Victims of Corporate Fraud - a Compensation Fund

In 2002, after the Halliburton no-bid profiteering in Iraq and the Enron bankruptcy revealed the depths of the Cheney-Lay-Skilling predatory mind-set of CEOs willing to pillage their own companies, AB 55 added a new Section to the California Corporation Code. Section 1502.1 establised the Victims of Corporate Fraud Compensation Fund (VCFCF) in the State Treasury administered by the Secretary of State.

The purpose of the Fund is to provide restitution to the victims of corporate fraud. Once a fraud judgment is obtained, if collection efforts are fruitless, victims can turn to the Fund. Apparently, however, since 2002, no victim has recovered.

Sadly, the Bush Legacy lives on...BP, Pentagon-gate, overpaid corrupt officials

Just from a few items reported in the LA Times today...it appears that the Bush Legacy just keeps on giving:

1. PENTAGON ACCOUNTING. The Defense Department has never accounted for billions of dollars given to and entrusted to it. The Special Inspector General for Iraq Reconstruction was created in 2004 to oversee $53 billion appropriated by Congress for reconstruction. For the most part, there are no records, and billions have not been accounted for at all.

2. CITY OF BELL. The Mayor, Manager, and Council of a charter city were exposed for giving themselves high salaries and benefits, while cutting back services and depleting municipal resources to do it: $787,637 to Robert Rizzo as City Manager, $457,000 to Randy Adams as Police Chief, etc. Documents show that the employment records go back to 2003 when the wholesale looting began.

3. BLAGOJEVICH. The trial of this former Governor of Illinois is concluding. Among other evidence was the $12,000/month income for his wife who performed no services and had no qualifications for a real estate firm, Rezko.

4. WIKILEAKS re Afghanistan War. New documents have been outed from the secrecy under which they had been wrapped which "offer insight primarily into the war-fighting of the recently departed George W. Bush administration". [A10] The document reveal the deliberate killing of two Reuters journalists in July 2007 , and the absence of any leadership from the Bush administration. Any. Basically the documents reveal the fact that what administrative officials were telling us was pure fabrication. The troops on the ground were not trained for what conditions they found, and the mission was compromised from the beginning.

5. LEVERAGED BUYOUT OF TRIBUNE. The court-appointed examiner in the Chicago Tribune's bankruptcy determined that the 2007 leveraged buy-out was marred by the "dishonesty" of its senior management--to the extent that the $8.2 billion transaction was a fraudulent conveyance [AA2].

UPDATES:

6. ARLINGTON CEMETERY. During the 8 years of Bush appointees "taking charge" of the government which they openly despised, the displacement of remains and records at Arlington occurred. Over 6000 are in disarray. No one is being held accountable, but even worse, it is astonishing to see that the appointees who were paid to be responsible have such little honor that they do not step forward, take responsibility, and devote themselves to correction of this sad state.

7. SPILLED OIL. Not just the spill in the Gulf, but simultaneously, there have been spills in Alaska, and even in the Great Lakes region. The scale of this depredation is significant, but it pales in significance to the scale of the ignorance, incompetence, and mindless denials of the Bush-Cheney-Rowe appointees and the Limbaugh-Breitbart-Fox network of idiologues who continue to rant with such indifference to science, honor, responsibility, and recovery.


Once the Government is dismantled and its positions filled with blind idiots, the predators come out of the bushes and actively destroy what is left. The destruction is far worse than mere entropic neglect -- it is pillage driven by the open invitation for spoil. After 8 years of irresponsible authorities, society now pays the price.

Those who prey upon credulity and hope
take away the lives of their victims.
That is to say, fraud is a capital offense,
greater in scale and consequence than
taking bread or things. For prudent persons
can guard their stuff from thieves, but
honesty has no protection from cunning.

Where fraud is permitted, where it has no severe consequences visited by law upon the perpetrator, then honest traders are always undone by knaves. Decency is at a great disadvantage in the face of misrepresentations of fact made by fraudsters who are not punished in any way.

This truth was observed in laissez faire Europe by the dean of St. Patrick's Cathedral in Dublin in 1726. The good dean wrote GULLIVER's TRAVELS among other great satires and reports. Jonathan Swift lived 1667-1745, tirelessly exposing the graft, corruption, and mendacity of hypocrites. His efforts had little effect upon the morality and laws he sought to uphold, and he was driven insane in his last years.

