, years earlier. Key findings:

--After Helliwell's arrest, a Marine Midland spokesman said the bank had been unaware of his con. In fact, bank officials spotted and investigated the scam in 1991 but chose not to alert regulators, despite a law requiring them to do so.

--The law requires banks to report cash deposits or withdrawals of more than $10,000 to the IRS, but Marine Midland neglected to file reports with regulators on roughly two dozen occasions when Helliwell deposited or withdrew more than that amount in cash from his checking accounts.

--Helliwell failed his Wall Street licensing exams eight times but was still permitted by DLJ to work closely with wealthy customers, some of whom he persuaded to invest in his fund and then bilked. Helliwell was finally pushed out of DLJ in 1995 amid a review of the firm's registration practices by the National Association of Securities Dealers (NASD), which led to a fine and a consent decree. Now the U.S. Attorney's office is reviewing DLJ's compliance with that consent decree as it relates to Helliwell.

--Marine Midland stonewalled the Securities and Exchange Commission during the agency's 1996 investigation of Helliwell, according to a former SEC attorney who was involved in the case. In addition, DLJ gave statements to the SEC regarding Helliwell's departure that conflict with what the firm is now telling FORTUNE.

Nearly two dozen victims of Helliwell are suing Marine Midland, and an arbitration case is about to be filed against DLJ. The lawyer behind the effort, Sean O'Shea, formerly ran the Justice Department's white-collar crime unit in Brooklyn, where he built a reputation as "a top draw...one of the toughest, most resourceful prosecutors that I've seen over the years," according to former U.S. Attorney Andrew Maloney. Says O'Shea: "I can't wait to torture these guys in court. I'm just gonna kick their ass from one side to the other. Dennis Helliwell did not have to happen. This ranks as the No. 1 case I've ever come across in terms of sheer cold-bloodedness."

Like many con men, Dennis Helliwell had a painful beginning. Abandoned by their alcoholic father, Dennis and his brother, Michael, were raised by their struggling mother in Detroit until she died of cancer. Dennis was 10. The boys were taken in by a stern aunt (herself an orphan) and an alcoholic uncle just outside Syracuse, in upstate New York. Michael never adjusted to the Glenny family; he immersed himself in drugs and was booted from the house. But Dennis forged a close bond with his aunt and enjoyed good relations with his four Glenny cousins. He was also popular with his peers, who elected him class president at the high school and head of the student government at Niagara University, a private Catholic school outside Buffalo. "Dennis was the last person in the world I thought would hurt anybody, because he needed to be liked so much," recalls family friend Barbara Nicholson, a 52-year-old psychologist. "He was fat and jovial, and he made you laugh because he was goofy. He said he looked upon me as a big sister. He'd give you this feeling that you were the only one in the world who was important. I knew he'd never hurt me." Helliwell bilked her of $76,000.

The Glennys were prosperous, but most of their money was held in a trust for Dennis' cousins that had been set up by their grandparents. "He was raised as part of the family, but he felt left out," says cousin Kelly Glenny, a singer-songwriter in Boston. "When he came from Detroit, he probably felt very privileged, something he had never experienced before, and he certainly felt entitled [to the money]." Dennis was the only member of the household to finish college and go on to become financially successful. At one point during his Ponzi scheme, he tried to persuade his aunt and uncle to allow him to manage the Glenny trust, but it was tied up in a way that prevented him from gaining control. Instead, says Kelly, he spent years "manipulating" his parents out of the family's heirlooms--antiques and artworks that were eventually seized by authorities and are now being auctioned off to pay victims. "I was always curious why he was so invested in getting all my family's things," says Kelly. "I think that was his way of believing he was more a part of the family."

Helliwell joined Marine Midland Bank as a 23-year-old loan systems analyst in 1982 and, a year later, met his future wife on a special teller line for employees. Georgia (Gigi) Pooley was a blonde, attractive Smith College grad from a prosperous family that had lived in Buffalo for many generations. Her father, Montgomery, had worked as a senior attorney in Marine's trust department and had helped her land the job. At first she was ambivalent about Helliwell, but she liked the fact that a friendship between the Pooley and Glenny families dated back more than 100 years. Helliwell told Gigi he was certain they had met as kids at one of the Christmas sing-along parties hosted by his grandmother. He wooed Gigi and her family, and made sure they believed he came from money. In fact, Helliwell's spendthrift habits had led him to file for personal bankruptcy in 1984--a fact he kept secret from everyone, including Gigi. "He filed for bankruptcy?" asks Gigi's father, when informed by this reporter. He laughs weakly. "That's a revelation."

