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 Richardson

July 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 coreyjohnrichardson@gmail.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.

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Dan Frishberg – BizRadio: Salem Communications settles Lawsuit with Rehan Siddiqi

January 3, 2011

It’s been almost a year since the world that Rehan Siddiqi lived in was dramatically changed.  Kicked off a radio station that he was joyfully buying, he found himself embroiled in a meltdown of major proportions created by BizRadio’s leader Dan Frishberg – also known as “The Money Man” – although it would appear that Dan’s money to support BizRadio was nothing more than an elaborate scam.

As a refresher, Rehan Siddiqi had entered into an agreement to lease/purchase the former station that BizRadio was aired on in early January 2010.  Asia Vision took the air the first of January on what Rehan thought was their new home.  Dan Frishberg took BizRadio to another station – one that cost him less and seemed to be a solution for the financial failure he was experiencing.

ONE MONTH…that’s all it lasted.  Frishberg (now well documented) couldn’t meet the financial obligations on the new station (he had no credit) and the result – SIDDIQI WAS KICKED OFF HIS NEW STATION.

The result was a lawsuit filed by Rehan Siddiqi for $18 million in damages against multiple parties including but not limited to:  Dan Frishberg, Elisea Frishberg, and Salem Communications.

Today, now almost a year later, this new year is starting with some good news for Rehan Siddiqi.  From reliable sources, it appears that Salem Communications has settled their issue with Siddiqi and as a result – Salem Communications – is no longer a party to the lawsuit filed by Rehan Siddiqi / Asia Vision.  What are the terms of the settlement – I don’t know.  But, this settlement opens the door for one major step forward with respect Dan Frishberg and his issues with the SEC (which still seem to be unresolved – and a lot of folks are wondering why) that is the sale of the station can now move forward with the Siddiqi lawsuit settled.

To be clear – Siddiqi’s settlement with Salem Communications does not mean he has settled with Dan Frishberg or Elisea.  The lawsuit for tortious interference against them still stands – although collecting from Dan or his wife should Siddiqi win the suit might be difficult at best.

I suspect that, based on Tom Taylor’s efforts (the SEC Receiver) the sale of the station will move forward fairly quickly in early 2010.  Who will buy it?  That remains to be seen.  Salem is an obvious candidate as they expressed interest in the station.  Likewise, Siddiqi, at one time, was interested.  Either way, whom ever buys the station, it would appear that this chapter might soon come to an end.  For the investors, however, I don’t suspect that the money from the sale will come close to making you whole as you look at your losses.

THE NEW YEAR’S QUESTION:

With things now open to move forward with the sale of the station, what action is the SEC going to take with respect to Dan Frishberg?  There seems to be sufficient evidence that he was an active part in the defrauding of numerous investors – most of whom will not come close to getting their principle losses back.  Al Kaleta lost his license as an investment advisor.  Dan Frishberg, on the other hand, has not.  Why?

Frishberg – “The Money Man” brand – is expanding with the conversion of Salem Stations to talk business stations, so it seems that Dan buys his suits with kevlar material…as thus far nothing seems to stick to him when it comes to law enforcement – either his investment license (SEC authority) or criminal – FBI, US Attorney or others.  Perhaps 2011 will bring some resolution to this sad affair.

PRIOR POSTS ARE HERE:

https://chuckgallagher.wordpress.com/2010/02/12/biz-radio-and-rehan-siddiqi-when-the-dust-clears-will-siddiqi-be-a-victim-or-a-victor/

https://chuckgallagher.wordpress.com/2010/03/03/dan-frishberg-and-bizradio-slapped-with-18-million-lawsuit-rehan-siddiqi-and-asia-vision-strike-back/

Meanwhile – YOUR COMMENTS ARE WELCOME!


Bernie Madoff and Mark Madoff’s suicide – the Reality of Prison! Choices and Consequences

December 13, 2010

Doing presentations on business ethics and fraud prevention, every presentation I begin starts with the statement – “Every choice has a consequence!”  No where is this more painfully obvious then the very public unfolding of the consequences begun many years ago by Bernie Madoff.

