DOCSLIB.ORG

The Motives, Mores, and Character of White Collar Criminals

Total Page：16

File Type：pdf, Size：1020Kb

Download full-text PDF Read full-text
The Motives, Mores, and Character of White Collar Criminals St. John's Law Review Volume 82 Number 2 Volume 82, Spring 2008, Number 2 Article 1 Why Do They Do It?: The Motives, Mores, and Character of White Collar Criminals Pamela H. Bucy Elizabeth P. Formby Marc S. Raspanti Kathryn E. Rooney Follow this and additional works at: https://scholarship.law.stjohns.edu/lawreview This Article is brought to you for free and open access by the Journals at St. John's Law Scholarship Repository. It has been accepted for inclusion in St. John's Law Review by an authorized editor of St. John's Law Scholarship Repository. For more information, please contact [email protected]. ARTICLES WHY DO THEY DO IT?: THE MOTIVES, MORES, AND CHARACTER OF WHITE COLLAR CRIMINALS PAMELA H. Bucyt ELIZABETH P. FORMBYtt MARC S. RASPANTIttt KATHRYN E. ROONEYtttt INTRODUCTION Why do talented, bright, highly educated, successful people, who have "made it," risk it all by lying, stealing, and cheating, especially when what they're stealing is not much compared to what they have? The simple answer is, "because they can." This Article looks at the more complex answer. Based upon extensive interviews with seasoned prosecutors and accomplished defense counsel, we explore the views and perceptions traditionally held about white collar criminals.1 From January through April 2007, we conducted lengthy interviews with forty-five nationally recognized experts in the area of white collar crime.2 The t Bainbridge Professor of Law, University of Alabama School of Law; Assistant United States Attorney, E.D. Missouri, 1980-1987. ft J.D. Candidate, 2008, University of Alabama School of Law. itt Partner, Pietragallo Gordon Alfano Bosick & Raspanti, LLP, Philadelphia, Pennsylvania. Mr. Raspanti is a former Philadelphia prosecutor and the chair of the firm's White Collar Criminal Defense practice group. He also is involved in whistleblower, or qui tam litigation, under the federal and state statutes throughout the United States. tt J.D. Candidate, 2008, University of Alabama School of Law. 1 See 45 C.F.R. § 46.102 (2007). Approval from the University of Alabama Institutional Review Board, No. 06-OR-213 (on file with the Univ. of Ala. Institutional Review Bd.). 2 The authors express their appreciation to the following individuals who participated in this survey: Daniel R. Anderson, Marcella B. Auerbach, Bernard S. Bailor, Raymond Banoun, James M. Becker, Robert S. Bennett, John T. Boese, Plato Cacheris, Leslie R. Caldwell, Peter W. Chatfield, Ian M. Comisky, Stephen S. Cowen, James E. Crowe III, Suzanne E. Durrell, Robert Fabrikant, Gerald A. Feffer, ST. JOHN'S LAW REVIEW [Vol. 82:401 interviewees included federal prosecutors, qui tam relators' counsel, and private defense counsel who specialize in defending those accused of white collar offenses. 3 The range of years of experience of study participants was vast. All interviewees had at least fifteen years of relevant experience; 4 over half had between twenty-six and thirty-five years of experience; and Karen F. Green, Frederick G. Helmsing, Brian J. Hennigan, Gabriel L. Imperato, Nancy S. Jones, Anthony A. Joseph, Paul L. Knight, Albert J. Krieger, David M. Laigaie, Frederick M. Levy, Michael K. Loucks, Abbe D. Lowell, Nancy Luque, Vincent L. Marella, Gregory P. Miller, William R. Mitchelson, Jane W. Moscowitz, James F. Neal, Kevin F. O'Malley, Martin S. Pinales, Larry S. Pozner, Michael W. Ramsey, Jack W. Selden, James G. Sheehan, Barry A. Short, Judson W. Starr, David J. Stetler, Robert L. Vogel, and Joe D. Whitley. 3 i Types of Current and Former Legal Practice 100% 82% 80% 71-/ 60% 40% 20% 9% 900 0% Current Federal Current Private Current Qui Tam Past Federal or Prosecutor Defense Counsel Realtors' Counsel State Prosecutor Infra app. A. 4 Study Participants' Years of Experience 1nn/. 