What a week for scam artists it was! At the beginning of the week, Illinois governor Rod Blagojevich was arrested for corruption after trying to sell Obama's Senate seat, and after that it was like a game of Check Out This Corrupt Sleazebag. (Which was never even a game before, really.) Here in New York, three potentially world-class scam artists were unveiled, men whose ball-sizes and levels of moxie are rivaled only by the amount of money they managed to rip off.
On Wednesday, we met Carl Butcho, the 26-year-old chef and caterer charged with putting $361,000 of luxury goods (mostly dog-walking supplies, somehow) on his boyfriend's Ernst & Young corporate credit card. He claimed he was framed, but this seemed unlikely when a restaurant he worked at told the papers about his weird behavior, like when he said he had a "giant fortune" and used "intestinal cancer" as an excuse to get out of work three months in. Also he claimed to be the son of a "coal tycoon" who does not, it seems, exist.
But Butcho's crimes, while entertaining, did not compare in magnitude with Marc Dreier's. The Harvard- and Yale-educated Park Avenue lawyer was arrested on Sunday for impersonating another lawyer; we hoped that meant he was wearing a fuzzy nose and glasses but actually, it was soon found out, he had utilized a "box of cellphones and a series of phony Web sites and e-mail addresses" to scam hedge funds out of $380 million dollars. The implications of this massive fraud are still being worked out, but Dreier's bail was denied (at his bail hearing, the ADA called him a "Houdini of Impersonation") and the 250 lawyers he employed are looking for new jobs.
We thought that seemed like a big deal until last night, when Bernard Madoff, founder of Madoff Investment Securities and former NASDAQ chairman, confessed to Feds that he had been running a "giant Ponzi scheme" and that $50 billion of investor money was gone. It's now looking like he might have been boasting (ugh) about that figure, and it's more like $17 bil. But nonetheless, investors from Geneva to Palm Beach have had their faces ripped off and their lives turned upside down, and no one is going to Israel this year.
Well. Anyone going to top that? Probably. Floyd Norris noted today:
Readers of the classic book “Manias, Panics and Crashes,” by Charles Kindleberger, should not be surprised. He documented how the frauds appear when the mania fades.
Or, as Warren Buffett has said, "It's when the tide goes out that you learn who's been swimming naked."
Or, as we always say: Balls that large don’t stay in pants for long.