Two years to the day – the day Bernie Madoff admitted creating the largest Ponzi scheme in US history, his son, Mark Madoff, committed suicide.  Apparently the pressure of all that was taking place (as the Madoff saga is far from over) was far too much for Mark to bear.

Some might ask, well how would you know?  The answer is simple…I’ve been there.  Having created a Ponzi scheme (not something I am proud of, but it is a fact that I openly share), I know about the emotional pressures that come with the consequences of choices I made.  The magnitude of my crime is dwarfed by that of Bernie Madoff.  Yet, pressure is pressure and likely it is all relative.

I candidly feel for Mark Madoff – knowing that his “dark night of the soul” had to be very light less in order for him to elect to end his life.  Beyond that, the pain that Bernie Madoff must feel is, too, enormous.  Even as I write this I can almost hear readers shaming me for having some compassion for Bernie.  But, honestly, I do.  The pain a father must feel knowing that his actions contributed to a depth of depression that contributed to his son taking his life is great.  I cannot honestly imagine that pain.

According to Ira Sorkin, Bernie Madoff’s attorney, Madoff will not attend the funeral of his son, Mark, out of consideration for his daughter-in-law and grandchildren.

Housed in a medium security prison for the rest of his life, Bernie Madoff has had his life reduced to working for around 12 cents per hour and wearing simple prison clothing day in and day out.  His brilliance will not be remembered.  Rather he has become the butt of jokes – “Charles Ponzi created the scheme, but Bernie Madoff with all the money!”  What a sad legacy.

As I said…I know the feelings of loss, inadequacy, hurt and what I and others have described as a “dark night of the soul.”  My new book describes my experience well.  Perhaps this excerpt will give some insight into that feeling that comes from facing a consequence that seems so great that ending a life is the only option – at least at the time.

SECOND CHANCES – excerpt:

At 7:11 p.m. that evening, I grabbed the Yellow Pages and began calling clinics─anyone who I thought might help me. Frankly, I don’t recall what I was looking up. I do remember that there were no listings under “suicide”─in fact, that wasn’t a category. So I looked up physicians, psychologists, psychiatrists, anything that started with a “P”. Honestly, I don’t remember who I did call─a proctologist, as far as I knew. The only thing that flooded my mind was I needed help.

“You’ve reached the office of Drs . . . Our office hours are from 8:30 a.m. to 5:00 p.m. Our office is closed. But if you’ll leave your name and number, we’ll be happy to call you first thing in the morning. Have a nice day!” Somehow, when you’re thinking of ending your life, “have a nice day” just doesn’t seem appropriate. And unfortunately, that’s the message I got over and over.

Calling became an obsession. It was the one thing I could do, one action that I felt in life I had some control over. “Just one more dial,” I would say to myself as I pressed the buttons on the phone, listening to the ring, hoping for an answer.

“Dr. Benson’s office.” That was the second time that day I was stunned. After getting recording after recording, I was somewhat unprepared for the possibility that someone would answer. Yet someone did.

“I need to talk with someone. I’m from out of town,” I somehow stammered.

“Actually, our office is closed. I was just walking out the door and thought this was my wife. Give us a call in the morni . . . ”  Before he could finish his sentence, I blurted, “I’m thinking of committing suicide!”

Silence─then the voice said, “Let’s talk.”

For the life of me, I can’t recall what was said between us as I lay on that lonely hotel bed. We could have talked for two minutes, twenty minutes, or two hours. I just don’t remember. What I do recall is that this total stranger, a man who I had never met, took the time to help me see past the grand illusion I had created and uncover the real me inside.

That night was the darkest night of my soul. That call that I shared didn’t make it better. It didn’t eliminate the consequences. It didn’t remove the pain. Rather, it gave me hope, hope that if I could make poor choices that would, most certainly, bring painful consequences, I also possessed the power to make positive choices with positive results.

His comment to me still resounds in my heart today. He said, “You have made a terrible mistake, but YOU are not a mistake! The choices you make moving forward will define your life forever and provide the foundation for your children’s lives. Think carefully as you make this choice!”