Court records show that Helliwell emerged from bankruptcy in early 1985, just as he hatched his Ponzi scheme. The procedure, perfected over time, was essentially this: Helliwell told his investors he had access to a special fund for high-net-worth individuals at Marine called "Trust B" that held notes returning a "guaranteed" 12% to 21% annual interest. The lucrative rate, he said, came from sophisticated trading activities in Hong Kong, where Marine's parent company (HSBC Holdings) was once headquartered. The fund was so popular, he added, that investors could join only when an existing investor left, which was rare. Helliwell provided his victims with statements on bank letterhead, deposit slips documenting their investments, even 1099 tax forms in Marine's name. When investors' "notes" came due, Helliwell would sometimes have to apologize for having "rolled" the money over into a new note without telling them. But it hardly mattered; most were in for the long haul.

Dennis and Gigi were married in an extravagant upstate society wedding in 1986. By then, Helliwell had joined Marine's private-clients group, where he was selling trust products to wealthy customers. He was hardly a model employee. His personnel file, obtained by FORTUNE, shows he was praised for his ability to make new contacts but was criticized heavily for low productivity and a lack of knowledge about the bank, the industry, and the products he was selling. He was refused entry to the bank's management program, in part because of his inability to "think independently." Moreover, sometime around 1987 bank officials discovered he had created stationery that falsely identified him as "director of marketing and sales." Helliwell was reprimanded but allowed to keep his job.

By the late 1980s, Helliwell's Ponzi was in full gear, and the money was rolling in. He celebrated Gigi's 30th birthday in 1988 by renting a yacht and flying in family and friends for a cruise of New York Harbor. The following year, Gigi converted to Catholicism in a lavish ceremony conducted by the president of Niagara University, Helliwell's alma mater, who travelled with an entourage to New York for the occasion.

The couple also broke into the city's black-tie charity circuit by co-chairing the Red Cross' Humanitarian Award dinner dance at the Waldorf-Astoria in 1989. Fellow charity committee members included George Plimpton, Cyrus Vance and Laurance Rockefeller. In 1991, Helliwell was featured and photographed in a glossy lifestyle magazine (M inc., now defunct) as an example of a successful, cigar-puffing, Brooks Brothers-attired banker. "Ponzi artists walk around naked, but everyone believes they have the finest silks," points out Howard Meyers, a former SEC attorney who was involved in the Helliwell case.

Beneath this glittering surface there was already trouble: He had been laid off from Marine Midland in a restructuring three months before the magazine article appeared. No problem, he assured his investors--Trust B was also available to former employees. And soon he had another job. But his friends, family, and investors, not to mention the Vances and Rockefellers, would have been shocked had they known his annual salary when he left Marine Midland. It was $26,400.

Several months after Helliwell left Marine Midland, the bank uncovered evidence that he was a criminal--yet did not alert authorities or do anything else to stop him. Marine officials launched an internal probe in April 1991 after receiving an inquiry about Trust B from a bank in Virginia, where one of Helliwell's investors kept his pension funds. The Marine execs soon discovered that Helliwell had typed out receipts to the investor on Marine letterhead, while the investor had written letters directing his bank to send $95,000 to Helliwell for deposit into a "guaranteed Trust B of Marine Midland Bank" paying more than 18% per year.

Marine officials alerted the bank's legal and investigations units. "We certainly started the ball rolling in the right place," recalls former executive Susan Rau, who supervised the bank's private-clients group at the time. "The Marine Midland stationery with the phony stuff is what triggered us to involve the special-investigations [unit]. When we saw the thing for Trust B, we said, 'Hey, wait a minute, something's wrong here. There is no Trust B.' We didn't know if this was the tip of the iceberg." Rau says the investigation lasted at least a few weeks. "It was thorough," she says. "[The investigators] went through all the records that he had kept, that the bank had kept, all his customer files. We certainly had very qualified investigators who were asking all the right questions."

