Gordon Grigg…scheduled for release 9/29/2014.
Whatever Happened to the Criminal Justice System in the USA? Dan Frishberg’s Biz Radio Folly goes Unpunished and Dan’s still on the Radio… Go Figure!July 20, 2012
It’s been a while…a long while since I turned my attention to Daniel ( Dan ) Frishberg – the radio personality who, with his partner Al Kaleta, caused many an investor to lose substantial funds in the failed Biz Radio debacle. I received an email today from a defrocked investor in Dan Frishberg’s failed scheme asking “Whatever happened to the criminal justice system in the USA? Dandy question, cause it seems that Dan Frishberg has effectively walked away with no criminal consequence to his very public investor fraud. If you want to see background go to these wordpress posts on “The Money Man“.
The key is to hold the right assets for enough time so that the investment can reap its full reward. It takes a lot confidence for an investor to believe that the company will not only be in business years from now but will continue to create an increasing amount of value several business cycles into the future. Successful investors are only able to hold on to stocks for the long term if they are able to create conviction with the proper due diligence, generate income, and protect their capital during uncertain times.
Hum…I read the words written and wonder! You state, “It takes a lot confidence for an investor to believe that the company will not only be in business years from now but will continue to create an increasing amount of value several business cycles into the future.” Yet, I wonder how the folks feel that listened to your advice on Biz Radio and your podcasts and YouTube and believed that you had a sustainable business model that would create an increasing amount of value to sustain them into the future. Seems from all accounts that you and your cronies led folks into investing into nothing more than a Ponzi scheme and today they have lost. But have you?
“Successful investors are only able to hold on to stocks for the long term if they are able to create conviction with the proper due diligence, generate income, and protect their capital during uncertain times.” Dan those are your words. Yet, you solicited investments that did not protect capital, generate income and were void of due diligence. Shame on you…! You survived, but what about those who trusted you?
I believe in Second Chances – in fact I wrote a book about it! I know with every fiber of my being how you operate as (sadly) I was you at one time. But there is one BIG DIFFERENCE. I acknowledged my unethical actions, made restitution and changed my choices. Seems accepting responsibility – which is the first step to recovery – is something that continues to allude you. Isn’t it time – Dan Frishberg – to face the truth of your lies and deceptions – take responsibility – make restitution and then move forward with your life in an honest and ethical way.
You – Dan Frishberg – could be a leader in ethical business practice, sharing the truth of your folly and how unethical practice can be turned into societal good. Sadly, Dan, it seems that you only know one thing – how to be a talking head on the radio. Every choice has a consequence and the consequences of your choices are not over…cause karma’s a bitch.
If you have been defrauded by Dan Frishberg and Al Kaleta – feel free to share your experience so others can at least be warned!
From time to time I wonder what motivates someone to perpetrate such a significant fraud? Having been there, I understand that once the illusion is created it’s difficult to escape from the lack of reality that sets in, but still – what motivated it to start with?
David R. Lewalski, formerly of Gainesville, Fla., pleaded guilty today to mail fraud in connection with his operation of a $30 million investment fraud scheme, announced Assistant Attorney General Lanny A. Breuer of the Criminal Division and U.S. Attorney Robert E. O’Neill of the Middle District of Florida.
Lewalski, 47, pleaded guilty before U.S. Magistrate Judge Mark A. Pizzo in the Middle District of Florida and faces a maximum penalty of 20 years in prison.
According to court documents, the defendant, who operated a company called Botfly LLC, willfully engineered and executed a scheme to defraud by promising victim investors that he could generate returns of up to 10 percent per month, compounded monthly, through his trading in the foreign currency (forex) market. In fact, the defendant operated an investment fraud scheme. The defendant and others working at his direction raised approximately $29,851,598 from victim investors, but the defendant used only a small percentage of those funds for forex trading (approximately $2.6 million), the vast majority of which he lost.