When he said to me, “YOU are not a mistake,” it hit me─while the past cannot be changed, the life we are given and the choices we make moving forward are the only things that count. I felt a burden lifted. I could not change the past; all I could do was face the consequences.  It was within my power to make good choices, now and in the future, that would produce a fruitful outcome. That was my destiny!

For information on how to obtain a copy of SECOND CHANCES – visit www.secondchancesbook.com or Amazon.com


Daniel Frishberg and the Importance of Money Management – Irony in Deception!

August 8, 2010

A day or so ago a scammed investor lamenting his/her plight said that the word is Dan Frishberg is growing tired of the negative publicity he’s receiving on the web.  It has become worry some that the choices that he’s made are producing consequences that tarnish his reputation.

My immediate response is “Every choice has a consequence!”  In fact, I shared that if Dan had taken a different path early on most of what he’s experiencing today would be quite different.  For example – had Dan shared with his followers that he’d made mistakes in his vision of BizRadio, that BizRadio was in financial trouble and that he would open the revenue source from his RIA to provide a steady stream of repayment to those who were defrauded or scammed in one way or another, I suspect the outcome would have been much more positive.

Alas…Dan “The Money Man” did not.  Rather he is desperately trying to continue to put out the message that he is “The Money Man” through a series of NEW blogs touting his expertise.  There is IRONY here.  I call it the IRONY of DECEPTION and the likely outcome is that Dan is digging the hole deeper for his ultimate demise.

I am not going to link my blog to his – as that has the effect of drawing attention to his work.  I will, however, share part of his blog comments and, after some comments, ask YOU for yours.  Perhaps I am off base and I’m man enough to accept that – so if your comments reflect a different opinion of Dan and his choices – PLEASE SHARE.

DAN STATES THE FOLLOWING:

Today I’ll share with you two general systems of money management that will help you how complex you want to take your strategy for managing the money even if you do not all. Good management of working capital is necessary to reach a compromise between liquidity and profitability. It is widely believed that if you can not manage your life, you can not begin to manage your money.

Let me repeat his comment: “It is widely believed that if you can not manage your life, you can not begin to manage your money.”  Time after time from numerous emails and phone calls, I have been told that Dan was challenged in managing his life – at least his financial life.  It is not for me to judge, but one might easily come to the conclusion that money management is an issue for Dan considering that investors money funded BizRadio and BizRadio was the “loss leader” (Dan’s comments not mine) that propelled his RIA and earned him personally a reported $700,000 per quarter.  Financial success on Dan’s part or the trappings of a successful scam – using other people’s money to accomplish his personal objective leaving other people victims?

Dan further states:  “You must understand that leveraging your money with good management can turn a relatively low investment business situation / in a dynamic Moneymaker. Wise money management is essential for a balanced and happy life. gives practical advice for managing money among others for gambling and trading of the shares. money management can mean acquiring more control over expenditure and revenue, both personal and business perspective.”

Dan seemed to practice what he preaches here.  Sure enough he turned a low investment into a good business situation (for himself) at least for a time.  Where did the BizRadio money come from?  I suspect that investors (victims) could now come out of the woodwork and share their stories of how they were suckered into believing that Dan “The Money Man” was wise and all knowing – touting the vision and ILLUSION that BizRadio was a good investment for them.  Reality Check:  BizRadio was only good for Dan.

Financial stress resulting from low skills of money management may affect our ability to make good decisions, harm our relations on the physical and mental health, and ultimately to function well in life. Indeed, deficient money management is one of the main causes of bankruptcy among unseasoned traders. Management of financial assets is an effective way to manage financial assets, one that may take place in various forms. Management services for financial assets generally provide include but not limited to, Control services, credit cards, debit cards, margin loans, automatic transfers from one account to another, and same brokerage services.