100% 80% 60% 53% 40% 29% 18% 20% 0% At Least 15 15-25 Years 26-35 Years 36 or More Years Years Infra app. A. 2008] WHY DO THEY DO IT? almost one-fifth had thirty-six or more years of experience.5 Eighty-six percent of the defense counsel served as federal or state prosecutors prior to entering private practice.6 The interview questions in our study are contained in Appendix A; the responses are in Appendix B. We tested the following hypotheses: (1) most white collar criminals fall into two categories: "leader" or "follower;" (2) those falling into each category display distinct personality profiles; and (3) the methods for deterring crime differ for each category. We found that our hypotheses were generally accurate. Our study results provide guidance, not reflected in current scholarship, for how to effectively deter white collar crime. Part One of this Article begins with definitions. Part Two discusses our study results, comparing our findings to current scholarship. Part Three concludes with our observations and conclusions. I. DEFINITIONS AND BACKGROUND For purposes of this study, "white collar crime" refers to non- violent, business-related violations of state and/or federal criminal statutes.7 At the beginning of the twentieth century, 5 Infra app. A. The participants also had a high caseload involving corporate defendants. Experience with Organizational Defendants 40% - 36% • 30% 25% 1 20% 18% 15%13 11% 9% 10% 4% 5% 0% _ 0% 1-24.9% 25- 50- 75- 100% Other 49.9% 74.9% 99.9% Percentage of caseload involMng corporate defendants Infra app. A. 6 Infra app. A. 7 Almost without exception, study participants defined "white collar criminal" as someone who commits a non-violent, business-related crime. See infra app. B, § I, question I. Word choice differed from one to the next, but the same general idea runs through each response. Some also described such perpetrators as being in positions of power or "high social standing," some cited specific crimes such as tax or stock ST. JOHN'S LAW REVIEW [Vol. 82:401 crime was evaluated from the classical perspective, in which criminal theorists maintained that humans all held the potential to engage in force or fraud out of self-interest, making no distinction between what scholars today segregate into white collar and more violent crime. 8 Criminal theory then evolved into the positivists' perspective, which took the classical theory even further by speculating that "crime is evidence of biological, psychological, or social pathology" and that force or fraud could only be explained by "special motive or compulsion."9 Positivists believed that such compulsion could be traced to "low social class, poverty, or inequality,"10 which left no room for the possibility that crime was committed by the wealthy in addition to the poor. Perhaps in reaction to positivist theory, sociologist Edwin Sutherland changed the course of criminology when he coined the term "white collar crime" in a 1939 paper he presented to the American Sociological Society and later detailed in his book, White Collar Crime." He defined white collar crime as "a crime committed by a person of respectability and high social status in 1 2 the course of his occupation." Statistical studies indicate that white collar crime occurs quite frequently. For example, according to the Association of Certified Fraud Examiners ("CFE"), fraud accounts for 6% of corporate losses in America annually, totaling an estimated $660 billion each year. 13 Small businesses of less than 100 employees appear to be more frequent targets of white collar crime, with 46% of frauds being committed at these companies. 14 The largest corporations experience the smallest percentage of fraud fraud, and several included the distinction that white collar criminals have not committed street crimes or drug crimes. See infra app. B, § I, question I. Nearly all participants used the word "business," "financial," or "economic" when describing such crimes. See infra app. B, § I, question I. 8 See MICHAEL R. GOTTFREDSON & TRAvIs HIRSCHI, A GENERAL THEORY OF CRIME 181 (1990). 