Lewalski admitted that instead of trading in the foreign currency market as he promised, he used the bulk of victim investor funds to make payments to other investors in order to perpetuate the scheme and make it appear as if he was generating the promised returns. Lewalski paid investors $14,339,887 in “returns” that he led them to believe were generated by his forex trading when, in reality, he was merely paying them with other victim investors’ funds. Lewalski also spent millions of dollars of victim investor funds on personal expenses, including high end real estate, private jet travel, luxury automobiles, computer equipment and jewelry.
YOUR COMMENTS WELCOME!
ETHICS AND WHITE COLLAR CRIME NEWS RELEASE:
Edward Louis Molz, III, aka “Frank Sullivan,” 29, of Plano, Texas, was sentenced by U.S. District Judge Sam A. Lindsay to 96 months in federal prison and ordered to pay $1,074,725 in restitution following his guilty plea in January to one count of wire fraud in connection with a fraudulent advance fee scheme he ran.
In addition, according to the plea agreement, Molz will be ordered to forfeit property that was derived from proceeds traceable to his offense, including funds seized on September 7, 2010, from the 3rd Street Financial LLC account at JPMorgan Chase, as well as a 2007 BMW 650, a 2005 Maserati and real estate located on Cartwright Street in Irving, Texas.
Molz was arrested in September 2010 at his home by FBI agents on wire fraud and mail fraud charges outlined in a federal criminal complaint, and was released on a personal recognizance bond. A federal grand jury returned a six-count indictment the following month charging Molz with four counts of wire fraud and two counts of mail fraud. In March 2011, Molz’s bond was revoked.
According to the factual resume filed in the case, from November 2009 through May 2010, Molz ran a scheme in which he induced small business owners, who were seeking alternative means of financing, to pay a fee to purchase an “aged” corporations. These “aged” corporations purportedly had access to lines of credit that were available to the purchaser.
To carry out his scheme, Molz established 3rd Street Financial, LLC, and, using the assumed name of “Frank Sullivan,” held himself out as its chief financial officer. He marketed 3rd Street Financial through a website and a loose association of financial brokers. He represented to potential purchasers that he had established and maintained a number of “aged” corporations which had been in existence for four to five years and had access to lines of credit between $250,000 and $400,000. For a $3250 acquisition fee, a purchaser could acquire a “Tier 1″ corporation with a minimum line of credit of $150,000. However, for a $6500 acquisition fee, a purchaser could acquire a “Tier 2″ corporation with a $250,000 minimum line of credit.
Molz represented that upon payment of the fees, he could deliver the aged corporation to a purchaser within nine to 12 weeks. He also represented that each “aged” corporation had additional benefits, including established “business trade lines,” a complete financial and business plan, a Dun & Bradstreet listing and three years of valid tax returns. He furnished potential purchasers with false and fictitious documents, including service agreements, testimonials from satisfied purchasers and letters from financial institutions confirming the issuance of lines of credit.
During the time frame mentioned above, approximately 247 individuals mailed or wired money to Molz and he deposited those funds into JPMorgan Chase and Compass Bank accounts. Molz did not deliver any “aged” corporations as promised. Instead, he used the money almost exclusively for his personal benefit, including the acquisition of personal assets and real estate.
YOUR COMMENTS ARE WELCOME
Russell E. Mackert, Brent Oncale, David White, Eric M. Kruz, and Tomme Bromseth sentenced to significant prison sentences for $100 million fraud scheme!August 1, 2011
Five employees for A&O Resource Management Ltd. and various related entities – including two executives – were sentenced recently for their roles in a $100 million fraud scheme with more than 800 victims across the United States and Canada.
The sentences were announced by U.S. Attorney for the Eastern District of Virginia Neil H. MacBride and Assistant Attorney General Lanny A. Breuer of the Criminal Division.
The five individuals were sentenced by U.S. District Judge Robert E. Payne. Russell E. Mackert, 52, general counsel for A&O, was sentenced to 188 months in prison; Brent Oncale, 36, former owner and founder of A&O, was sentenced to 120 months in prison; David White, 41, the former president of A&O, was sentenced to 60 months in prison; Eric M. Kurz, 47, a wholesaler of A&O investment products, was sentenced to 60 months in prison; and Tomme Bromseth, 69, an A&O sales agent in the Richmond area, was sentenced to 36 months in prison.
