The New York magazine interview with Bernie Madoff has finally been published. Steve Fishman spoke with Madoff on the phone (collect calls from Madoff’s prison) for several hours. And so, sitting alone with his therapist, in the prison khakis he irons himself, he seeks reassurance. “Everybody on the outside kept claiming I was a sociopath,” … Read more »
Category: Fraud
The Amish Madoff
The Securities and Exchange Commission filed charges against Monroe L. Beachy, a 77-year-old Amish man from Sugarcreek, Ohio. They found the Bernie Madoff of the Amish. Beachy targeted his fellow Amish in his alleged fraud. He raised more than $33 million from as early as 1986. Beachy enticed investors by promising interest rates that were … Read more »
It Has a Name: Operation Broken Trust
Apparently, many of the recent financial fraud actions in the news have been part of a nationwide operation organized by the Financial Fraud Enforcement Task Force to target investment fraud: Operation Broken Trust. “To date, the operation has involved enforcement actions against 343 criminal defendants and 189 civil defendants for fraud schemes that harmed more … Read more »
Fraud Awareness Week
The Association of Certified Fraud Examiners is urging organizations worldwide to participate in International Fraud Awareness Week, November 7-13, 2010 to help cast a spotlight on the problems arising from fraud. This weeklong campaign encourages business leaders and employees to proactively take steps to minimize the impact of fraud by promoting anti-fraud awareness and education. … Read more »
Rosand Enterprises and Real Estate Fraud
I find looking at fraud cases instructive, seeing common themes, failures and techniques. Since my company is in real estate, real estate fraud catches my eye. Recently the SEC brought a case against Rosand Enterprises and one of its principals, Robert A. Anderson. The Securities and Exchange Commission came in late. The Illinois Secretary of … Read more »
The New Face of Evil?
His crime was simple: collect money from investors, fake the returns, pocket the money, and repeat. His crime was the biggest: $20 billion in cash plus $45 billion of fake returns. Should Bernie Madoff be the new name for evil? Christine Hurt of University of Illinois College of Law contrasts Madoff with the original Ponzi … Read more »
Telling the Truth During Earnings Calls
Is the CEO or CFO lying during the quarterly earnings call? How can you tell? David F. Larcker and Anastasia A. Zakolyukina of the Stanford Graduate School of Business turned to the rich data set of quarterly calls and subsequent financial restatements. After studying Q&A sections of transcripts of hundreds of calls with CEOs and … Read more »
Power Corrupts – So Does Powerlessness
Rosabeth Moss Kanter points out another reason that the “tone at the top” is only one factor for corporate compliance in Powerlessness Corrupts. “Power corrupts, as Lord Acton famously said, but so does powerlessness. Though powerlessness might not result in the egregious violations associated with arrogant officials who feel they are above the law, it … Read more »
Ernst & Young’s 11th Global Fraud Survey
Driving ethical growth – new markets, new challenges, the title of Ernst & Young’s 11th Global Fraud Survey, shows fraud is up; audit and legal are stretched to deal with these challenges; compliance is patchy; and Boards need more and better information to manage the risks. They interviewed more than 1,400 chief financial officers, and … Read more »
What About the Rating Agencies?
There has been lots of criticism aimed at Goldman Sachs over the Abacus 2007-AC1 deal. They help set up a CDO so their client, Paulson & Company, could make a bet on a downturn in the residential real estate market. To make that bet, they allowed Paulson to influence the securities that went into the … Read more »