LET ME ASK A QUESTION:  How many people in the Houston – Dallas markets are suffering (I mean truly suffering) financial stress due to the representations of Al Kaleta and Daniel Frishberg?  Both are shameful representatives of the financial community.  Dan, through his actions, has caused stress to both physical and mental health of many who have lost their life savings, believing that Dan Frishberg lived up to his self proclaimed status as “The Money Man.”  Now, Dan is desperately trying to save his reputation.  What Dan fails to realize is that his actions destroyed his reputation.  Dan is effectively nothing more than a con man who hasn’t yet realized that feeding his ego off of other people’s money is costing him everything.

The sad part is this could have been different.  But then the same could be said for Bernie Madoff.  Both Dan Frishberg and Bernie Maddoff have two things in common: (1) they are both intelligent and (2) they are both crooks.  The only difference – Bernie is in prison.  Dan hasn’t been charged.  YET…

YOUR COMMENTS ARE WELCOME.


50 Years for a Ponzi Scheme – Thomas “Tom” J. Petters has a lot of time to think ahead! My this sounds like the BizRadio scam…

April 13, 2010

Every choice has a consequence.  That is my opening sentence as I address groups all around the country on choices and consequences or business ethics.  As a speaker and fraud prevention consultant I seem to get the question asked often, “Are there more bad guys doing this type of thing these days?”

No…believe it or not there aren’t.  Rather, the access to money has dried up and the “bad guys” are starting to surface.

Take the example of Tom Petters of Wayzata, Minnesota, who was sentenced to 50 years in prison for running a $3.65 billion Ponzi-type investment fraud scheme, one of the largest ever. Convicted last December on all 20 criminal counts that he faced, including wire fraud, mail fraud and money laundering, Petters now faces a long time in prison for his choices.

Petters and his co-conspirators bilked investors who thought their investment money was being using to buy consumer electronics for resale to retailers such as BJ’s Wholesale Club and Costco. Several other executives of the company, including Deanna Coleman, Robert White, Michael Catain and Larry Reynolds, who have all previously pleaded guilty in the case.

Petters solicited billions of dollars in financing for PCI, telling investors he’d use their funds to buy and re-sell consumer electronics and other goods for a profit. Those transactions never occurred, and Petters used investor money to prop up his other, often legitimate, businesses and for his own personal use.

Now…for those who follow my blog this sounds painfully like, what I am referring to as the BizRadio scam.  Put in perspective, didn’t BizRadio investors put money into various investments thinking that they were either high yield bonds or real estate investments, when in fact, the money was diverted into BizRadio which had no practical purpose other than to grow Dan Frishberg’s investment portfolio.  And, now – stopped by the filing of an involuntary bankruptcy – BizRadio would have been sold back to Salem Communications and Dan Frishberg gained personally in that he got airtime out of the deal.  Let me repeat he got air time.  Not, the investors got the benefit of airtime which is an asset that could be sold, but Dan Frishberg got the airtime.

Something smells Frishy!

But back to Tom Petters…

U.S. Attorney B. Todd Jones said the sentence – the longest ever in Minnesota for financial fraud – demonstrated that authorities would not shirk from vigorously investigating and prosecuting financial crime.

Petters’ crimes first came to light last year, but prosecutors presented evidence that he was bilking investors as early as the mid-1990s. He defrauded a Twin Cities investment firm in 1996, lying to Data Sales Co. Inc. officials about his plans to use their funds to buy electronics from 3M Co. and re-sell the goods to retailers.

In 2000, he attempted to defraud GE Capital, which had extended him a line of credit. Petters submitted false purchase orders, fraudulent checks and other documents in an effort to convince the company he was using its capital to buy and sell goods.

To lure investors, Petters often talked of his “special” relationships with Costco and other discount retailers, witnesses testified in the case. When investors asked to talk to the retailers he did business with, or inspect the goods he claimed to be selling, Petters deflected them, saying prying would scare off buyers.

As investor money flowed into PCI’s accounts throughout the early- to mid-2000s, Petters funneled it elsewhere. He used hundreds of millions of dollars to support his other business ventures, such as Polaroid and Sun Country, which operated under the umbrella of his Petters Group Worldwide entity. He used millions more for personal gain.