Joel Osteen in the eye of the Hurricane of Heresy

60 Minutes: Why are so many people flocking to Joel Osteen? The most watched religious broadcast in America, the largest congregation and he says: "I try to leave them better off than they were before". A message of hope -- God has a good plan: The Prosperity Gospel, for rewarding Believers with health, wealth, and blessings. Time and Chance are coming together for you. The key is Do the Right Thing, and you are passing the test. Most people already know the wrong they've done. Is this misleading? In tough times, you have to embrace where you are. Sports arena seats 16,000, has no overt religious symbols. The ceiling changes color. Does not ask for money on TV. $43m, and $30m in mail, with book sales ("Become a Better You"), still on Best Seller List. Not one mention of God or Jesus Christ in there. Theologians -- Rev M Horton (Escondido) calls it Cotton-Candy, telling people there is going to be a windfall in your life. No sin, suffering or redemption. He calls it heresy to say God is a resource for You. What could be dangerous about giving people Hope? Deluding and dumbing down? Or keeping it simple. Help you have the right thoughts take action today. Joel broke down in tears on the 60 Minutes Interview, humbled that he can help "give them hope". He writes and memorizes his sermons. Yes, the Religion is now officially out of Religion. We are talking about Hope, and it is Hope Now. It appears likely that out of green-back envy, the pious Right will declare him apostate. There are no real Believers. But we need Hope.

Disappointing Frauds - the year's top scams

The schemes of Con-artists are flowering here in Orange County. Newport Beach remains the leading "home" outside of Nigeria, for scamming the world. The impunity of the perpetrators continues to parallel the scale of their ill-gotten gains, although the election of our new Attorney General (former Governor Brown) is a huge gasp of fresh air on the prosecution front.

Various "scams": (1) Phone call claims to be from the Red Cross to spouses on behalf of soldiers serving in Iraq, claiming to need information, which is then used for identification theft. (2) "Natural Viagra" with unknown or the same ingredient as real Viagra. (3) Phone call to family members of elderly, seeking identity information, for "emergecy" care. (4) The IRS refund email. (5) Fake foreclosure redeemers, collecting fees to do nothing or falsely collect "rent". (6) Certified checks, which are deposited as "available funds", but not yet cleared. (7) In wildfire areas, fake contractors promising reconstruction or utility restoration. (8) And of course, high returns promised for investments in which there is no real "business" -- actual trade for value-added services or produced goods. Millions of dollars are lost by citizens, and the money invariably going "off-shore", a hidden hemorrage of financial strength facilitated by government agencies run by Bush appointees -- in other words, government agencies that see/ hear/ do nothing.

"Business" has been redefined. Stealing is "business" if you can get away with it, and of course, any idiot can get away with it in todays' environment.

Still, I am so disappointed in the quality of the Frauds this year. Even the smartest MBA's from the best business schools are coming up with the lamest crimes. The frauds are little more than thuggish takings. The smartest guys in the boiler-room turn out to be dumb-nut thugs. QUOTE OF THE WEEK -- "We had a scheme where the rich got richer. I did it, and I feel good about it. But I'm not planning to run for office". Marc B. Wolpow, former Bain Capital director, referencing his former Bain colleague, Mitt Romney. Bain Capital was a "business" which had no legitimate business and engaged in white collar theft. Call it what it is.

Third Pary theory of Liability - as "Enablers" of Crime

It "ought" to be difficult for criminals to carry out their predation. Unfortunately, as so many directors of corporations and even government institutions seem to think that "business" or "regulation" should be blind to frauds. This is a self-defeating attitude, since it erodes the Marketplace upon which our prosperity depends.

Criminals ought to have a more difficult time victimizing the weaker, poorer, and less informed or gullible members of our society. The large institutions -- banks, insurance companies, government agencies -- at this stage of our civilization are actually part of the victimizing culture; they do not prevent fraud on consumers, they enable it.

