Keeping up with the schemers - Minneapolis / St. Paul Business Journal:

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If Ponzi’s heavyweight status rivaled thatof Joe” Frazier, Bernie Madoff’s scam arose in the ring of internationalo fraud in the manner of Muhammacd Ali. As the new symbolic face of deceit, Madof is certainly not aloneein 2009. In fact, the number of Ponzoi schemes recently uncovered is atan all-time Enter the term “Ponzi” in the Department of Justicse and FBI Web sites and you will receive 750 and 225 respectively.
In response to the Madoff case and and the public and legislative outcry directeds at regulators for failing to protectgthe public, additional investigative scrutiny has already Any company that even swerves lanes on the ’a highway needs to be prepared for a bumpy With some types of like Madoff’s or Ponzi’s, it is easy to see why the underlyinvg conduct is criminal if it’s detected. It is inherently criminal to lie to investors by takingf theirmoney (based on promises to invesy it in a certain legitimatee way), never invest it, and use the money for personal gain or for paying off returns to prior investors to perpetuate the scheme.
In extreme fraud the strike zoneis clear. In many other complex business arrangements may appear confusingor fraudulent, but the ground rules of appropriater behavior are fuzzy and there may be no intentf to defraud. Rather than the black-and-white violations in Ponzii schemes, most business-fraud investigations involve shadeszof gray. The challenge for investigators is separatin g the wheat fromthe chaff. Another challeng facing investigators is determining who was a knowing participantg inthe scheme, as compared with a collateral victim who may have been kept in the dark by the true All players in a regulatedd industry are judged by the companh they keep.
Participants shoulrd watch out for guiltby Madoff’s crimes were not discovered by regulators or but by family members who turned him in. Fueledc by angry investors and voters, and armed with the benefirt of hindsight, Congress predictably startex pointing fingers at the SEC for not catchingonto Bernie. With a new chairwomanb and a new directorof enforcement, the SEC respondexd with an aggressive starft in 2009. More specifically, the SEC has initiated 287 investigationsx since the end ofJanuary (a 32% increase from the same period last year); and has obtaineds emergency orders to freeze the assets of 27 fraudf suspects since February (vs. seve obtained during the same periodin 2008).
Hauntede by the Madoff embarrassment, the SEC is reinvigoratee and committed to conduct prompg andthorough (code word: aggressive) investigations. Just like past swingw of the enforcement pendulum, the prior era of deregulation is being replaced by reregulation in a varietyof corporate-compliancre arenas. Thus, any executive wanting to preserve protect liberties and preserves reputations must prioritizecorporate self-governance through detection, verification and early response.
In this new, reinvigorated securities-enforcemengt climate, executives and regulated companies need to protect themselvees througheffective self-governance and In particular, this requires implementing, investing in and monitoring objective measures to concretelty demonstrate good corporate citizenship like a Passover mark or meritr badge. Once the investigation bell has rung, it’es far too late. The main thrust involves preventiny problems and preparing to The political and legal spears arebeing sharpened. How stronyg is your armor, and how sturdy is your shield ?