What answers did they find? FORTUNE has obtained Marine's investigative file from 1991. "Suspicion of possible IRS fraud," wrote a senior bank investigator. What else they may have found may never be known: Marine officials reviewed Helliwell's bank statements and grilled him in person, but no notes of the interview seem to exist. Helliwell's former boss, Alan Trench, spoke to the SEC two years ago (he declines to comment today) and conceded, says a former SEC attorney, that the bank knew it had uncovered illegal activity.

The rules governing Marine Midland, then a nationally chartered bank, were clear: Any "known or suspected" criminal violation involving bank transactions had to be reported within 30 days to the Office of the Comptroller of the Currency, the FBI, and the local U.S. Attorney. Yet Marine Midland reported the matter to no one.

Why not? The bank won't say anything about the Helliwell case. Some experts speculate that Marine may have feared civil liability by blowing the whistle. After all, it wasn't until a year later that the industry's "safe harbor" rule went into effect, protecting banks from civil liability if they report suspicious activities involving customers. Attorney O'Shea has gathered evidence suggesting Marine decided not to alert authorities because Helliwell was no longer an employee and there was no known loss to the bank or any victims--though the law does not allow exceptions on those grounds.

The bank also failed to take other steps that might have been expected--and might have stopped Helliwell. Its review of Helliwell's checking accounts would have turned up scores of Trust B investors whom the bank (or government regulators) could have contacted but didn't. In addition, Marine failed to shut down Helliwell's checking accounts, though it had strong evidence they were being used for illegal purposes. "I can't see any reason the accounts weren't closed once the bank found out about it," says bank expert Leon Ellen, who has advised the Treasury Department on bank secrecy matters. "That I can't understand, because it leaves the institution open to exposure." Moreover, Marine failed to file "currency transaction reports" with the IRS--as required by law--on roughly two dozen occasions from 1989 to 1995 when Helliwell withdrew or deposited more than $10,000 in cash.

Apparently Marine Midland's only significant response to its 1991 investigation was to get an affidavit from Helliwell clearing the bank. "Trench [Helliwell's former boss] said a group decision was made to get Dennis to admit in an affidavit that Marine had nothing to do with it," says a former SEC attorney, who insists on anonymity. "Trench said all their notes from the investigation were then sent to the bank's legal department, and that's the last he heard of it. There was a basic understanding this would go no further." In the affidavit, Helliwell apologizes for using the bank's stationery. He says the investments in question "were solely guaranteed by me" and states he has had "many other investors," all of whom are "in full knowledge" that their Trust B investments are not with Marine. That was a lie, of course.

Marine's investigators apparently now realize the bank should have done more. Elizabeth Hughes, author of the investigation report, has since left her job as head of the bank's "external" investigations unit and declines comment on the matter. But one of O'Shea's assistants recently interviewed her, and his report quotes her saying the bank "dropped the ball" by failing to report the Helliwell case to authorities. William Fogarty, who still runs the bank's internal-investigations unit, also declines to comment, but O'Shea says he's uncovered evidence that Fogarty told bank regulators last year that Marine was negligent and should have investigated further.

A former Marine executive who was involved in the Helliwell probe defends the bank's behavior. "There was no indication that there were large sums of money flowing through his Marine accounts," says the executive, who insists on remaining anonymous. That statement is false, however. FORTUNE has obtained Helliwell's checking account statements from 1989 to 1995, and they show that in the two years before Marine's probe, nearly $800,000 flowed into his accounts. Of that amount, nearly $600,000 came in checks from investors for Trust B. Indeed, even while Marine's investigators were on the case, one of Helliwell's accounts received a $50,000 check, earmarked for Trust B, from his mother-in-law. It was deposited without difficulty.

For the next five years the Helliwells became fixtures in the charity world, where Dennis cultivated the credibility that would fuel his Ponzi. It was a busy life: One day luring in new victims, the next day co-hosting glamorous charity balls with the Manhattan A list--Seagram chief Edgar Bronfman, New Yorker editor Tina Brown, Bear Stearns Chairman Ace Greenberg, financier Felix Rohatyn. There was the Polo Luncheon in Greenwich, Conn., honoring film star Isabella Rossellini. There was the evening at Manhattan's Sky Club in 1991 when Dennis and Gigi received the Child's Champion Award, given to those "who exemplify in their daily lives the ideals of the Boy Scouts."

