INVESTORS: KROLL LED US INTO SCHEME

Kroll Inc., the global risk consulting company, never saw it coming.

And that’s just the problem, according to a growing list of wealthy investors, who claim the well-known background investigations firm gave them the green light to invest with certain money managers — only to see those millions of dollars go up in smoke shortly thereafter in what are believed to be some of the largest Ponzi schemes ever.

One wealthy South African investor is weighing legal action against Kroll, The Post has learned, after the New York-based company’s office in that country issued a lengthy report in 2007 giving businessman Barry Tannenbaum a clean bill of health.

Tannenbaum was offering investors returns of 3 percent a week if they would help finance his pharmaceutical importing business and its shipments of the raw materials in AIDS treatment drugs.

The investor was wary after Tannenbaum showed him and others contracts from large pharma companies — so he sought out intelligence on Tannenbaum. The Kroll report put him at ease, sources familiar with the case said.

Documents seen by The Post show that Kroll Background Screening conducted a thorough investigation of both Tannenbaum and a second man on June 18, 2007. The finished Kroll report is understood to have been passed on to others, unwittingly pushing even more potential victims into Tannenbaum’s alleged fraud.

Tannenbaum is currently living in Australia, where he claims his innocence.

“The accusations of me running a Ponzi scheme are unfounded and drivel. I was not running a Ponzi scheme at all,” Tannenbaum, 37, told The Post in an e-mail last week.

After Tannenbaum’s Frankel Chemical Corp. was more than a year late on making payouts, the investor, who wished to remain anonymous, hired a team of private investigators who found that many of the contracts with the pharma firms were forged.

The private investigators went to South African authorities this summer and a task force of five national law-enforcement agencies, including the central bank, the police department’s Serious Economic Offences Unit and the Financial Intelligence Center, started an investigation into allegations that Tannenbaum ran a $248 million Ponzi scheme.

The Kroll report clearing Tannenbaum, who has not been charged with any crime, would be the centerpiece of any civil action against the risk-consulting company.

The apparent black eye for Kroll in South Africa comes just weeks after Electri International sued Kroll over $6.3 million it placed with alleged Ponzi schemer R. Allen Stanford. Electri, a Bethesda, Md.-based foundation for electrical contractors, paid Kroll $15,000 for a due diligence report on Stanford International Bank, the financier’s Antigua-based operation. The report said Stanford’s operation was on the up and up.

Stanford was arrested this year and charged with running a $7 billion Ponzi scheme.

“With Bernie Madoff, wealthy investors rushed in without doing any due diligence,” a source close to the South African investigation said. “With Stanford and Tannenbaum, investors took the precaution of asking a reputable firm to perform due diligence yet they still got burned.”

Kroll declined to comment about the report.

The Electri case was especially embarrassing for Kroll because after it was filed it was learned that Kroll’s Thomas Cash, head of its Miami office, whose jurisdiction issued the Stanford report, used to work as a consultant for the disgraced money man — information that was not disclosed to the client.

Cash has since left Kroll.

A third case this year involved two Miami brothers who were promised a return of 5 percent a month to invest in a company that distributed iPods to a South American retailer. Kroll, according to a lawsuit filed by the brothers in federal court in Florida, vetted Andres Pimstein and Jeffrey Feuer, the duo behind the distributor, and gave them a clean bill of health.

The brothers’ $1.1 million investment in the distributor was lost when it turned out the investment plan was a $40 million Ponzi scheme. Pimstein pleaded guilty to federal charges this year.