9 Id. 10 Id. 11 EDWIN H. SUTHERLAND, WHITE COLLAR CRIME 7 (Yale Univ. 1983) (1950). 12 Id. 13 AS'N OF CERTIFIED FRAUD EXAM'RS, REPORT TO THE NATION ON OCCUPATIONAL FRAUD AND ABUSE, at iii (2004), available at http://www.cfenet.coml documents/2004RttN.pdf. The CFE found that over 40% of the victimized corporations are privately-held, while just over 30% are public corporations (the balance is represented by government agencies and non-profit organizations). Id. at 5. 14 Id. at 6. 20081 WHY DO THEY DO IT? schemes, though on average fraud in these companies costs more 5 than schemes in much smaller companies.' II. STUDY RESULTS A. White Collar Criminals: "Leaders"and "Followers"? The notion that white collar criminals can be described as either "leaders" or "followers" is strongly supported in the Federal Sentencing Guidelines, which, in large part, prescribe sentences based on two factors: the offense conduct and the defendant's criminal history. 16 The Guidelines provide stiffer sentences for those who actually commit a crime versus those who aid and abet, are accessories, or who participate as co- conspirators. 17 In this sense, the Guidelines recognize a distinction between those who lead the crime and those who 8 assist in it. 1 Most of the study participants (77.8%) agreed that white collar criminals fall into categories of either "leaders" or "followers."19 One-fourth of these respondents provided caveats to their responses, 20 for example, by identifying a third category as those who "retaliate" either by becoming whistleblowers or by agreeing to testify for the government in exchange for complete immunity, a reduced charge, or a reduced sentence. 2' Another example would be those who wander unknowingly into white 22 collar crime schemes, never realizing they are violating the law. 15 Id. Corporations with more than 10,000 employees lose on average $105,500 per scheme, corporations with 1,000 to 9,999 employees lose $87,500 per scheme, corporations with 100 to 999 employees lose $78,500 per scheme, and those with fewer than 100 employees lose $98,000 per scheme.
Load more

Recommended publications
  • Supreme Court of the United States
    No. 17-1104 IN THE Supreme Court of the United States AIR AND LIQUID SYSTEMS CORP., et al., Petitioners, v. ROBERTA G. DEVRIES, INDIVIDUALLY AND AS ADMINISTRATRIX OF THE ESTATE OF JOHN B. DEVRIES, DECEASED, et al., Respondents. –––––––––––––––––––––––––––––– INGERSOLL RAND COMPANY , Petitioner, v. SHIRLEY MCAFEE, EXECUTRIX OF THE ESTATE OF KENNETH MCAFEE, AND WIDOW IN HER OWN RIGHT, Respondent. ON WRIT OF CERTIORARI TO THE UNITED STATES CouRT OF APPEALS FOR THE THIRD CIRcuIT BRIEF FOR RESPONDENTS DENYSE F. CLANCY RicHARD P. MYERS KAZAN, MCCLAIN, SATTERLEY Counsel of Record & GREENWOOD ROBERT E. PAUL 55 Harrison Street, Suite 400 ALAN I. REicH Oakland, CA 94607 PATRick J. MYERS (877) 995-6372 PAUL, REicH & MYERS, P.C. [email protected] 1608 Walnut Street, Suite 500 Philadelphia, PA 19103 (215) 735-9200 [email protected] Counsel for Respondents (Additional Counsel Listed on Inside Cover) 281732 JONATHAN RUckdESCHEL WILLIAM W.C. HARTY THE RUckdESCHEL LAW PATTEN, WORNOM, HATTEN FIRM, LLC & DIAMONSTEIN 8357 Main Street 12350 Jefferson Avenue, Ellicott City, MD 21043 Suite 300 (410) 750-7825 Newport News, VA 23602 [email protected] (757) 223-4500 [email protected] Counsel for Respondents i QUESTION PRESENTED Under general maritime negligence law, does a manufacturer have a duty to warn users of the known hazards arising from the expected and intended use of its own product? ii TABLE OF CONTENTS Page QUESTION PRESENTED .......................i TABLE OF CONTENTS......................... ii TABLE OF APPENDICES .....................viii TABLE OF CITED AUTHORITIES ...............x INTRODUCTION ...............................1 COUNTER STATEMENT OF THE CASE .........6 A. Respondents were exposed to asbestos during the expected and intended use of petitioners’ machines ..................6 1.