The only obstacle to wholesale consumer deception is the existance of a few law firms which still handle business frauds, taking cases one at a time. For example, in another suit similar to one I handled 20 years ago, an Orange County jury concluded that U.S. Bancorp "should have known" about fraudulent accounts it opened for fraud operators under the name DFJ Italia Ltd. and awarded $17.6 million. The Bancorp attorneys argued that it should not be held responsible for the actions of criminals. That defense makes great sense EXCEPT WHERE THEIR BANK ENABLED THE CRIMINALS TO DEFRAUD INVESTORS USING BOGUS "ACCOUNTS". This theory of "enabling" is a very strong cause of action.

Former NYSE Chairman Richard Grasso, and Greed

The LA Times reported a pleasant congruence of newsworthy events, in its 10/20/2006 Business Section: The Dow Jones closing above 12,000 for the first time, and the release of State Supreme Court Justice Charles Ramos' ruling that the former New York Stock Exchange Chairman, Richard Grasso, might be forced to return $100 million to the Exchange.
Justice Ramos made a point of basing the restitution order on the fact that Grasso was serving as Chairman, an office with "fiduciary" standards owed to the organization he purported to serve while milking it with a stratospheric "compensation package" in excess of $187.5 million per annum. The Court rejected Grasso's argument that the NYSE board made up of top Wall Street executives was "informed" and approved his pay. Interestingly, Grasso contended that he himself did not know how much he was making, a fact that Justice Ramos labelled shocking: "That a fiduciary of any institution, profit or not-for-profit, could honestly admit that he was unaware of a liability ofo over $100 million...is a clear violation [of fiduciary duties]."
In the May 2004 law suit brought by New York Attorney General Eliot Spitzer, Grasso was proved to have stocked the Board with cronies and then misled them about the magnitude of his ballooning pay, including more than $100 million in retirement benefits quietly accrued in his last few years on the "job".
Greed is not necessarily good or bad, and it is not a quality which is going to disappear, not matter how much it is condemned. However, where it is compounded with fraud -- concealments, misdirection, misrepresentation, and violation of fiduciary duties -- the act of benefitting oneself at the expense of others who are in no position to object or even realize what is happening, is simply a form of theft. It is a crime, a wrong, a violation of laws, and a distortion of the "free" market. For a "business" person to indulge in thievery, instead of exchange, is to destroy the market. His act is tantamount to market murder, in that it puts fear into the marketplace, and obstructs the transactions that otherwise would occur, killing them.
Equally shocking, however, is how LITTLE the "sanction" really is, relative to the scale of the offense. As sharply critical as Justice Ramos is of Grasso's testimony, he is still limiting the sanction to restitution. His ruling seems limited to a species of disgorgement. In other words, Grasso (and future Grasso's hiding in other grass) had NO RISK: Either he gets away with stealing, or he is caught and has to give up what he stole. Mere disgorgement is not a disincentive.

Tempting Faith - believers are being USED by religious hypocrites; corroboration.

LAT 10132006 A19, Wallsten. "President Bush's top political advisors [Rowe] privately ridiculed evangelical supporters as 'nuts' and 'goofy' while embracing them in public and using their votes to help win elections."
The reviewer, Wallsten, interviewed Paul M. Weyrich, a Bush-conservative, about Kuo's book. The Bush administration denies Kuo's account of the "faith-based" program. Speech-writer Michael Gerson claims it is "laughable", and Jim Towey, another former director of the faith-based program, claims Kuo's description is unrecognizable. However, neither critic denied that politics factored predominantly into the program which has significantly failed to supplant community needs although it hosted numerous "conferences" appealing to pastors prior to elections.
Kuo is a second insider to document the political use of religious conviction by people who are themselves not righteous ones. Kuo's observations now corroborate those of John J. DiIulio Jr, the first director of the "Office of Faith-Based and Community Initiatives", a uniquely Rowe-based bureaucracy formed when Bush first took office. DiIulio was the first official to resign 7 months after his appointment in the Bush-Rowe-Cheney administration, stating that the White House was run by "Mayberry Machiavellians" who put political ends over everything else.
With this published corroboration by Kuo, who made the same accusation when he resigned from the same program in 2003, it appears that the leadership of our country has been "hijacked" (to use Kuo's term) by a cabal of religious hypocrites. The Christians are being fed to the lions, at their own expense inside the arena, while the lions outside the arena are gathering with impunity. In making this analogy, no disrespect to lions is intended.