If the Boy Scouts award weren't ironic enough, consider the occasions when the Helliwells co-chaired annual dinners at the Plaza Hotel for the National Victim Center, a group that raises money for crime victims. The organization's co-founder, Ala Isham, daughter of Sunny and Claus von Bulow, became godmother of one of the Helliwells' daughters. At one point Helliwell even charmed Jack Beatus, who managed the finances for the Tisch family, one of the country's largest fortunes. Beatus recommended Helliwell to at least one investor, whose wife was subsequently fleeced.

Through it all, the Helliwells were living it up with other people's money. Helliwell's checking account records show a man living way beyond his means: In the year before Marine's probe--for half of which he was unemployed--he spent $60,000 just to cover his American Express bills, his limo driver, his floral arrangements, and his private-club expenses. The couple rented a five-story brownstone and filled it with art, antiques, the finest clothes, and enough jewelry to sink a ship. "Dennis was a compulsive shopper," says a former assistant. "He shopped continually, for himself and to buy gifts for everyone." Ex-prosecutor Ressler notes, "He would take people in a limousine to a Broadway play and then a fancy dinner at a private club and insist on picking up the tab--but he'd be using their money. They'd say, 'Oh, my God, Dennis, you're so generous! This isn't necessary!' But he would insist." Far from being ashamed, Helliwell still seems to think his open-handedness ought to count in his favor. "A lot of these people involved in Trust B were frequent visitors at our home, and every luxury was laid out for them," he says from prison. "Do you know what I mean? When we went out to dinner with people, I very rarely let anyone pay."

Relatives say Dennis treated Gigi like an ornament. "He directed her life," says her sister Leslie. "He loved to give orders, and my sister would jump. She said to me that anytime she tried to state her opinion, it just wouldn't be heard." Leslie says Dennis would routinely select the clothes and jewels he wanted Gigi to wear. "He'd dress her up like a little doll, tell her how to talk, how to do everything. She was like a Stepford wife." Having a showcase family was important to Helliwell. After spending tens of thousands of dollars to adopt two infant girls, the Helliwells were given a baby shower by a Marine Midland official who was active with them in the charity world. Every Christmas thereafter, investors and friends would be sent color portraits of the perfect family. Behind the scenes, however, Dennis may have been living a double life in more than just his financial dealings. His best friend says that Helliwell confided that he was having affairs with men. Helliwell vehemently denies it.

After some six months of unemployment, Helliwell was hired by Sanford C. Bernstein, one of Wall Street's top money management houses, as a "financial adviser." SEC records show that Helliwell failed to pass his basic brokerage licensing exams on two occasions and left the firm just five months after he joined. These exams are required for all Wall Street reps who engage in counseling, advising, or selling securities to customers. Says Bernstein CEO Roger Hertog: "Helliwell was a gregarious, likable individual, but it's firm policy that people have to leave if they don't pass their exams. These are open-and-shut cases. There are no unregistered employees in the firm who are dealing with clients. It takes a lifetime to build your firm's reputation, but it can take a short time to undermine it."

Helliwell did not find such a barrier at Donaldson Lufkin & Jenrette, where he was welcomed on the recommendation of a senior VP who was active with him on charity committees. His assignment was to sell portfolio-management services to customers with at least $250,000 to invest. Helliwell lasted 3 1/2 years without ever passing his basic brokerage exam, and many of his victims are now furious that DLJ let this unlicensed employee dispense investment advice to wealthy individuals--several of whom he advised to put their money into Trust B.

One was Katherine Hoffman of Buffalo. In 1993 she invested $250,000 with DLJ on Helliwell's recommendation. He then proceeded to malign DLJ's performance in several conversations with her, eventually persuading her to invest virtually all that money, plus more, in Trust B. Hoffman was bilked of nearly half her savings and may soon lose her home to foreclosure, says her lawyer, Charles Ritter, who just weeks ago settled an arbitration case against DLJ on her behalf.