“The impact of this massive fraud on many of A&O’s investor victims has been disastrous,” said U.S. Attorney MacBride. “Hundreds of elderly investors invested their life savings with A&O and saw it all vanish in an instant. These investors were not looking for quick cash, just a safe alternative to invest their retirement funds. The safety, security, and no-risk nature of the investment was critical to the sales pitch, and it was all a big fat lie.”
“Brent Oncale and his co-conspirators operated a sham investment company that turned fraud and deceit into a business model,” said Assistant Attorney General Breuer. “They stole millions from hundreds of unsuspecting investors, pocketing huge sums for themselves. Today’s sentences reflect the severity of these cowardly and costly crimes.”
All five men pleaded guilty in the fall of 2010 and early 2011 for their roles in the fraud scheme at A&O, which falsely marketed life settlement products to investors, many of whom were elderly. The conspirators at A&O defrauded investors by making misrepresentations about A&O’s prior success, its size and office locations, its number of employees, the risks of its investment offerings, and its safekeeping and use of investor funds.
When state regulators began to scrutinize A&O’s investment products, conspirators manufactured a sham sales transaction to “sell” A&O to an offshore shell corporate entity named Blue Dymond and later to another offshore shell corporate entity named Physician’s Trust. However, A&O and Physician’s Trust was still secretly controlled by A&O principals and their conspirators.
It was a bold scheme that saw Mackert, 52, create sham companies, make up the name “R.J. Stephenson” as a fictional representative, hire an actor who pretended to do due diligence on a sale, and slip $10 million in cashier’s checks past customs in Fort Lauderdale to deposit in a secret trust account in Nevis.
On June 6, 2011, the hedge fund manager of A&O, Adley H. Abdulwahab, 35, of Houston, was convicted by a jury in Richmond, Va., of one count of conspiracy to commit mail fraud, five counts of mail fraud, one count of conspiracy to commit money laundering, five counts of money laundering and three counts of securities fraud. A founder of A&O, Christian Allmendinger, 39, was convicted by a jury on March 23, 2011, of one count of conspiracy to commit mail fraud, two counts of mail fraud, one count of conspiracy to commit money laundering, two counts of money laundering and one count of securities fraud. Abdulwahab is scheduled to be sentenced on Sept. 28, 2011, and Allmendinger is scheduled to be sentenced on Aug. 14, 2011. They face up to 20 years in prison on each count except the securities fraud counts, on which they face up to five years in prison.
YOUR COMMENTS ARE WELCOME!
Le-Nature’s fraud “the largest in the history of the Western District of Pennsylvania” – Robert B. Lynn found guilty of Bank Fraud!July 31, 2011
Losses hidden by false documents leads to massive collapse and huge losses. Every choice has a consequence and this scheme left many holding the bag with financial losses.
After deliberating 16 hours, a federal jury of nine women and three men found Robert B. Lynn guilty of 10 counts of bank fraud, wire fraud and conspiracy relating to the operations of Le-Nature’s, Inc., the Latrobe, Pennsylvania water bottler that collapsed in bankruptcy in 2006, United States Attorney David J. Hickton announced.
Lynn, 67, of Westmoreland County, Pa., was tried before Senior United States District Judge Alan N. Bloch in Pittsburgh, Pennsylvania.
“The Le-Nature’s fraud was the largest financial fraud in the history of the Western District of Pennsylvania,” said U.S. Attorney Hickton. “The public interest demands effective prosecution of all crimes, and this was one of special magnitude. At the end of this lengthy investigation and trial, we are gratified by the diligent work of the jury in reaching its verdict.”
According to Assistant United States Attorneys James Y. Garrett and Robert S. Cessar, who prosecuted the case, the evidence presented at trial established that the defendant ran Le-Nature’s sales operations. While the company was losing millions on its products during the years 2001 to 2006, Lynn and other company executives provided false information about its business activity and financial condition to investors and lenders, making it seem the company was profitable and expanding. As a result of the false information, lenders and investors advanced funding to Le-Nature’s of more than $800 million during the scheme. When the company collapsed, the losses were approximately $600 million.