    [Show full text]
  • Customer Advisory: Beware Virtual Currency Pump-And-Dump Schemes
    Customer Advisory: Beware Virtual Currency Pump-and-Dump Schemes The U.S. Commodity Futures Trading Commission (CFTC) is advising customers to avoid pump-and-dump schemes that can occur in thinly traded or new “alternative” virtual currencies and digital coins or tokens. Customers should not purchase virtual currencies, digital coins, or tokens based on social media tips or sudden price spikes. Thoroughly research virtual currencies, digital coins, tokens, and the companies or entities behind them in order to separate hype from facts. Blow the whistle on Pump-and-dump schemes have been around long pump-and-dump schemers before virtual currencies and digital tokens. Historically, they were the domain of “boiler room” Virtual currency and digital token pump- frauds that aggressively peddled penny stocks by and-dump schemes continue because falsely promising the companies were on the verge they are mostly anonymous. of major breakthroughs, releasing groundbreaking If you have original information that products, or merging with blue chip competitors. As leads to a successful enforcement demand in the thinly traded companies grew, the action that leads to monetary sanctions share prices would rise. When the prices reached a of $1 million or more, you could be certain point, the boiler rooms would dump their eligible for a monetary award of remaining shares on the open market, the prices between 10 percent and 30 percent. would crash, and investors were left holding nearly For more information, or to submit a tip, worthless stock. visit the CFTC’s whistleblower.gov website. Old Scam, New Technology The same basic fraud is now occurring using little known virtual currencies and digital coins or tokens, but thanks to mobile messaging apps or Internet message boards, today’s pump-and- dumpers don’t need a boiler room, they organize anonymously and hype the currencies and tokens using social media.
    [Show full text]
  • Using Clawback Actions to Harvest the Equitable Roots of Bankrupt Ponzi Schemes Jessica D
    Georgia State University College of Law Reading Room Faculty Publications By Year Faculty Publications 1-1-2011 Midnight in the Garden of Good Faith: Using Clawback Actions to Harvest the Equitable Roots of Bankrupt Ponzi Schemes Jessica D. Gabel Georgia State University College of Law, [email protected] Follow this and additional works at: https://readingroom.law.gsu.edu/faculty_pub Part of the Accounting Law Commons, Bankruptcy Law Commons, and the Legal Ethics and Professional Responsibility Commons Recommended Citation Jessica D. Gabel, Midnight in the Garden of Good Faith: Using Clawback Actions to Harvest the Equitable Roots of Bankrupt Ponzi Schemes, 62 Case W. Res. L. Rev. 19 (2011). This Article is brought to you for free and open access by the Faculty Publications at Reading Room. It has been accepted for inclusion in Faculty Publications By Year by an authorized administrator of Reading Room. For more information, please contact [email protected]. ARTICLES MIDNIGHT IN THE GARDEN OF GOOD FAITH: USING CLAWBACK ACTIONS TO HARVEST THE EQUITABLE ROOTS OF BANKRUPT PONZI SCHEMES JessicaD. Gabelt CONTENTS INTRODUCTION: Too GOOD TO BE "GOOD FAITH"....................20 I. THE PONzI KINGDOM: STITCHING THE EMPEROR'S NEW CLOTHES ................................................................... 25 A. Ponzi Construction Codes ............................................ 25 B. Historic Ponzi Schemes.........................26 11. THE CLAWBACK CROWD: IN PURSUIT OF PONZI PAYOUTS .... 30 A. Ponzi Scheme Definition and Its Players................ 31 B. Ponzi Payouts:"Fraudulent or Preferential?.............. 32 1. Defining andDifferentiating Fraudulent Transfers..... 34 2. Ponzi Schemes: Fraud in the Making................ 36 t Assistant Professor of Law, Georgia State University College of Law. J.D., University of Miami School of Law; B.S., University of Central Florida.