Securities laws are fairly clear on what unlicensed employees may and may not do. Unlicensed clerks can service customers in a minimal way, but "anyone who is chatting with a customer about a recommendation and helping guide them into a decision needs to be registered," says Mary Alice Brophy, a top enforcement official of the National Association of Securities Dealers. DLJ insists Helliwell never crossed that line. Company lawyer Timothy Mayopoulos says, "His role was circumscribed to those things he was permitted to do without having a license. What he did was act as an introducer of high-net-worth individuals to DLJ. He was always paired up with someone who was registered." But that's not at all how Helliwell or his clients recall it. Investor Hoffman maintains that when she first contacted DLJ about investment possibilities, she was referred to Helliwell and never dealt with anyone else at the company. "People only dealt with me," agrees Helliwell. "I would suggest portfolios and tell people why it would be good for them. I did a lot of handholding."

Is DLJ's behavior unusual on Wall Street? Not in underground boiler rooms perhaps, but the NASD's Brophy says she's unaware of any respectable Wall Street house that has unlicensed reps who are reeling in rich people. "It's hard to envision someone who's out there attracting business who hasn't passed those exams," she says. Or as ex-prosecutor Ressler puts it: "A premier financial institution is not supposed to have unlicensed brokers rendering financial advice. That's what we expect from bucket shops on Long Island."

In fact, during the time Helliwell worked at DLJ, the firm was under pressure from the NASD for employing unlicensed executives and had paid a small fine and quietly signed a consent decree promising to shape up. In February 1995, two weeks before DLJ's deadline to have all its reps licensed, Helliwell--having failed yet again to pass his exam--cleaned out his desk. He "was let go," admits DLJ attorney Mayopoulos. "Given that he had not passed his examination, there was no longer any useful point in his being at DLJ, and he was encouraged to look elsewhere. The firm said, 'We're not going to keep him in our employ.'"

But the firm painted a different picture for regulators. In a routine filing with the NASD and in discussions with the SEC, the company said Helliwell left voluntarily. The distinction was important. "If DLJ's attorneys had told us Helliwell had been encouraged to leave, that would have set off bells," says a former SEC attorney. "That certainly wasn't the party line when we met with them. They should stick to one story."

As it was, DLJ helped Helliwell after he left the firm and carried on independently. He and the firm held a reception for investors at the century-old Buffalo Club in upstate New York that was paid for by DLJ. One of the firm's top stock pickers, Tom Leddy, made a presentation about market trends. Timothy Low, a DLJ broker who had taken over Helliwell's accounts, flew up for the occasion. During the event, Helliwell distributed a brochure for his startup company in which he falsely described himself as a "pioneer" of DLJ's portfolio advisory service, but none of the DLJ execs at the event seemed to notice or care. Why was DLJ still associating with Helliwell? A company spokesman says that DLJ viewed the event as an opportunity to meet and recruit investors, but that there was "never a deal" to give Helliwell a cut of any future business. Helliwell says otherwise. He insists he had a post-employment "written solicitor's agreement" in which DLJ would pay him 0.25% of the assets under management of any future clients he helped bring to the company. "If DLJ had such an arrangement with Helliwell, then the firm did an end run around the NASD consent decree," says attorney O'Shea. To determine if that happened, the U.S. Attorney's office is reviewing the matter.

One of the many charities Helliwell got involved with was Abbott House, a program for hundreds of abused and disabled children just outside New York City, on whose board he briefly served. He got to know Abbott House's CEO, Denis Barry, who decided to invest his savings, $45,000, in Trust B. When Barry's investment came due in September 1995 and Helliwell "rolled it over" into a new note--and then tried to get him to invest yet more money--Barry says he "sensed a scam" and shared his fears in a phone call with DLJ broker Tim Low. Barry's handwritten notes, taken at the time of the conversation, reveal that the DLJ rep was also becoming nervous about Helliwell. Low spoke about "early warning flags," such as the 18% returns, and the fact that some elderly investors "have 80% of [their] assets" in Helliwell's Trust B. "Low said he felt an obligation to alert some of their DLJ clients that Dennis was encouraging people to withdraw their money from DLJ to invest with him," recalls Barry. But he didn't alert the authorities.