Five other defendants charged in the scheme pleaded guilty earlier. They were Gregory J. Podlucky, 50, of Westmoreland County, Jonathan Podlucky, 37, of Westmoreland County, Andrew J. Murin, Jr., 54, of Washington County, Donald Pollinger, 67, of Charlotte, North Carolina, and Tammy Andreycak, 43, of Westmoreland County.
Judge Bloch scheduled sentencing for Dec. 1, 2011. Based on Lynn’s convictions, the law provides for a total sentence of 220 years in prison, a fine of $2.5 million, or both. Under the Federal Sentencing Guidelines, the actual sentence imposed is based on the seriousness of the offenses and the criminal history, if any, of the defendant.
Pending sentencing, the court allowed Lynn to remain free on bond.
The Internal Revenue Service/Criminal Investigation and the United States Postal Inspection Service conducted the investigation that led to the prosecution of Robert B. Lynn.
YOUR COMMENTS ARE WELCOME
Ethics and Honest Services: Promoting your book is one thing – fraud is quite another (or was it fraud?) … just ask Michael Jimenez and Marie MasonJuly 26, 2011
The former fiscal manager for the Hillsborough County Head Start program goes on trial in federal court along with his wife and another Head Start employee on fraud charges.
Michael Jimenez is charged with conspiring with fellow Head Start employee Marie Mason to have the pre-school program buy $9,000 worth of books authored by Jimenez’ wife, Johana Melendez Santiago.
U.S Attorney Robert O’Neill is handling the government’s case personally. O’Neill is also the lead prosecutor in the government’s public corruption case against former Hillsborough County Commissioner Kevin White.
Jimenez, Melendez and Mason each face three felony counts related to the book sale including obtaining “by fraud” more than $5,000 from a government agency, and obtaining money by “false and fraudulent pretenses” that deprived citizens and Head Start clients of their right to “honest services.”Defense attorneys say their clients did not intend to defraud the government. The purchase of 750 copies of “Travel Boy Helps Sebastian,” a book that teaches children about germs, was not done covertly, and the county got good value for the money spent. The 47-page book retails on Amazon.com for about $25 and is available in English and Spanish.
“The county bought the books …. That’s not fraudulent,” said Jeffrey Brown, Melendez’ lawyer. “The county paid for the books and the county got the books.”
Details in the federal indictment closely mirror evidence unearthed by a Hillsborough County investigator last year. Emails showed Melendez contacted her husband on April 15, 2010, concerning a “book order.”
“Here’s a letter of presentation of my book in case they need justification,” Melendez wrote, adding, “I’ll have the quote sent immediately.” She followed up with an email to a Head Start procurement employee.
Six days later, Jimenez forwarded the presentation to the procurement employee.
Mason, the agency’s family and mental health director, initiated an internal purchase request form for the book on May 3 of that year.
Originally, the agency was going to purchase 2,000 copies of the book. But several employees told the county investigator they were pressured to reduce the order to 750 copies so it wouldn’t be reviewed by the county’s procurement office.
“It was further part of the conspiracy that the conspirators would and did keep the total price of the purchase of the books under $10,000 so that the process of purchasing the books would not have to go through the bid process,” the indictment stated.
O’Neill won a tactical victory Thursday when Bucklew denied a defense motion to exclude evidence that Jimenez and Mason had not disclosed a conflict of interest in approving the purchase of the book. Defense attorneys cited a U.S. Supreme Court ruling last year in Skilling v. United States that a fraud conviction cannot be based on conflicts of financial interest.
“Skilling says you can’t prove honest services fraud by anything other than bribery or a kickback,” said David Weisbrod, attorney for Jimenez.
The judge, however, agreed with O’Neill that the high court ruling did not say conflict of interest evidence could not be admitted, only that it could not be the basis of a conviction for honest services fraud.
However, the defense is expected to hammer at the points they say were raised in Skilling: No bribery or kickbacks took place, therefore there was no fraud.