Early investors in PCI reeled in significant profits, and PCI was at one time receiving more offers from investors than it needed to accept. But the scheme began to unravel amid the credit crisis of late 2007 and early 2008. At that time, it became increasingly difficult for PCI to lure new investors to cover high-interest payments owed to earlier investors, many of which were hedge funds.

Petters, his employees and associates grew increasingly desperate in early fall of 2008. It was then that PCI executive Deanna Coleman went to federal law enforcement officials, presenting them with evidence of the fraud. She agreed to secretly record conversations with Petters, gathering further evidence that was later presented at trial. Petters was arrested in fall of last year and jailed until his trial.

According to the Wall Street Journal: “The U.S. attorney’s office in Minnesota said Mr. Petters continued “to lull investors” even after agents executed search warrants on Sept. 24, 2008, for his home and office, also in suburban Minneapolis. On Oct. 3 of that year, he was arrested. The investigation was conducted by the Federal Bureau of Investigation, the Internal Revenue Service and the U.S. Postal Inspection Service.”

Apply this to the BizRadio – Dan Frishberg case and see the similarities.  The only dramatic difference is that Petters crimes have come to trial and sentencing and the other is still under investigation.  But…EVERY CHOICE HAS A CONSEQUENCE.

YOUR COMMENTS ARE WELCOME…


So you’re guilty of a Ponzi scheme – What About Your Spouse? Just ask Victoria Meisner – The long arm of the law reaches farther!

March 14, 2010

I am not proud to admit this, but it is a fact and common knowledge for many years.  In the mid-’80’s I perpetrated a Ponzi scheme.  I did it without the knowledge of my wife, my business partners, in fact, no one knew until…

The outcome.  Total financial ruin.  The loss of many of the relationships I held dear.  The loss of my career.  And, yes, a Prison sentence.  But, what about my spouse.  In the early ’90’s when I agreed to plead guilty there was never (to my knowledge) any consideration that anyone would be prosecuted other than ME.  But now some 20 years later with what seems a proliferation of Ponzi scheme perpetrators – well – times they are a changing.

An article in the South Florida Sun Sentinel summarizes it well:

They once could be found at the sides of their charming, wealthy husbands — leading lives of privilege and glamour.

Now those years of comfortably basking in money are gone, replaced by lawyers’ questions and the scorn of former friends. Their posh lives had been built on their husbands’ schemes.

Call them “The Real Housewives of South Florida Ponzi Schemers.” Among them is Boca Raton mother Victoria Meisner, whose husband, Michael, masterminded a $37 million fraud.

Her story, however, is different from that of most of the other wives. For like her husband, she’s a convicted felon. On Friday, she found out she will be going to prison.

Victoria Meisner, 53, was sentenced to 18 months’ imprisonment for filing a false tax return. She pleaded guilty in November to reporting $49,626 of total income in 2003, despite helping rack up more than $430,000 in personal expenses that year on a debit card belonging to her husband’s business, Phoenix Diversified Investment Corp.

Meisner’s case highlights one of the inevitable questions for authorities investigating Ponzi schemers and how they threw around their ill-gotten gains: Should family members whose luxurious lifestyles were funded by dirty money face criminal charges themselves?

Back to reality…  I was convicted of embezzlement and tax evasion.  One I stole money from my clients in a Ponzi scheme fashion and two, I didn’t pay taxes on stolen money.  Yes, the IRS can put you in prison for things like that.  But, the more important question that people often asked of me was – “What did you do with the money?”  My response was – “Look around.”

Like so many fraudsters (can’t say I like that term, but it fit at the time), I lived, for my community a lavish lifestyle.  As I look back I have often wondered if people, including my wife and business partners, didn’t know or at least wondered.  It seemed in the late ’80’s that what ever I wanted I got.  BMW – Mercedes – Jaguar – BMW – Airplane, etc.  The “boy toys” were big and for the most part far more expensive and lavish than others I was connected with had.  Likewise, what my wife wanted she got.  Nice home, custom window treatments, fine furniture, and if that weren’t enough – another much finer home under construction.  We had it all (by out community standards)…but it was all an illusion!