    [Show full text]
  • Part 1 Structure and Working of Boiler Rooms Scams
    Frans Roest: E-BOOK EDITION Share Fraud & Boiler Room Scams Exposed A research about worldwide boiler room share fraud __________________________________________________________________________________________ PART 1 STRUCTURE AND WORKING OF BOILER ROOMS SCAMS Frans Roest: E-BOOK EDITION Share Fraud & Boiler Room Scams Exposed A research about worldwide boiler room share fraud __________________________________________________________________________________________ 1.0 Introduction and scope of the problem 1.1 Introduction In this study we look at a specific form of international investment share scams, the criminal act of selling worthless shares, non-existing shares or other financial derivatives using high pressure sales tactics such as cold calling, or through mediums like e-mail and the internet. The efficiently structured boiler room represents just one of the many types of groups that perpetrate mass- marketing fraud. It is the authors’ opinion that boiler room/stock fraud scams are underestimated due to the fact that to this day, most national governments still do not know how to adequately address this international form of organised crime. An Australian report about serious and organised investment fraud states that one of the main challenges in developing responses to such activities is the lack of available tried and proven practical examples.1 In this study the author hopes to fill this gap to some extent. This study describes international impressions in the campaign against boiler room fraud worldwide and also a number of ‘good practices’ in the field of prevention and information from, amongst others, Australia, Canada, Great Britain, The Netherlands, Spain, Hong Kong, USA and, more recently, New Zealand. This information has been derived from open sources (public domain information).
    [Show full text]
  • U.S. V. Chartier, Et
    Case 1:17-cr-00372-JS-GRB Document 1 Filed 07/11/17 Page 1 of 48 PageID #: 1 / FI LED NK:ALC/PTH IN CLERK'S OFFICE F. #2016R01805 U.S. DISTRICT COURT E.D.N.Y- UNITED STATES DISTRICT COURT * JUL 1 1 2017 * EASTERN DISTRICT OF NEW YORK -----------------------------X BROOKLYN OFFICE UNITED STATES OF AMERICA INDICTMENT - against - Cr. No. _ ______ ___ (T. 15, U.S.C., §§ 78j(b) and 78ff; T. 18, JEFFREY CHARTIER, U.S.C., §§ 371 , 98l(a)(l)(C), 982(a)(1), STEPHANIE LEE, 982(b)(l), 1349, 1956(h), 1957(b), LA WREN CE ISEN, 1957(d)(1),2 and 355 1 etseq.;T.21, MICHAEL WATTS, U.S.C., § 853(p); T. 28, U.S.C., § 2461(c)) ROBERT GLECKMAN, ERIK MATZ, RONALD HARDY, BRIAN HEEPKE, also known as " Brian Targis," DENNIS VERDEROSA, EMIN L. COHEN, GLAsSER, J. also known as "lan Grant," ANTHONY VASSALLO, PAUL EWER, MANN. M.J. MCARTHUR JEAN, also known as "John McArthur," ASHLEY ANTOS, ROBERT GILBERT and SERGIO RAMIREZ, Defendants. ---------- ------------ - ------ X THE GRAND JURY CHARGES: INTRODUCTION At all times relevant to this Indictment, unless otherwise indicated: I. The C01rnpt Boiler Room and Related Entities 1. My Street Research was a purported financial services business headquartered in Melville, New York, which promoted the stocks of publicly traded companies Case 1:17-cr-00372-JS-GRB Document 1 Filed 07/11/17 Page 2 of 48 PageID #: 2 to individual investors, primarily through cold-call campaigns and the circulation of a newsletter. My Street Research was founded under the name Dacona Financial and thereafter changed its name to Power Traders Press ("PTP"), then to Trade Masters Pro and, most recently, to My Street Research.
