Fraud Fridays 2018 – An Embarrassment of Riches!

Welcome back, fellow believers in Objective Facts, Truth, Justice, and the Norweigan American Way.* We’re less than three weeks into the new year, and 2018 is already showing signs of being another banner year for financial fraud schemes, collusion, and general white-collar malfeasance. But first, let’s recap on some of 2017’s greatest hits:

A $1.2 billion Boca Raton Ponzi Scheme – South Florida Business Journal

According to the SEC complaint, Woodbridge Group offered investors, many of them seniors, interests in commercial real estate loans made to third parties. The company said these loans were short-term financing with interest rates of 11 to 15 percent, the SEC said. This is generally known as ‘hard money’ lending.

The SEC alleged that these loans were not actually made to third parties, but to Shapiro-owned companies that had no income and never made payments on the loans. The complaint alleged that Shapiro and Woodbridge used investors’ money to pay other investors; paid $64.5 million in commission to sales agents; and diverted $21 million for Shapiro’s personal use, including for charter planes, country club fees, luxury vehicles and jewelry.

Our complaint alleges that Woodbridge’s business model was a sham,” said Steven Peikin, co-director of the SEC’s Enforcement Division. ‘The only way Woodbridge was able to pay investors their dividends and interest payments was through the constant infusion of new investor money.’”

 

Offshore Is Where All the Cool Kids Stash Their Questionably-Obtained Cash – The New York Times 

The Paradise Papers, released by the ICIJ in November, were a jaw-dropping and startlingly comprehensive expose of the vastly complex world of offshore banking and how it serves as a global shadow-banking system for the finances of the global elite. We’re talking TRILLIONS of dollars of tax fraud, money-laundering, etc. It’s well worth exploring the high-quality investigative journalism demonstrated by the ICIJ.

 

We Were Somewhere Around Washington D.C., On the Edge of the Beltway, When The Drugs Began to Take Hold – Healthcare Finance

The Department of Health and Human Services Office of Inspector General, state and federal law enforcement executed a massive fraud takedown this month that charged more than 400 defendants in connection with healthcare fraud schemes that involved roughly $1.3 billion in fraudulent billings to government payers including Medicare and Medicaid, the OIG announced.

The takedown is being called the largest in history, both for the number of defendants charged and the amount of money lost, OIG said.

Additionally, OIG issued exclusion notices to 295 doctors, nurses, and other providers related to opioid diversion and abuse. The notices ban participation in or claim submissions to, all Federal healthcare programs.Those who got the notices include 57 doctors, 162 nurses, and 36 pharmacists.

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Meanwhile, Back Here in the Upside Down…

2018 promises to continue to be at least as surreal as 2017, and until we either get spit out of whatever weird quantum wormhole we’re currently inhabiting, or my doctor gets my medications properly adjusted, we’re bound to have no shortage of material for this year and beyond. Just a few potential sources of financial fraud, in no particular order, are:

  • Federal tax reform – I’m hearing that this thing has more loopholes than a hand-knitted cat-bed blanket, and you can bet there are armies of accountants and tax preparers hard at work finding and exploiting them.
  • Offshore Banking – the ICIJ, ProPublica, and many other worthy organizations will continue to expose the seedy underbelly of global finance and trade.
  • Bitcoin/Cryptocurrencies/Blockchain – It’s amazing! It’s going to change everything! Atlas is Shrugging! Nazis are getting rich! What could possibly go wrong?

Recommendations:

P.T. Barnum famously noted that a new sucker is born every minute, and Edward Balleisen’s book Fraud: An American History From Barnum to Madoff is a thoroughly readable and informative primer on the long tradition of ripping off one’s fellow Americans. – Princeton University Press Blog

Fans of the venerable TV series American Greed (that would be all of us, right?), can look forward to a new Netflix documentary, Dirty Money, that promises to be both entertaining and educational. Of particular interest to us here in the Kansas City area is an upcoming episode on convicted payday-loan fraudster Scott Tucker. Tucker, if you don’t know, stole over a billion dollars by running an absolutely deplorable set of online payday lending operations. He tried to hide his operations with a classic straw-man defense in which he claimed the payday lenders were owned by Native American tribes and were thus exempt from most federal lending and usury laws and regulations. It didn’t work, and now he’s staring down 16.5 years in a federal penitentiary. The “money quote’ (sorry, couldn’t resist) from the trailer:

“In the trailer for ‘Dirty Money,’ Tucker is asked whether he is a moral person. ‘I’m a businessperson,’ he responds.

It’s gonna be good!

Music Recommendation: The somewhat-awkwardly-titled live album from The 1975, DH00278 (Live from the O2, London. 16.12.16) is just really, really good. Pop? Punk? Alternative? Rock? White-Boy Funk? – all of the above. Get your groove on…

Food Recommendation: Costco’s Kirkland Signature butter cinnamon loaves. Good God, that stuff is addictive. And we ain’t fancy – Costco is just fine for us humble public servants. It’s worth getting a Costco membership just for this stuff.

See you soon, fellow fraud fans! Hey, if you feel so inclined, give me a follow on Twitter @JustinMcDaid, or connect with me on LinkedIn or Facebook –  Justin McDaid

Thanks!

*Not a shithole, unlike some individuals we shall not name in this blog

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