FOR THE RECORD:  My now, ex-wife, had no clue.  I was a master illusionist.  I profoundly regret the pain I caused her and am indeed thankful for the grace and dignity she maintained in continuing her life and being the extraordinary mother to our children she has and continues to be.

Now…some 20 years later comes the Meisner case which opens a new and potential frightening door that heretofore seems to have been closed.  SPOUSAL PROSECUTION!

John Gillies, head of South Florida’s FBI office, has called the Meisner case “a cautionary tale to spouses that they cannot claim ignorance about their financial situation when they know better.”

Defense lawyers who specialize in white-collar crime agree that just because a spouse or family member isn’t actively involved in a fraud, it doesn’t mean he or she is safe from criminal prosecution.

“Willful blindness in the criminal system is tantamount to actual knowledge if there are sufficient red flags to alert an individual that criminal activity is afoot,” said Sharon Kegerreis, a Miami-based attorney and former federal prosecutor.

Among those warning signals: a sudden, unexplained influx of wealth into the household or curious patterns of moving money between bank accounts.

Looking back – could my wife explain our sudden increase in wealth?  If you looked at our lifestyle and the lifestyle of my partners, was there a difference and how could that be explained?  And, why was it that when I got a call to deposit money into our account for a purchase that my wife made, I had to consistently transfer money between accounts?  The tell tail signs were there.  But no one (not the least of which ME) wanted to look.  I created a grand illusion and all was comfortable – and who wants to disturb that comfort?

While most wives (this assumes that crimes are committed by men – which is not always true), do not get prosecuted…there is a growing trend to bring a new level of accountability to bear when it comes to protecting the victims of crime and punishing those who perpetrated the crime.

In the Victoria Meisner case – she was not convicted of the actual Ponzi scheme, but rather for filing a false tax return.  (Once again the IRS becomes a successful tool when it comes to busting fraud).

“I knew that my family and I maintained a lavish lifestyle well in excess of the ‘total income’ reported,” she acknowledged in a sworn statement last November.

Somehow I imagine that she regrets ever speaking those words – cause those are the words that put her in federal prison.

But what of her husband – well…his sentence is around the corner.  Michael Meisner pleaded guilty in September to mail fraud, loan application fraud and tax evasion. He is scheduled to be sentenced March 19 in West Palm Beach federal court, and faces up to 30 years in prison under sentencing guidelines.

FOR THE RECORD…I am not in any way proud of my past acts.  I often, as a speaker today, am asked, “If you had it to do over again, would you do it?”  Frankly, I chuckle at that question that arises over and over.  The answer, “NO!”  But, with that said, I cannot change my past, yet I can use the incredible lessons learned and hope that being open, honest and willing to share them might help others in their life journey.

I speak to audiences all over North American and one thing that is a common theme – EVERY CHOICE HAS A CONSEQUENCE!  In this case, perhaps it is now time to consider that consequences can arise from failing to look and be aware just as much as they are from being on the front line of the crime.

YOUR COMMENTS WELCOME!


Robert “Joe” Halderman pleads guilty to David Letterman extortion! Why did he do it?

March 9, 2010

Well…this story is all over the news so one might ask what can a simple blog add that has not been stated in, almost, every other media outlet reporting today?

Answer: Perhaps motive!

The real question is – how can a person, like Joe Halderman, a former CBS News producer make such a choice that has the possible implication of prison?  But first, let’s see what is being said in the new reports:

CNN states:

Robert “Joe” Halderman, the former CBS News producer accused of trying to blackmail comedian David Letterman, agreed Tuesday to plead guilty to grand larceny in the second degree in exchange for six months in jail, five years probation and 1,000 hours of community service.

In a separate statement, the former “48 Hours” producer admitted that he tried to extort $2 million from Letterman to keep quiet about the “Late Show” host’s sexual affairs.

