Crime DOES Pay!

Jon Corzine. Dick Fuld. John W. Meriwether. Raj Gupta. You recognise those names? I'm sure you do. What do they all have in common? They have all been involved in scandals, bankruptcies or crimes and have pretty much gotten away with it..

A little history lesson for those who are less familiar with some of these names:

  • Jon Corzine - Goldman Sachs CEO, Governor of New Jersey, U.S Senator, CEO of MF Global which collapsed in late 2011, with hundreds of millions of dollars of client money going "missing". Net worth, hundreds of millions.

  • Dick Fuld - As the CEO, he led Lehman Brothers to bankruptcy. Now we could debate for hours whether it was his fault, whether he could have done anything about it etc but lets just agree that he didn't exactly do a fantastic job. Nevertheless, he has a net worth of roughly $160mm (including a $13mm house he 'sold' to his wife for $100 less than 2 months after Lehman went under).

  • John Meriwether - Arbitrage trader extraordinaire at Saloman Brothers, founder of 3 hedge funds including Long Term Capital Management which lost close to $5 billion in 1998 and required a full bailout from the Fed and other Wall Street banks. Has since founded 2 hedge funds, one of which failed and the other is doing dismally. Hard to get an estimate of this guy's net worth but lets just say it is substantial.

  • Raj Gupta - Finally something topical! You guys have probably heard about this but Raj was today sentenced to a 2 year prison sentence and a $5m fine. His crime? Helping Raj Rajaratnam (a hedge fund billionaire) make hundreds of millions of dollars by passing him information from his board seat at Goldman Sachs.

So, thats a very brief history of some very rich individuals, all of which have probably committed some crimes whether they have been found guilty or not. How is it that these high-flying financiers get either nothing or a slap on the wrist for "dubious activity" worth more than the GDP of some countries? Can money really buy everything?

Comments (19)

Oct 24, 2012

Yeah just like your boy Madoff - he will have pretty much gotten away with it in ~150 years

Oct 24, 2012
neilol:

Yeah just like your boy Madoff - he will have pretty much gotten away with it in ~150 years

though think about how many people running ponzi schemes have (and continue to) get away with it..

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Oct 24, 2012
neilol:

Yeah just like your boy Madoff - he will have pretty much gotten away with it in ~150 years

You mention Madoff, someone had been reporting him to the SEC for YEARS with evidence before they actually did anything.

Oct 24, 2012

Madoff is a greedy idiot. At that level you close up shop, pack your bags and go to a country with no extradition. Oops, WHAMMY!

Oct 24, 2012

The fact is a few these guys are behind bars. Now there is a price for being in prison. Isn't there

Oct 24, 2012

Many people commit frauds and get away with it. Ethics only exist in books. There are no ethics in the real world. Dollar is your only ethic in life.

Oct 24, 2012
State of Trance:

Many people commit frauds and get away with it. Ethics only exist in books. There are no ethics in the real world. Dollar is your only ethic in life.

The absolute, vast majority of people are always law abiding, and one out of 15,000 is a Corzine. Choosing an illegal path often has negative NPV regardless of your industry. The way to really make it is absolutely to do so legally (to be a billionaire, work your way towards managing your own hedge fund, for example). It is legal and moral to arb inefficiencies in markets created by idiotic government action.

Oct 24, 2012
EURCHF parity:
State of Trance:

Many people commit frauds and get away with it. Ethics only exist in books. There are no ethics in the real world. Dollar is your only ethic in life.

The absolute, vast majority of people are always law abiding, and one out of 15,000 is a Corzine. Choosing an illegal path often has negative NPV regardless of your industry. The way to really make it is absolutely to do so legally (to be a billionaire, work your way towards managing your own hedge fund, for example). It is legal and moral to arb inefficiencies in markets created by idiotic government action.

Y would those prestigious hedge funds take a look at my way when I am from a US semi target. They have millions of HYPSM grads to choose from.

Oct 24, 2012

Dick Fuld sold a $13mm house to his wife for $100. Good idea!

Stay hungry, stay smart.

Oct 24, 2012
State of Trance:

Many people commit frauds and get away with it. Ethics only exist in books. There are no ethics in the real world. Dollar is your only ethic in life.

Agree.

Stay hungry, stay smart.

Oct 24, 2012

Note to self: Never do business with State of Trance.

Oct 24, 2012
SirTradesaLot:

Note to self: Never do business with State of Trance.

lol

If the glove don't fit, you must acquit!

Oct 24, 2012
SirTradesaLot:

Note to self: Never do business with State of Trance.

Aren't you the guy that rips people's faces off though? Selling products with hidden fees while your clients think they're getting a great deal?

Note to self...

Oct 24, 2012
Going Concern:
SirTradesaLot:

Note to self: Never do business with State of Trance.

Aren't you the guy that rips people's faces off though? Selling products with hidden fees while your clients think they're getting a great deal?

Note to self...

I don't know what you're talking about.
http://www.wallstreetoasis.com/forums/tell-me-abou...

Oct 24, 2012
SirTradesaLot:

Note to self: Never do business with State of Trance.

There are too worlds namely an idealistic one and a real one. We only get to hear of the ones that commit massive fraud but they are so many frauds that exist that are never caught by the authorities. I am not saying ethics do not exist. They do but far too many of those never get caught. The ones who are ethical are always left behind. I still believe that we should abide by our own moral code of ethics and not be under the influence of anyone else.

Oct 24, 2012
State of Trance:

I still believe that we should abide by our own moral code of ethics and not be under the influence of anyone else.

You know, the German philosopher, Friedrich Nietzsche, believed that morality is just a fiction used by the herd of inferior human beings to hold back the few superior men...It's worth noting that he died of syphilis.

Oct 24, 2012

Meriwether should not be on that list. The fault is with his LPs, who keep refinancing his attempts, not with him for failing to understand the meaning of risk management. Still, nothing illegal, just stupid ("what consenting adults do in private between closed doors...").

Fuld happened to be the CEO of the bank chosen to be made an example of (before the US govt truly understood the meaning of TBTF), it could have been any of the other guys at the top at the time; although maneuvers like shifting assets to relatives are probably against the spirit of the law. Since managing an IB was not about managing a company, but trading a government-created anomaly (as in the very existence of the bank being the trade), we can't really fault him for doing what his shareholders expected of him.

Corzine is the odd one out. When you use client money like this, you should go to jail. Hoping justice prevails long term. Fraud is fraud.

Oct 25, 2012
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