Two More Money Managers Accused of Fraud

[Guest MonkeySee]

Anyone want to bet that these guys will be out on bail for years. They then will probably receive a fine and serve no jail time. Talk about the pedos buying their way out of jail in Thailand, these guys that commit white collar crimes do the same thing and are no better in my book.

 

 

NEW YORK (Reuters) – Two money managers who oversaw investments for Carnegie Mellon University and other institutions were arrested on Wednesday on charges of running an estimated $550 million, decade-long swindle, the latest in a wave of big financial fraud cases.

 

Paul Greenwood, 61, and Stephen Walsh, 64, managing general partners of broker-dealer WG Trading Co with main offices in Greenwich, Connecticut, were charged by U.S. prosecutors with conspiracy, securities fraud and wire fraud.

 

The pair, both former part-owners of the New York Islanders National Hockey League team, are accused of using client money as "their personal piggy-bank" to fund lavish lifestyles, according to the U.S. Securities and Exchange Commission.

 

The SEC and the Commodity Futures Trading Commission brought civil charges against the men and their companies, which also include WG Trading Investors LP and investment adviser Westridge Capital Management Inc in Santa Barbara, California. The SEC obtained a court-imposed asset freeze against the men and their affiliated entities.

 

The two men appeared in U.S. Magistrate's Court in Manhattan where a judge set bail at $7 million to be secured by $1 million in cash or property not from proceeds of the purported fraud. The judge imposed travel restrictions. They did not enter a plea and were freed, but were ordered to meet the bail conditions by March 11.

 

Full story at: http://news.yahoo.com/s/nm/20090226/ts_nm/us_wgtrading

 

[Guest shebavon]

"Anyone want to bet that these guys will be out on bail for years. They then will probably receive a fine and serve no jail time. Talk about the pedos buying their way out of jail in Thailand, these guys that commit white collar crimes do the same thing and are no better in my book."

 

Seeing how many more lives these scoundrels have destroyed, I would have to say that they are much worse.

 

If they do get jail time, it is usually at the country club style prisons. Hard time? I say farm them out to Maricopa or Gitmo.

[Guest fountainhall]

The incessant drip-drip-drip of financial misdeeds makes me wonder why there are not far harsher penalties for this sort of white-collar crime. If John Doe steal a few millions, he gets put behind bars for a long time. If you are a director of AIG or Citigroup and have taken unbelievable risks that turned spectacularly sour, you put out one hand to be slapped by Congress and the other to receive billions of tax dollars to stay afloat.

 

Why are directors and top executives of these companies not as culpable as Madoff and his ilk? Why should they not be prosecuted vigorously, jailed and face massive fines? What right have they to live their lifesytyles when they have destroyed shareholder wealth, increased the national debt and placed the world economy in jeopardy.

 

Case in point. When the former Chief Executive of the Royal Bank of Scotland, one of Europe's largest, resigned last year, he was awarded a US$23 million pension. He now draws down US$930,000 a year - and he's only 50! Yet this man's miscalculatons resulted in a monstrously large bailout and UK taxpayers now owning a staggering 70% of the bank. This man should be in jail!

[Guest fountainhall]

If you are a director of AIG or Citigroup and have taken unbelievable risks that turned spectacularly sour, you put out one hand to be slapped by Congress and the other to receive billions of tax dollars to stay afloat.

 

Why are directors and top executives of these companies not as culpable as Madoff and his ilk? Why should they not be prosecuted vigorously, jailed and face massive fines?

At least some states are trying to get some of these shysters prosecuted. This from today's LA Times -

 

California is considering joining New York and Delaware in a wide-ranging investigation into Wall Street's role in the mortgage meltdown that could lead to criminal charges against financial executives.

 

California Atty. Gen. Kamala Harris met with New York Atty. Gen. Eric Schneiderman on Thursday in San Francisco to discuss cooperating on the investigation, which is already one of the broadest to probe how banks encouraged the financial crisis through the creation of risky financial instruments backed by mortgages.

 

New York and Delaware have more than a dozen attorneys working full time on the effort and have subpoenaed or requested information from 13 financial firms, including Goldman Sachs and JPMorgan Chase & Co., according to people familiar with the investigation. The people spoke on condition of anonymity because of the sensitivity of the investigation.

 

. . . The lawyers in the attorney general offices in New York and Delaware are looking at the role that Wall Street played in the buildup to the crisis: allegedly inflating the demand for subprime loans and then packaging them into shoddy bonds that triggered the financial meltdown, people familiar with the matter said.