O’Neill disagreed, saying in the hearing that the Supreme Court has defined “kickback” as any money, gratuity or gift provided directly to people for services or obtaining services.
Head Start, a school readiness program under the U.S. Department of Health and Human Services, is funded with federal and county dollars. When officials in the county’s Family & Aging Services Department learned of the book deal, they passed the information to County Administrator Mike Merrill, who ordered an internal investigation.
Based on the probe’s findings, Merrill tried to fire Jimenez in December. But federal rules require such a termination be approved by the executive committee of the Head Start Policy Council, a group consisting mostly of parents of children in the program.
When the group refused to fire Jimenez, Merrill took the next step under Head Start guidelines by referring the firing to a three-person committee made up of two county officials and the chairman of the policy council. They agreed in March that Jimenez should be fired.
Merrill also had recommended that Mason be fired, but the Head Start committee refused. After negotiations between Mason’s lawyer and the county, she was allowed to come back to work. Mason is now on administrative leave without pay pending the outcome of the trial.
An excellent article about this issue is found here.
THOUGHTS AND COMMENTS WELCOME!
Business Ethics: It is really about more than avoiding prison! Is there a little Bernie Madoff in each of US? A Guest Blog by Corey RichardsonJuly 24, 2011
A “Man of The Age” financier is surrounded by mystery and adoring members of the moneyed elite hungry for some of his wondrous returns. This paragon of the business class with The Midas Touch accepts only a few choice clients who seem to wither in his presence as they deliver their accumulated wealth into his magical hands – no questions asked. The returns are beyond belief, and for very good reasons. Unbeknownst to all, this wizard of the market is juggling fraudulent accounts to pay for his lavish lifestyle. The only trading is from their hands to his. The ruse comes tumbling down and the entire nation is stunned.
The scoundrel portrayed above is Charles Dickens’ character, Mr. Merdle of Little Dorrit, first published in 1857. Dickens foretold the Madoff scandal verbatim in his quintessential corruption tale, but this iniquitous business leader is an age-old archetype, and we, like Dickens, find it easy to vilify him due to the magnitude of his crimes; No stealing a crust of bread for this villain. At its polar opposite, take the “common criminal,” the savage monster seen today in T.V. cop shows, the local news, and innumerable B-movies. This standard is bloodthirsty, drug- crazed, and has a soul as black as night.
Dickens’ work is also replete with such characters. The beauty of these caricatures is that we cannot find ourselves in either. They conveniently represent “other.” All the while we can sit comfortably in our living rooms with our sense of moral rage because we do not bilk venerable charitable funds and we do not cook meth in our kitchen. Yet, it can be argued that if we truly strive for a better world, then we need to go well beyond the knee-jerk reactions of these scenarios, and find ourselves in the moral conundrums.
Stricter regulations of the financial sector and more accountability, gun control legislation, sensible criminal sentencing laws, affordable drug rehab, etc., are important factors, but are only part of the solution. Even focusing on improvements to education and social services, which have been shown to be extremely important in crime prevention within certain groups, is still only a small part. To thoroughly understand what drives people as different as Kenneth Lay or a Gov. “Blago,” as well as a gun-totting inner-city kid with a pocket full of dope, we must understand root causes of criminal behavior, thus pointing the way for our next generation of leaders- and evaluate ourselves in our own business affairs.
“What causes criminal activity, and. who are these people who commit crimes against our society, such as … ” taking items from work, “fudging” on taxes, paying for non-business activity with a business account, inflating an insurance claim, switching labels at a store, producing unsafe products, “padding” a bill, or any number of violations of legislated standards for personal gain committed by everyday people.
Due to perception, universally known within psychology as the fundamental attribution error, these crimes are given little thought by those who commit them. Joe Citizen justifies and minimizes these activities as “bending” the rules. And this is where we see the attribution error in effect: we tend to overestimate the role of personal factors and underestimate the “influence of situations in others, and we overestimate the situational factor and underestimate the personal factor in our own circumstances. It is the age-old “We judge others on their actions, and we judge ourselves on our intent.” Or I’m bending the rules, and he is breaking the law.