“On the morning of September 9, 2009, I gave a sealed envelope to Mr. Letterman’s driver as he waited outside of Mr. Letterman’s Manhattan home,” Halderman said in the statement, called an allocution. “I asked the driver to give the envelope marked ‘Privileged and Confidential’ to Mr. Letterman.

“The envelope contained a number of documents, including a document I created entitled ‘Treatment for a Screenplay.’ This so-called treatment was just a thinly veiled threat to ruin Mr. Letterman if he did not pay me a lot of money.

“Later that month, on three different occasions I met with Mr. Letterman’s lawyer, Jim Jackoway, to work out the details of the extortion. On October 1, 2009, I deposited a check for $2 million that Mr. Jackoway gave me.

“I knew throughout this time that I was not engaged in a legitimate business transaction with Mr. Letterman and that what I was doing was against New York law. I understand that my attempt to extort $2 million from Mr. Letterman violated his and his family’s privacy. I promise to respect their privacy in the future.”

Then-District Attorney Morgenthau said Letterman gave Halderman a $2 million check in October and Halderman deposited the money into a Connecticut bank account the day before he was arrested.

So does the above answer the question – WHY?

Not really.  Rather, the next to the last paragraph in the CNN news report gives us the clue.

Halderman closed his statement by expressing “great remorse” and apologizing to Letterman and his family and to the family of Stephanie Birkitt, one of the women Halderman said had engaged in a sexual relationship with Letterman. Birkitt was an assistant to the talk show host and a former live-in girlfriend of Halderman.

SO TO THE QUESTION OF WHY?

First, when a crime like this is committed, typically there are three components that come together to create the “perfect storm.”  NEED – OPPORTUNITY and  RATIONALIZATION.   Let’s explore these and see if we can find out where Joe came from when he concocted this hairbrained idea.

First, OPPORTUNITY is easy.  Few people have the connectivity to David Letterman to pull this off.  Frankly, I can’t imagine many who read this thinking that they would even know how to get close enough to Letterman to pull of such a stunt.  So the OPPORTUNITY portion was primarily effected because Halderman was a “former” CBS News producer.

Second, NEED.  That might be a bit more complicated.  It was reported that one of the ladies that Halderman accused Letterman of having sexual relations with was Stephanie Birkett who happened to be a live-in girlfriend of Halderman in the past.  Perhaps (just speculation) Halderman held some ill intent toward Birkett and Letterman – a man’s scorn?  Maybe…  Or, as reported here, Halderman was debt ridden and desperate.    The report states in part:

“I also tried very hard to convince my ex-wife to not go, or to at least not go so far.”

Halderman complained his ex, Patty Montet, “was not interested in my opinion and is determined to make this move.”

Halderman’s daughter decided to stay with him in Norwalk, Conn. But his romance with Stephanie Birkitt, one of Letterman’s sidekicks on the “Late Show,” soured, sources said.

“It was devastating for him having his son move away with his ex-wife. … He loved his kid like I’ve never seen a father love his child,” said Jeff Dyment, 43, who used to coach a youth soccer team with Halderman.

It was in the midst of that emotional maelstrom that Halderman – perhaps inspired by the true crime stories he produced for a living – tried to shake down Letterman by threatening to reveal the comedian’s numerous affairs with female staffers, prosecutors charged Friday.

Emotion is a strong driver for NEED.  Bernie Madoff illustrated that when he effected the largest Ponzi scheme in history.  His need:  the need to be right!

Lastly, RATIONALIZATION.  If you were to ask anyone who effected a crime (long before they did it), would it be right to extort or blackmail someone?  Well, you and I both know that the answer that Mr. Halderman would have given would be a resounding – NO.  Yet, in the midst of emotional turmoil with high NEED and OPPORTUNITY – anyone (an I mean ANYONE) can rationalize bad behavior.

The RATIONALIZATION key is the part that allows a good person to make bad choices and, as I say to every group I speak to, EVERY CHOICE HAS A CONSEQUENCE.

Perhaps Mr. Halderman can learn from his past misjudgements and focus on a more effective way to be a father, person and business associate.

YOUR COMMENTS ARE WELCOME.