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Posts Tagged ‘fraud’

$80,000 Collectible Teddy Bear

Thursday, February 26th, 2009

We all heard about $6,000 spent by Dennis Kozlowski, former CEO of Tyco, for bathroom curtain. Now, there is another guy that allegedly spent $80,000 for collectible teddy bear — using the money looted from investors.

Federal prosecutors allege that since 1996, Paul Greenwood and Stephen Walsh ran a fraudulent investment-advisory scheme, involving several companies, in which they promised to invest funds in a program called “enhanced stock indexing.” It was represented as a conservative trading strategy that had outperformed the Standard & Poor’s 500 Index for more than 10 years. Prosecutors allege the men raised more than $668 million from institutional clients, and misappropriated most of the money.

Recently we heard about Bernard Madoff. Then, there was news about Allen Stanford. Now, this news is coming out. I wonder how many more crooks are going to be discovered.

Alleged victims (of Greenwood’s fraud) include Carnegie Mellon University, which had invested more than $49 million, and the University of Pittsburgh, which put in more than $65 million, court records show. These universities charge exorbitant fees from students and then they lose all the money to some crooks. What a world!

Related Link: Pair Lived Large on Fraud

Mad at Madoff

Tuesday, December 16th, 2008

It’s becoming harder to see a honest person in Wall Street. Even the former Nasdaq chairman is involved in rogue ponzi scheme that duped $50 billion from investors. fifty billions dollars! Probably this is the largest fraud in ponzi scams.

Bernard Madoff was the chairman of Nasdaq stock exchange. He was well respected in financial community. People like Sen. Frank Lautenberg, Real estate magnate Mortimer Zuckerman, Movie director Steven Spielberg, DreamWorks Animation SKG Inc. Chief Executive Jeffrey Katzenberg and Nobel laureate Elie Wiesel trusted him. Billionaire Carl Shapiro believed in Madoff’s integrity and trusted him with $500 million+.

Bernard Madoff tricked all of them and the financial institutions’ regulators. He effectively ran a ponzi scheme to pay high returns to his investors.The beauty of this is that even the most skilled investors didn’t doubt Madoff’s investing methodologies.

Wall Street Journal reports that Madoff played the options game. He claimed that he sold and bought thousands of option contracts per day. But, the total number of option contract transactions, carried out in the exchange in that time period, was far less than what he claimed to trade. Some investors may get the money back because of SIPC insurance. SIPC covers upto $500,000 per customer. If someone lost $500 million+ in Madoff’s fraud, it would be hard to get anything back.

In 2000, Madoff served on the government’s Advisory Committee on Market Information, established to protect investors by ensuring accurate and full public disclosure of information to them. He was just an advisor. Advisors don’t need to follow their own advice, I guess.

Related Link: Fund manager in the scandal

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