Meanwhile, a growing number of Helliwell's investors were asking for their money. His checks were bouncing left and right, prompting Marine Midland finally to close his two accounts--but a close friend at the bank allegedly helped him open a new one. A second pal, Charles Liggio, a senior VP at Republic National Bank, was calling Helliwell repeatedly to keep his checks from bouncing in an account he kept there; Liggio would give Helliwell deadlines for making deposits and thus unwittingly kept the Ponzi scheme alive. While Liggio declines to comment, Helliwell says his friend at Republic bailed him out on more than ten occasions.

But the walls were closing in. In mid-January 1996, three of his relatives flew to New York seeking proof from him that Trust B existed. "We really didn't have an interest in blowing him up," says Gigi's brother, Monty Jr. "We naively thought he must have assets somewhere, and we wanted to try and negotiate something." It was too late. On Feb. 7, the SEC received a detailed letter from a Connecticut investor. The following day, three SEC agents were in Helliwell's Manhattan office, watching him shake for nearly ten minutes while his lawyer gave him advice over the phone. Helliwell's assets were frozen five days later.

For nine months after his arrest, Helliwell fought the charges. Gigi stood by her man, defending him in brisk comments to her family. The couple even renewed their wedding vows in a private church ceremony in August 1996. Several weeks later Helliwell was led sobbing from a courtroom after having been remanded into custody for violating the travel restrictions of his bail deal. He pled guilty to the Ponzi scheme in November. Gigi and their two daughters moved in with her parents and started receiving welfare checks and food stamps. Gigi filed for divorce within months.

Marine, meanwhile, was dodging bullets. In May 1996, the SEC subpoenaed all of its records pertaining to Helliwell. But the bank did not send over its 1991 investigation report. "The bank responded by saying it had nothing," says a former SEC attorney. "We knew they were stonewalling us." Four months later, Marine's general counsel requested a meeting with the regulators. Instead, the SEC threatened to seek a court order if the bank did not turn over the documents. Finally, the papers arrived.

Last year, the Federal Reserve opened and closed an investigation into Marine's role in the Helliwell affair without taking action. The Fed isn't talking, but it may have based its decision on a technicality: Marine didn't report to the agency until 1994, when it switched to a state charter, and that was long after the bank had closed its probe of Helliwell. Another reason for the Fed's softness may be institutional. "The banking industry is still a creature of the 1930s, and regulators don't want people to know what's going on because they're afraid of a run on the banks," says Ernest Badway, a former SEC attorney who was involved in the Helliwell case. "Given today's mergers with securities firms, this practice will be disastrous if it continues." Whatever the Fed's reasoning, this much is certain: "If Dennis Helliwell had been nipped in the bud in 1991," says the ex-prosecutor Ressler, "then dozens of victims wouldn't have been fleeced in the ensuing years."

How do you recover from such ruinous betrayal by a relative or close friend? Not quickly or easily. At least eight victims have sought therapy. Some, like Buffalo dentist Michael Collard, rarely venture beyond the office, which he calls a "controlled environment." Collard was Helliwell's best friend, the one who was godfather to a Helliwell daughter and was conned of $667,000. Collard has since gained about 80 pounds and "just doesn't want to meet new people," says a girlfriend who helps him cope. "If you can't trust your local bank and your best friend, who can you trust?"

Emotionally, Helliwell's in-laws have been hardest hit. Gigi's father, Montgomery Pooley, had built a reputation in Buffalo as a loyal, well-bred gentleman, both as a lawyer and as a champion squash player. Today, at 81, he finds it unbearable to be associated with such a scandal, particularly since he had introduced his son-in-law to many friends in his social circle. "My dad has aged dramatically through this whole thing," says Gigi's brother, Monty Jr. "Helliwell had been something of a confidant. He'd call my father several times a day, and this is the guy who robbed him blind, both financially and emotionally."

Gigi's mother, Georgia, 69, is working overtime as a nurse and "is always exhausted," says Monty Jr. "She's frantically trying to make up for what was taken from her." She says, "In a way I'm sort of in denial. I've never really looked at it straight on. I don't want him to be whipped or destroyed. I just don't want him on my property. I do want him to contribute to the upbringing of his two daughters, which he bought with our money, with moneys he had no business using."