    [Show full text]
  • Economic Cybercrimes and Policing Responses
    Economic Cybercrimes and Policing Responses Mike Levi Cardiff University [email protected] Cambridge Cybercrime Colloquium 2016 Typology of reported frauds in NFIB last quarter 2014 data Fraud type No. of Percent total frauds reported frauds Banking and credit industry fraud 34,913 32.7% Cheque, plastic card and online bank 19,127 18% accounts (not PSP) Application fraud (excluding mortgages) 10,091 9.5% Non-investment fraud 30,490 28.6% Online shopping and auctions 12,405 11.6% Computer software service fraud 8,455 7.9% Advance fee payments 15,065 14.1% Other advance fee frauds 7,498 6.7% Lender loan fraud 2,078 1.9% No identified category 12,404 11.6% Categories as % of total 92,872 87% Total 106,681 100% Offender first contact with victims in NFIB cases Contact method No. of frauds Percent of total reported frauds Phone call, text message or similar 31,088 35% Visit to a website 15,587 18% Other 11,625 13% In person 10,932 12% Letter or fax 10,159 11% Email 6,859 8% Web forum, chat room or similar 1,582 2% TV, radio or online advert, or flyer 462 1% Newspaper, magazine 179 0% Tot a l 88,473 100% Selected Action Fraud category/sub-categories % Cyber-involvement Dating scam 88% Online shopping and auctions 86% Rental fraud 74% Ticket fraud 72% Mortgage related fraud 48% Fraudulent applications for grants from charities 44% Business trading fraud 31% Charity fraud 27% Pyramid or Ponzi schemes 24% Cheque, plastic card and online bank accounts 18% Consumer phone fraud 18% Fraudulent applications for grants from government 17% Bankruptcy
    [Show full text]
  • View Complaint
    UNITED STATES DISTRICT COURT MIDDLE DISTRICT OF FLORIDA : ________, Individually and On Behalf of : No. All Others Similarly Situated, : : CLASS ACTION Plaintiff, : : COMPLAINT FOR v. : VIOLATION OF THE : : FEDERAL SECURITIES LAWS FIRST CHOICE HEALTHCARE : AND DEMAND FOR JURY SOLUTIONS, INC. and CHRISTIAN : TRIAL ROMANDETTI, SR., : : : Defendants. : Plaintiff _______ (“Plaintiff”), individually and on behalf of all other persons similarly situated, by its undersigned attorneys, hereby brings this Complaint for violations of the federal securities laws (“Complaint”) against defendants First Choice Healthcare Solutions, Inc. (“First Choice,” “FCHS” or the “Company”) and Christian Romandetti, Sr. (“Romandetti,” collectively with First Choice, the “Defendants”). Plaintiff’s allegations are based upon its personal knowledge as to itself and its own acts, and information and belief as to all other matters, such information and belief having been informed by the investigation conducted by and through its attorneys, which included, among other things, a review of (1) the public filings by First Choice with the United States Securities and Exchange Commission (“SEC”); (2) conference calls and announcements made by Defendants; (3) wire and press releases published by, and regarding, FCHS; (4) analysts’ reports and advisories about the Company; and (5) information readily obtainable on the Internet. This Complaint also incorporates by reference the following respective documents: the criminal indictment of defendant Romandetti – who was First Choice’s Chairman of the Board of Directors (“Board”), President and Chief Executive Officer (“CEO”) – for committing securities fraud, conspiracy to commit wire fraud, conspiracy to commit securities fraud, and conspiracy to commit money laundering filed in United States v. Romandetti, CR 18-614-JS-GRB, ECF No.
