December 12, 2008
Why are they always such old guys?
Conrad Black, Robert Maxwell, Ken Lay, and others besides. So they defrauded huge amounts of money from the general investing public – possibly you and I via pension funds and long-term investments – and despite being caught, they have lived the good life, spent the money and are too old to truly pay a penalty.
Bernard Madoff is 70. How do you really exact justice for fraud on a 70 year old? He has probably set his family up with lovely homes, cars and lifestyles around the world. Some of the money is spent and simply unrecoverable. All that is left is to send him to prison. Sure, that won’t help his reputation – but will he survive the stress of a trial?
Once a trial has dragged on and on, he will be perhaps 72 or 73. How long a jail sentence can someone of that age serve? Is that how society is repaid for his sins?
More importantly, how big a fraud does it take before regulators spot it? $50bn does seem rather large. Why wasn’t it nipped in the bud when it was just a few billion? Hark at me… Just a few billion… Like it is small change to me!!
Now that the hedge fund bubble is burst(ing), I am sure that many more of these will be uncovered. It is difficult, however, to image bigger frauds. But, since hedge funds use such deliberately obscure structures, how easy will it be to prosecute this and other similar crimes?financialguy