Friday, June 22, 2012

Anyone Still Denying Control Fraud?

This example should disabuse you of the notion that Control Fraud hasn't returned, and grown.

Jury convicts Ind. financier in $200M fraud scheme

An Indianapolis businessman accused of looting an Ohio-based finance company after buying it and bilking about 5,000 mostly elderly investors out of more than $200 million was convicted Wednesday on all counts.

A federal jury found Tim Durham guilty of securities fraud, conspiracy and 10 counts of wire fraud. His business partners, James F. Cochran and accountant Rick D. Snow, also were convicted of conspiracy and securities fraud, and some wire fraud counts. When sentenced, the men could face decades in prison.

Durham’s defense attorney had argued that the men simply made bad business decisions in the midst of the bewildering economic crisis of 2008.


Wasn't that Cheney's defense? "No one could have predicted this."

It's one thing for MMT to sound so implausible to those already indoctrinated. Yet how do we explain the unwillingness of our electorate to believe that those they profess to admire are robbing the electorate & stealing from the vulnerable?

Bill Black's 4 Rules for Control Frauds should also be familiar to every highschool student, but instead they're usually till taken as a POSITIVE by naive voters and ignorant or corrupt politicians.

1. Grow massively, 

2. By making very poor quality loans at high rates of interest, 

3. Use extreme leverage (high corporate debt), and 

4. Set aside virtually no loss reserves for the massive losses that will be coming. 

If you do these four things, you are mathematically guaranteed to report record short-term income. Akerlof and Romer referred to it as a sure thing - it is guaranteed.

CEOs just have to trigger their golden parachutes and safely leave, before the company implodes.

What do we have to do to get our current electorate to wise up?

ps:  Follow what the actual prison terms are.  They could still get off, file appeals, or even receive pardons.  In the state of Maryland, Judges can even reset sentences, after "considering" further input from those convicted, or their lawyers.

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