Archive for January, 2009

House Testimony on Ponzi Schemes

Friday, January 30th, 2009

Tamar Frankel is a professor at the Boston University College of Law and an expert on the regulation of investment advisers.  As I write this, her multi-volume treatise The Regulation of Money Managers is on the bookshelf behind me.  The House Committee on Financial Services called her to testify about the recent spate of Ponzi schemes and the regulatory reaction to them.  Her testimony is as succinct and cogent a description of Ponzi schemes and Ponzi operators as I have ever read, and certainly worth your time. (more…)

Ponzi Schemes and Pizza

Thursday, January 29th, 2009

Ponzi schemes are becoming more common than pizza in an elementary school cafeteria.  They have been in the news so often - and will be in the news so long - that smart educators may decide to teach kids about them.  First we study math.  Then we study science.  Then we study Ponzi schemes.  Too many kids will have learned about them already from hearing their parents talk about how grandma and grandpa lost their life savings in such a scam.  But one Ponzi is so different from the next that the teacher will have to focus on what all Ponzis have in common:  they sweep across the landscape as virulently as the Black Death.   (more…)

Nadel Nabbed

Wednesday, January 28th, 2009

As we predicted, Arthur Nadel is alive.  He surrendered to authorities after two weeks on the lam.  No one had been sure what became of him after he phoned a relative to alert him to the presence of a supposed suicide note in which he expressed despair over how much of his clients money he had lost.  News reports put him in the vicinity of suburban New Orleans last week.  We will likely know soon where his two week wonderings took him, and whether he ever came close to escaping the country. (more…)

Ponzi Schemes Make the Big TIME

Wednesday, January 28th, 2009

TIME magazine is running a story about the flood of Ponzi schemes in the news these days.  It is well worth a read.  But, I believe, Katherine Addelman, Regional Administrator of the SEC’s Atlanta Office got it right when she said:

I’m not sure this is an unusual flow of Ponzis.   But since Madoff, there’s a lot more coverage. These cases are moving to the front page, and because of it more people are getting skeptical of these investments . . . .  They’re more willing now to give information to us. (more…)

Is There A Safer Bet Than Assuming?

Tuesday, January 27th, 2009

It’s hard to know if your money is where your broker tells you it is.  And after all the scams hitting the news in the past few months, the thought is more frightening than ever.  But to the un-trained eye, how would you know what to look for on your statements? And if you’re receiving interest payments, then it’s safe to assume that everything is ok, right? 

Investors in Gen-See Capital Corp probably assumed so.  They believed that President and Owner, Richard S. Piccoli, had invested their money in “high quality” mortgages, as he said.  They also had no idea that the “return” they were receiving was actually being paid by new investor money.          (more…)

Scam on the Run

Monday, January 26th, 2009

Every day that passes without authorities finding Arthur Nadel makes me think of Homer Forster, a fraudster we pursued in my days at the U.S. Securities and Exchange Commission.  Forster redeemed customers’ variable annuity contracts without their knowledge or consent and took the money (just over $1.6 million) for himself.  He had been planning his escape for quite sometime, and managed to leave the country before the criminal authorities could track him down.  He and his girlfriend had applied for and received U.S. Passports under assumed names, and used them to flee the States. (more…)

Is Your Money Safe With Anyone?

Friday, January 23rd, 2009

So far we’ve seen only the beginning of the turmoil to come from Bernie Madoff’s scam, and the thousands of similar scams currently operating in the United States.  You can’t blame people for begging the question: Is your money safe with anyone?  MSN Money published an article on this topic recently, and the comments from their message boards wondered this very thing. (more…)

They’ll Likely Find Him Alive

Thursday, January 22nd, 2009

Like conspicuous consumption, the financial criminal who attempts to fake his own death and takes it on the lam has become trite.  We have seen it three times in the past year. 

First, Samuel Israel, the architect of the fraudulent Bayou hedge fund, left his car on a bridge over the Hudson River with the phrase “Suicide is Painless” drawn in the dust and pollen on the hood, leaving authorities - who were expecting him to report to prison that day - wondering whether he had jumped to his death.  (more…)

Mini-Madoff Costs Floridians $350 Million

Wednesday, January 21st, 2009

Down in southwest Florida, they are calling Arthur Nadel the mini-Madoff.  It’s a lesson in proportion, I guess.  Sixty days ago, we’d have considered a $350 million financial scam to be huge.  Next to Madoff’s $50 million effort, though, it looks rather puny.

John Hielscher & Michael Pollick of the Herald Tribune are covering the Nadel case closely, and their coverage is well worth a read.  (more…)

The Forecast Calls for a 100% Chance of Financial Scams

Wednesday, January 21st, 2009

The skies are threatening as the New York Times reports on yet another financial manager gone missing under circumstances that lead investigators to believe that he has committed suicide. 

The police are searching for Arthur Nadel, 75, a prominent Sarasota philanthropist and fund manager who was reported missing by his family Wednesday. He left a note, described as a suicide note by The Sarasota Herald- Tribune, that reported that investors could be out as much as $350 million. (more…)