This phenomenon is not unique to the middle and upper socioeconomic strata, and equally applies to the poor. A drug dealer feels that his activities, though illegal, are still a legitimate means to earn a livable wage within his community. The same could be said of any accountant or lawyer who “tweak’s” the system to make a little money. So, getting a television set off the back of a truck in the ghetto looks much like another’s decision to not claim income on a second job. It is all about perspective.
As we address the problem of the business class, we can facilitate the much-needed change in perspective with some cold, hard facts. Business leaders do not need to be as extraordinarily crooked as Madoff to affect a, huge societal burden. Study after-study demonstrates that “white collar” or corporate crimes, as well as middle-class crimes, ranging from tax evasion, insurance fraud, price fixing, inventory “shrinkage” (what a euphemism!), etc., weigh much more heavily than the number one Index crime, conventional property crime. Index crimes are known also as “street crimes.” They are highly visible crimes, easy to categorize and count, and are overwhelmingly committed by the poor. White collar crimes, by contrast, are difficult to detect and rarely prosecuted. Still, the economic yearly cost with respect to property crimes of the corporate America are approximately twenty times greater than conventional property crimes of index offenses, or a difference of $200 billion to $10 billion annually.
Having completed a fully accredited MBA program via a distance-based education format, I need to share that – this accomplishment – was done from an 8′ by II’ prison cell. I was an inmate and like most “on the inside,” I readily justified my criminal acts, which occurred within my professional life, as did the drug dealer or the burglar. So, as I approached my Business Ethics coursework, I did it with the secure knowledge that I committed a crime. This perspective, and the belief that my professors would judge my answers too with this in mind, gave me a keen eye in studying ethical queries in business.
I believe that when most students answer questions related to ethical foundations or detail their understanding of their own personal values, they do it from a perspective that they themselves could not possibly commit a crime. Such activities, such as smoking pot in the college dorm or not claiming wages from a summer job paid “under the table,” are simply not considered as crimes, which they are. Again the attribution error: “My (illegal) acts are not illegal, and certainly not unethical.
Everybody does it. It is no big deal.” And so forth. To cultivate a true ethical North in business, we must broaden our perspectives, and when an ethical dilemma arises, we can perceive it as such. No different from operations management or strategic planning. An appreciation of multiple perspectives — proffers a grand wealth of insight that will carry our next generation of leaders.
As a convict, my daily life is a direct result of criminal acts related to my work. In my studies, I can clearly see the untold millions that are affected by one unsafe product, but I can also appreciate how one man can justify criminal acts as a bad business decision, rather than a pathological act for profit with no respect for the law. To open the eyes of CEOs early in their training to the easy comparisons between corporate crime and “street” crimes, as well as offer tangible proof of the enormous societal burden of white-collar crime, would be of immeasurable value. In teaching business ethics, we must go well beyond the bland terms and definitions and the prosaic personal litanies of “What I value in the world.” We must make the coursework truly applicable and create managers and business leaders who intuitively understand how ethics within Corporate America are just as important, if not more so, as profit margins and supply chains.
Clearly, when I understand myself, I can understand Bernie Madoff or Kenneth Lay. I believe the same could be said of us all. The equation is simple: Unbridled Financial Gain plus Opportunity, then Add the Likelihood of Detection and Fear of Prosecution. Embracing the truth of unlawful acts in our everyday lives, be it business or personal, is much harder to do than to merely vilify in a fanciful Dickensian way the corporate or government leader who betrays our trust, or even the dope dealer of the inner cities. But it will help to create leaders who view all of their work and life through a lens of principled behavior. We must begin to see the situational nature of all criminals acts, and therein lies the beginning of meaningful solutions. It is not enough to alter the number of opportunities to steal or the severity of the requisite penalties, but to go further by changing what stealing looks like by different people, changing the perceptions of illegal gains, and infusing the intrinsic value of ethical behavior.