PRJ: Insitutionalized Fraud

Washington-based SoundExchange released a list of 9000 recording artists which it claimed it was unable to locate in order to distribute $500,000 worth of "royalties". SoundExchange was creating by the recording industry to collect and distribute royalties. They could not find Rapper Mos Def, producer T-Bone Burnett, or the Mormon Tabernacle Choir.
The artists forfeit the money to SoundExchange if not claimed.

NEW EVANGELS, FASTEST GROWING RELIGION

Unitarian Universalists, the vastest growing religious group.

There are always two dynamics in play: The force of division, and the tendency to merge. The blue-state bible-belt which we saw exploited so relentlessly in the last political epoch is now dividing. The old familiars -- Graham, Pat Robertson, Jerry Falwell, James Dobson, and Richard Land -- are giving way to the fresh charisma of the new guard -- Rick Warren, Richard Cizik, and Ted Haggard. New talking heads of the Church victorious. Even inside the Southern Baptist Convention (the largest Protestant denomination), we see the platform of Frank Page moving the discourse from the cognitive dissonance of anti-abortion pro-death penalty, anti-gay pro-marriage obsessions, to the more topical and urgent and "get real" messages, such as social justice, globalization, and stewardship of natural resources.

In the larger world, forces of Unity are clearly at work in the Church Ascendant. The fastest growing congregations in the world among all religious communities based on "choice" (not merely the number of births in countries with State religions), are the Unitarian Universalist. Maybe most people who have the "choice" of beliefs, who understand who they are as human beings, maybe everyone, is a closet Unitarian.

What we did not know about the Hidden Hand of the Marketplace

Adam Smith, a professor of Ethics, coined the phrase "the hidden hand of the marketplace" to explain how the price for goods was set. He had observed that the activities of the wealthy were subsidized by the State, while the middle and lower classes were hardly supported at all in their activities, many of which were suppressed. THE WEALTH OF NATIONS. Anyway, the West and East India Trading Company has come a long way since 1776.

While Adam Smith did not actually invent "capitalism" or "socialism", and he did not advocate either a "free" market nor a "regulated" one, his description of the dynamics of human interaction has stood the test of Aristotles' unities -- time, place and action. And it appears now that we will always have both competition and paternalism, and both have their place. However, Adam Smith did not foresee the toll which Marketing would charge on the Market. Today, Marketing is an unrelenting, widespread, brilliant, and ruthless force. And it will have its way with all Sources of information -- it will corrupt the Government purse, violate the trust of Academia, and suck the will out of the Professions -- all on the way to influencing the mass consumer.

For example, Enron produced no product and offered no service, and yet it became the seventh largest corporate enterprise in the United States -- it positioned itself as a "marketing" entity, buying paper choses, artfully driving up the price, and then on the sale of the same thing at a higher price, claiming a "profit" for itself. Or rather, for its inner circle of pirates.

Did any economist remark the rapid, widespread and illegitimate electrical power market distortion? Did a single corporate lawyer report this violation of legal principle -- outright deception, fictitious partnering with fictitious off-shore entities, and fraud are all crimes the lawyers knew were occurring. Did a single government regulatory body -- across municipal, State, and Federal jurisdictions -- strip the pirates of their booty? The demise of Enron occurred as a result of the use of its "cover" to steal, and it collapsed internally. It even sought the protection of "bankruptcy" proceedings -- in other words, using legal cover and pretensions to the very end, to hide its own 60 billion-dollar fraud.

Marketing is wonderful. However, it is no longer "the music man" trumpeting instruments to keep the kids out of pool halls. Now it is bent and smart. Advertising is now a nasty piece of work devoted to taking the "choice" out of choice. For example, the Drug Industry: I used to love Merck. Just think of all those drugs they make that reduce our pain and heal our afflictions. Unfortunately, as the Vioxx litigation has brought to light, the Big Drug companies devote more billions to marketing than they do to developing new drugs. The "new drugs" they are making are not helping us -- they are killing us. Their new drugs are mostly for the side-effects their old drugs are giving us. The best "cough medicine" on the billion-dollar market, provides a little less help than a glass of water for a child with a cold.

So I am just getting to this Prediction: As Marketing takes over the Web, which it is and will, it will actively seek to prevent true facts from emerging. Google anything you want, the sites that will pop up are the ones that pay Google. Search engines will be bought and paid for as marketing tools. Nothing will survive which does not profit someone. This is not about food and shelter, this is about power.