    [Show full text]
  • Our Presentation Will Begin Shortly…
    THE EMERGING MARKETS INTERNET + ECOMMERCE ETF Our Presentation will begin shortly… 1 Something BIG is Happening in Emerging Markets November 2020 Alibaba HQ, Hangzhou, China A Random Walk Down Wall Street ~30% of EEM & VWO are SOEs 1992 3 “I Pray Towards Omaha” ~30% of EEM & VWO are SOEs 1993 4 “We want to invest in China” 2005 5 The Case For Emerging Markets 6 What are Emerging Markets? Emerging Markets Frontier Markets *MSCI & FTSE Disagree Americas Asia Brazil China Chile India Columbia Indonesia Mexico Korea* Peru Malaysia Argentina Pakistan Africa Europe Middle East Philippines Taiwan South Africa Czech Republic Egypt Thailand Kenya Greece Qatar Bangladesh Mauritius Hungary United Arab Emirates Sri Lanka Morocco Poland Bahrain Vietnam Nigeria Russia Jordan Tunisia Turkey Kuwait Croatia Lebanon Estonia Oman Lithuania Kazakhstan Romania Serbia Slovenia 7 Source: MSCI Classifications as of November 2018 The Case for Emerging Markets ▪ Different - Diversification benefits vs. Developed Markets – Correlation to S&P 500 < 1.0 ▪ Bigger - Larger Consuming Population – 85% of global population and 50% of global GDP ▪ Younger - Favorable Demographics – Millennials and Gen Xers spend 50% more time shopping online than Baby Boomers and Seniors ▪ Growing Faster – Consumption 8 Emerging Markets are 85% of the World World Population 7,000,000,000 6,205,000,000 5.6x 6,000,000,000 5,000,000,000 4,000,000,000 3,000,000,000 2,000,000,000 1,095,000,000 1,000,000,000 - Emerging & Frontier Markets Developed Markets 9 Emerging Markets Have Better Demographics
    [Show full text]
  • UNDERSTANDING PONZI SCHEMES Can Better Financial Regulation Prevent Investors from Being Defrauded?
    UNDERSTANDING PONZI SCHEMES Can better financial regulation prevent investors from being defrauded? By Mervyn K Lewis EDWARD ELGAR PUBLISHING (2015) ISBN 978 1 78254 909 3 (cased) ISBN 978 1 78254 810 9 (Ebook) Book review by Sally Ramage I am grateful to Professor Lewis for writing this book on Ponzi schemes. As usual, most have heard of a Ponzi fraud but most do not fully understand what it really is and especially how a swindler Charles Ponzi (1877-1949) and his fraudulent methods could have an effect on present day investors. What is a Ponzi fraud? A Ponzi fraud is essentially an investment fraud wherein the operator promises high financial returns or dividends that are not available through traditional investments. Instead of investing the victims' funds, the operator pays ‘dividends’ to initial investors using the principle amounts ‘invested’ by subsequent investors. The fraud is generally unravelled when the operator flees with all of the proceeds, or when a sufficient number of new investors cannot be found to allow the continued payment of ‘dividends’. This type of fraud is named after Charles Ponzi of Boston, Massachusetts, US, who operated an extremely attractive investment scheme in which he guaranteed investors a 50 percent return on their investment in postal coupons. Although he was able to pay his initial investors, the scheme dissolved when he was unable to pay investors who entered the scheme later.1 So who was Charles Ponzi and what did he do? Ponzi was an immigrant to the United States (US) from Italy and he was known to have been a forger, a dishwasher, and a smuggler.
    [Show full text]
  • Boiler Room Fraud: an Operational Plan Utilizing the Injunction Against Fraud Pursuant to 18 U.S.C
    Pepperdine Law Review Volume 15 Issue 4 Article 1 5-15-1988 Boiler Room Fraud: An Operational Plan Utilizing the Injunction against Fraud Pursuant to 18 U.S.C. §1345 Robert M. Twiss Follow this and additional works at: https://digitalcommons.pepperdine.edu/plr Part of the Antitrust and Trade Regulation Commons, Civil Law Commons, Criminal Law Commons, President/Executive Department Commons, and the Securities Law Commons Recommended Citation Robert M. Twiss Boiler Room Fraud: An Operational Plan Utilizing the Injunction against Fraud Pursuant to 18 U.S.C. §1345 , 15 Pepp. L. Rev. Iss. 4 (1988) Available at: https://digitalcommons.pepperdine.edu/plr/vol15/iss4/1 This Article is brought to you for free and open access by the Caruso School of Law at Pepperdine Digital Commons. It has been accepted for inclusion in Pepperdine Law Review by an authorized editor of Pepperdine Digital Commons. For more information, please contact [email protected], [email protected], [email protected]. Boiler Room Fraud: An Operational Plan Utilizing the Injunction Against Fraud Pursuant to 18 U.S.C. § 1345 Robert M. Twiss* TABLE OF CONTENTS I. Introduction ............................................. 504 II. Scope of the Boiler Room Problem ...................... 504 III. Nature of Boiler Room Schemes ........................ 505 IV. Operation of the Boiler Room ........................... 507 A. Location of Boiler Rooms ........................... 508 V. Impact of the Regulatory Agencies ...................... 509 A. Commodity Futures Trading Commission ........... 510 B. Securities and Exchange Commission ............... 514 C. Internal Revenue Service ........................... 522 D. State and Local Governments ....................... 526 VI. Special Problems Inherent in Developing an Operational Plan for Criminal Enforcement ........................
