bring on the funkhouser

Elitist Attitude Helps Uncover Fraud

Time was, U.S. regulators couldn’t be counted on to spot a fraudulent money manager if he was tooling around the Cayman Islands in a rhinestone-studded Lamborghini with a pile of dot-matrix-printed financial statements and his stripper girlfriend beside him. But now that the financial crisis has spurred the government to funnel billions of taxpayer dollars into beefing up oversight of the sector, they’re apparently much better at it. Witness the following anecdote of how Cameron Funkhouser, executive vice-president of Finra’s newly created Office of Fraud Detection and Market Intelligence, uncovered the Ponzi scheme perpetrated by one Kenneth Wayne McLeod, a 48-year-old money manager who targeted law-enforcement officials in Pennsylvania, using two things: the Internet and elitist thinking.

Once the case was in Funkhouser’s hands,” Bloomberg reports, “he did what any top investigator would do: He Googled.”

The results were disturbing. One warning sign was that McLeod’s education and experience weren’t typical of other experts in the profession. Funkhouser also came across a local news clip of McLeod loading coolers onto a chartered bus for a trip to the Super Bowl in Miami.

Good thing they got him early. Next year, he might have sprung for a plane — or at least someone to help him load the coolers.

Niche-Market Madoff Duped Law Officers in Ponzi With a Twist [Bloomberg]

Elitist Attitude Helps Uncover Fraud