 

"This is where all the bodies are buried," said Charles Geisst, a former banker who now teaches at Manhattan College. "This is where you could see fraud on an institutional level."

[Guest fountainhall]

I am resurrecting this thread only because I have just watched the splendid documentary "Inside Job". Somehow I missed it when it was awarded the Oscar for Best Documentary last year and only picked it up on Silom a few days ago.

 

It's a devastating exposé of the reasons for the financial crisis and its global impact. Unlike Michael Moore's exposés, it is shorn of emotion, confining itself merely to telling the story - and letting some of those who participated add their comments.

 

Unsurprisingly, few of the actors agreed to appear on camera. Surprisingly, some of those who did - like a former member of the Federal Reserve, Frederic S. Mishkin, and the Dean of Columbia Business School, R. Glenn Hubbard - get tied up in knots during the questioning: one looks like an incompetent idiot (and I select that word after considerable thought) who chose to lie on his c.v. by altering the title of his 2006 paper "Financial Stability in Iceland" to "Financial Instability in Iceland" (the former), or greedy, selfish and arrogant (the latter). Unsurprisingly, one effect of the movie was to force Columbia into approving more stringent rules for disclosing potential conflicts of interest among faculty. And if anything really surprised me in the movie, it was learning of the role of academia in creating much of the intellectual framework for financial deregulation from the Reagan years on.

 

As one of those interviewed said very pointedly at the end, precious little has been done by the Obama Administration to change the system. The big banks have got bigger, and most of the big fish have not only kept their obscene bonuses, they still swim free. Why the clearly incompetent Hank Paulson and the Merrill Lynch alumni remain out of jail (with some even high up the Obama Administration) is surely one of the great mysteries of our day. For what was not obvious to that mob - or what they knew but failed to do anything about? - was obvious to others. Christine Lagarde, the new boss of the IMF, provides a particularly telling anecdote about a conversation with Paulson many months before the shit hit the fan.

 

Christine Lagarde: And l clearly remember telling Hank: 'We are watching this tsunami coming, and you're just proposing that we ask: "which swimming costume we're going to put on."'

 

iInterviewer: What was his response? What was his feeling?

 

Christine Lagarde: 'Things are under control. Yes, we are looking at this situation carefully, and, yeah, it's under control.'

http://www.imdb.com/title/tt1645089/quotes

 

When Lehmann Brothers went to the wall, Paulson had not even bothered to tell any of his international counterparts. Neither he nor his team had considered the considerable legal consequences in other countries! All, like Christine Lagarde, then Finance Minster of France, learned from the media. Mme. Lagarde's reaction: "Holy Cow!" Surely one of the more notable understatements of 2008!

[Guest thaiworthy]

Unsurprisingly, few of the actors agreed to appear on camera. Surprisingly, some of those who did - like a former member of the Federal Reserve, Frederic S. Mishkin, and the Dean of Columbia Business School, R. Glenn Hubbard - get tied up in knots during the questioning: one looks like an incompetent idiot (and I select that word after considerable thought) who chose to lie on his c.v. by altering the title of his 2006 paper "Financial Stability in Iceland" to "Financial Instability in Iceland" (the former), or greedy, selfish and arrogant (the latter). Unsurprisingly, one effect of the movie was to force Columbia into approving more stringent rules for disclosing potential conflicts of interest among faculty. And if anything really surprised me in the movie, it was learning of the role of academia in creating much of the intellectual framework for financial deregulation from the Reagan years.

I saw this doc also quite recently and this paragraph above sums up why I am so angry about the mess. Deregulation allowed the banks to sell complex "derivatives" which essentially released them from any risk for making the loans. Sounds like dominoes, when one falls, they all fall.

 

Here's a better explanation of derivatives

 

There were so many fat cat middlemen driving Mercedes-- it all trickled down to the ordinary working class stiff that were left holding the bag. And yes, the big players ended up with star roles in government no less, as if completely excused from wrongdoing. The film showed scenes of these guys shaking hands with the president as if to congratulate them for a job well done!

 

There's still smoke from the fire that gets stoked now and then as each new brokerage falls to its knees, but somehow they're a class of people I find difficult to feel sorry for. It's the unemployed worker and people struggling to keep their homes, among many other situations that truly deserve more compassion.

 

Rent the movie and watch it very carefully. It's filled with details that will shock and horrify you. It's a horror film to be sure, far scarier than anything Hollywood could dream up.

 

Then prepared to become more than just annoyed. You will in fact become very, very angry.