    [Show full text]
  • March 21, 2006, Item B-15
    THE BOARD OF SUPERVISORS OF THE COUNTY OF STANISLAUS ACTION AGENDA SUMMARY DEPT: Chief Executive Office BOARD AGENDA # *B-15 Urgent Routine &a AGENDA DATE March 21,2006 CEO Concurs with Recommendation YES 415 Vote Required YES NO SUBJECT: Approval for the Emergency Replacement of the Boiler System in the Courthouse Pursuant to Public Contract Code Section 22050, and Related Actions STAFF RECOMMENDATIONS: 1. By a 415 vote, make the following findings: a) that the sudden loss of the boiler system at the Courthouse on March 15, 2006 resulted in the inability to heat the courthouse; b) that the replacement of the boiler system is necessary to permit the continued conduct of essential county operations or services; (Continued on Page 2) FISCAL IMPACT: It is estimated that the cost to lease temporary boiler equipment, abate the asbestos in the boiler room, replace the boiler, and administer the project will not exceed $322,280. The cost to install a temporary boiler system which includes preparing the area for installation, actual installation, installation of temporary fencing and four months of rental costs is projected to be $31,830. (Continued on Page 2) BOARD ACTION AS FOLLOWS: NO. 2006-194 On motion of Supervisor -----E;~ye! IIIIIIIIIIIIIIIIIII. , Seconded by Supervisor ----MIadieId ----------------- and approved by the following vote, Ayes: Supe~isors:~Q1B~:nMa~~1~d.~JQY~1~~~B~~~nL~and~Chairman~S'~mQn~..................................... Noes: Supervisors:Nm .................................................................................... Excused or Absent: Supervisors:N~oe........................................................................ Abstaining: SIIpe~isOr:N00%................................................................................ I) X Approved as recommended 2) Denied 3) Approved as amended 4) Other: MOTION: ATTEST: 0 TALLMAN, Clerk File No.
    [Show full text]
  • Financial Fraud: a Literature Review
    A Service of Leibniz-Informationszentrum econstor Wirtschaft Leibniz Information Centre Make Your Publications Visible. zbw for Economics Reurink, Arjan Working Paper Financial fraud: A literature review MPIfG Discussion Paper, No. 16/5 Provided in Cooperation with: Max Planck Institute for the Study of Societies (MPIfG), Cologne Suggested Citation: Reurink, Arjan (2016) : Financial fraud: A literature review, MPIfG Discussion Paper, No. 16/5, Max Planck Institute for the Study of Societies, Cologne This Version is available at: http://hdl.handle.net/10419/141282 Standard-Nutzungsbedingungen: Terms of use: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Documents in EconStor may be saved and copied for your Zwecken und zum Privatgebrauch gespeichert und kopiert werden. personal and scholarly purposes. Sie dürfen die Dokumente nicht für öffentliche oder kommerzielle You are not to copy documents for public or commercial Zwecke vervielfältigen, öffentlich ausstellen, öffentlich zugänglich purposes, to exhibit the documents publicly, to make them machen, vertreiben oder anderweitig nutzen. publicly available on the internet, or to distribute or otherwise use the documents in public. Sofern die Verfasser die Dokumente unter Open-Content-Lizenzen (insbesondere CC-Lizenzen) zur Verfügung gestellt haben sollten, If the documents have been made available under an Open gelten abweichend von diesen Nutzungsbedingungen die in der dort Content Licence (especially Creative Commons Licences), you genannten Lizenz gewährten Nutzungsrechte.
    [Show full text]