When we see that all of us have a little of Bernie Madoff in us, only then can we begin to view our world more clearly and begin to make authentically ethical decisions as we lead our companies and organizations. We may even make significant changes in our personal lives.
Business Ethics: It is really is about more than avoiding prison.
Corey Richardson Biography:
Corey John Richardson is a former clinician, who holds a Master’s Degree in PA Studies from the University of Nebraska’s College of Medicine (Omaha) and a Bachelor’s Degree in Health Science/PA Certificate from the University of Florida’s College of Health Related Professions (Gainesville). He holds an MBA from Salve Regina University’s Graduate Business School (Newport, RI) and has completed doctoral health science coursework with a focus on prison healthcare at Spalding University (Louisville, KY). Mr. Richardson’s work has been incorporated into criminology courses at the University of Cincinnati and has been included in CURE’s congressional file on correctional healthcare in support of HR 3710. He has performed medico-legal consulting and has legal experience assisting prisoners in various civil and criminal actions. As a pro se litigant, he won a precedent-setting case on appeal against the Kentucky DOC and its Abuse of Power (published at Richardson v. Rees, 283 S.W. 3d, 257). He has also worked as a facilitator in numerous psychotherapeutic and rehabilitative programs.
Mr. Richardson has written widely about prison issues and sobriety for publications such as Spotlight on Recovery, Cell Door Magazine (the official publication of the National Death Row Assistance Network), T’he Kentuckiana News, Perspectives (the official journal of the Association for Humanistic Psychology), The Grapevine (Alcoholics Anonymous’ international publication), The Long Term View: A journal of informed opinion (Massachusetts School of Law at Andover), OUTlooks (Canada’s GLBT magazine), and others. Several of his essays have been published in the book Voices Through The Wall and he won 1st Prize in the Ford Foundation’s 2OO9 national writing competition Think Outside the Cell, published in Love lives here, too. (2010)
Mr. Richardson maintains his writing at coreyrichardson.blogspot.com and may be reached at email@example.com. In 2001, he was convicted of crimes related to practicing medicine without a license and served 122 months in the Kentucky Department of Corrections; his supervising physician was given a probated sentence. Mr. Richardson has 13 years of continuous sobriety on July 14, 2011.
Former Wachovia Financial Advisor – Lazaro E. Salado – Pleads guilty to Bank Fraud – what was his motivation?July 13, 2011
Since every choice has a consequence – the consequences of Lazaro Salado’s fraud will be significant and impactful. The prison sentence that he will receive will be life changing and the restitution that follows may be impossible. But at a deeper level the question might be what motivated his behavior?
According to the Criminal Information, Salado was a financial advisor at Wachovia in Miami, Florida, responsible for assisting clients in investments and financial planning. From February 2004 to May 2009, Salado stole more than $1.45 million from five of his clients at Wachovia by causing checks to be issued on client accounts, without the knowledge or authorization of these clients, for payment to a bank account controlled by Salado. Salado concealed the fraud by providing false and fraudulent statement to clients and also by transferring money between client accounts through unauthorized wire transfers.
As part of the plea agreement announced in court today, Salado agreed to make mandatory restitution of $1,457,309 to Wachovia (now Wells Fargo).
Sentencing is scheduled for September 14, 2011 before U.S. District Judge Marcia G. Cooke. Salado faces a maximum statutory sentence of up to 30 years in prison, a fine of up to $1,000,000, and restitution.
In any fraud there are three components that come together: (1) Need; (2) Opportunity and (3) Rationalization. While it might seem obvious that Salado had a need for money (since that is what he stole) – the bigger question might be – FOR WHAT? Did his lifestyle reflect the use of the stolen money? Should have it been noticeable by his co-workers?
He had opportunity through Wachovia – yet the question looms – where did the internal controls fail that allowed Salado to embezzle such large sums of money? Surely the systems were in place to detect activity like this that took place over 5 years.
Lastly, wonder what was in Salado’s mind that allowed him to rationalize his behavior?
If you know Lazaro Salado and/or have any insight into these or other questions that may arise feel free to comment.
YOUR COMMENTS ARE WELCOME!