The question that continues to haunt the family is, How much did Gigi know? She declines to be interviewed, in part because an SEC case against her is still lingering. What's known for sure is that she was a signatory on Helliwell's accounts and clearly benefited from the scheme. She called Dennis' cousin Kelly Glenny last year to wish him a happy birthday. "Toward the end of the conversation, she said, 'Well, it was fun while it lasted,'" he recalls. "I was furious when I hung up the phone." Says Gigi's brother, Monty: "I choose to believe that she didn't know [about the Ponzi scheme]. But her inability to recognize what was going on is distressing." Sister Leslie talks with Gigi, but the big conversation hasn't taken place. "Oh, I've tried," she says. "We still haven't had our answers. She's not ready or strong enough yet. There are a lot of people she has to answer to."

Today Gigi is trying to pick up the pieces, in part by attending college classes to become a teacher. "She didn't just lose her lifestyle; she lost her life," says brother-in-law Michael. "She has her mom and dad, but pretty much everybody in the family wants nothing to do with her. And none of her old friends wants anything to do with her. And I'm sure she walks around Buffalo and everyone is talking behind her back."

As for Dennis, he has kept busy tutoring inmates on the fine points of Christianity, teaching them English, even sharing his prison allowance money with those in need. "I can't say who he was before, but clearly he is now a very compassionate man," maintains Alan Larsen, a volunteer for a nationwide prison ministry group. Indeed, Larsen says he has worked with hundreds of inmates over the past five years and has never met one as kind and generous as Helliwell.

What, ultimately, made Dennis do what he did? FORTUNE posed the question to Dr. Steven Berglas of the Harvard Medical School, whose entire clinical practice consists of successful businessmen who self-destructed. "While I've never met or spoken with Helliwell, he manifests the characteristics of certain abused or abandoned people who engage in what I call Pyrrhic Revenge," says Berglas, who has written books on the subject. "They use success to try and compensate for the feeling that they're damaged goods. Ultimately, the success they seek doesn't mollify that feeling, so they use self-destructive tactics as a way to draw in and punish others. In a malicious con, the criminal will set up a storefront, lure people in, and split in the middle of the night. But the self-destructive white-collar criminal soils his own nest as much as possible. 'You say you love me, but I know I can't be loved. Now it's payback time!' They don't punish strangers; they punish intimates. 'I'm going down, and you're coming with me, you bastards!' I see this in so many people I treat for white-collar crime."

In Berglas' view, the capture is part of the complex. "These people are standing around waiting to get caught," he says. "They are almost gleeful at discovery and at the hurt they caused." During his prison interview Helliwell kept interrupting questions to ask what his victims were saying about him. He seemed obsessed with their opinions and would sometimes lash out at those who were particularly critical of him. Explains Berglas: "They almost want to be there to watch the pain they inflicted on those who have actually or symbolically wronged them. As for the victims, well, when you lose money to a pickpocket, you recover really easily. But when you lose money to someone who kisses you good night, someone you've shared secrets with, the effects are just devastating."

Berglas says that without intensive therapy, people engaged in Pyrrhic Revenge "definitely" strike again. Helliwell calls that prediction "preposterous" and is declining to take advantage of prison counseling. "I'm not one to dwell on problems," he says.

Or scarcely one to acknowledge them. The word "denial" doesn't begin to describe Helliwell's attitude toward his past. Asked how he felt during the pressures, the juggling, the deceptions of running an 11-year Ponzi scheme, his answers are consistent: "I never thought about it." "I don't even want to think about it." "I don't really know." His version of what went wrong? "I really thought I could have worked everything out and paid everyone back, but then the government got involved, and it turned into a colossal nightmare." His attempts to defend himself or describe his own suffering are often ridiculous or pathetic. On the dentist he drilled for $667,000, he reflects, "Collard says I'm a pathological liar. Those statements really hurt. We were good friends." Another time Helliwell explains, "I never took money without giving a receipt."

He is no more engaged with reality when he talks about his future. His cousin Kelly Glenny reports that Helliwell called his foster mother from prison not long ago and gave her some encouraging words: "He told my mother that when he gets out, he can go back to work doing what he was doing, and everything is going to be fine. He's living in a fantasy."

Helliwell is legally barred from Wall Street. Still, by November 2000, he'll be out of prison and looking to make money somehow. "I have every intention of paying these people back," he says. Maybe so--but he's appealing the judge's order requiring him to do it.

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