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To Frank Marranca, a retired Buffalo construction worker, it was an investment offer that sounded too good to pass up.

Borrow $25,000 against his life insurance policy and invest the money in World Wide Capital Funding, an Amherst debt collection company that was promising to nearly double the interest he was earning.

Even better, Marranca's insurance agent, Michael Ferguson, promised that the investment would be safe and sound.

It didn't turn out that way.

Instead, Marranca and his son, Charles, who invested another $13,500, spent more than two years trying to get their money back from what state law enforcement officials said has ballooned into one of Western New York's biggest investment frauds.

Far from being the "safe and secure" investments that Ferguson and World Wide's owner, Dennis McNerney, were pitching, the Marrancas' money went into a high-risk "factoring" venture to collect on debts owed to stores and businesses, said Dennis Rosen, an assistant state attorney general.

Ultimately, state officials said, the scheme evolved into a Ponzi scheme, where money from new investors was used to pay the dividends owed to other investors. And there was no money to repay investors who wanted to get out entirely, the officials charged.

"It was very, very, very terrible. I couldn't sleep nights," Marranca said Thursday after McNerney and Ferguson pleaded innocent in state Supreme Court to charges that they bilked 45 Western New York residents, most of them elderly, out of $5 million.

In the end, the victims stand to lose about $3.75 million of their money, with 28 of the investors in line to divvy up $1.25 million in restitution being made by McNerney and Ferguson's former employer, Metropolitan Life Insurance Co.

Marranca is one of the lucky ones. He and his son will get back nearly $34,500 of the $38,500 that they invested in World Wide Capital. "I worked hard for my money. I didn't have any big money in the bank to invest," Marranca said. "I had the insurance policies."

Another investor, a 91-year-old Alden woman who invested her life savings of $198,000, will get about $147,000 of her money back, Rosen said.

"They began to do this clandestinely" when both McNerney and Ferguson worked for Met Life, said John Calagna, a spokesman for the insurance company, which has agreed to repay 90 percent of the money invested while either man worked for Met Life. "We were not aware of this activity, and we are trying to do right by people."

McNerney left Met Life in 1995; Ferguson, who allegedly received commissions from McNerney for referring investors to him, was fired in June.

Rosen said the investigation is continuing. After state officials barred World Wide Capital in April 1998 from offering any new investments without first registering with the state attorney general's office, Rosen said McNerney started a similar venture, Continental Capital Funding.

State officials are investigating Continental Capital's operations, and state officials have frozen $1.4 million in assets that Continental Capital has in an account at HSBC Bank USA, Rosen said.

"These guys have unmitigated gall," state Attorney General Eliot Spitzer said. "The only good news is that we caught them."

State law enforcement officials said World Wide Capital worked this way:

Beginning in 1993, McNerney and World Wide Capital would pay companies an up-front fee in exchange for the right to collect their accounts receivable.

Because World Wide Capital would buy the receivables at a steep discount, sometimes for 70 cents or less on the dollar, the company could pay investors dividends of 9 to 12 percent, which were double to triple the yields on savings accounts or certificates of deposit. On some deals, McNerney had the potential to earn profits of as much as 50 to 60 percent, Rosen said.

To raise the money he needed to buy the receivables, McNerney sought out investors, many of them elderly residents who had done business with Met Life in the past. "The defendants made a concerted effort to target senior citizens," Spitzer said.

Marranca, for instance, said Ferguson recommended World Wide Capital to him. "He used to come to my house to collect the premium" on the life insurance policy, Marranca said. "He used to tell me about this investment. Then one day he told me, you've go so much money in this policy, why don't you take it out and invest it?

"I was making an extra 6.5 percent on my money for doing nothing," he said. "I thought, because they were working for Met Life, they were an honest person."

To make the investors more willing to sign "joint venture agreements," McNerney promised that World Wide Capital offered them high-yielding investments that were fully secured and guaranteed. "He would use phrases like, 'This is like putting money in the bank,' " Rosen said.

That helped convince the late B. Wade Hall to invest about half of his assets in World Wide Capital. "My mom and dad worked really hard all their life," said their daughter, Lynda Wallace of Batavia.

"He was not well-versed ininvesting. He just thought this was a great deal," Wallace said. "He knew if it sat in a plain old savings account, he'd lose money because of inflation."

Instead, World Wide Capital invested in risky start-up companies, or businesses with financial troubles, Spitzer said. And when many of those investments turned sour, McNerney lost much of his investors' money.

"When their investments went bad, it turned into a Ponzi scheme," Spitzer added.

To keep investors happy, World Wide Capital continued to pay its regular dividends, though Wallace said the size of her father's payments had been reduced.

But both Marranca and Wallace said they ran into roadblocks when they tried to get their money back. McNerney told Wallace, for instance, that he would have to repay her father's estate as World Wide Capital's receivables came in.

Marranca said McNerney promised in summer 1998 to repay his money within 45 days of his request but failed to do so. "He also said he'd give it back a little at a time, but he never did," Marranca said.

McNerney's attorney, Robert J. Schreck, said his client is innocent but would not comment further. Ferguson's attorney declined to comment.

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