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Tue

16

Dec

2008

Swindler Nation
Tuesday, 16 December 2008 12:19

by Stephen P. Pizzo

"It's only when the tide goes out that you learn who has been swimming naked."

- Warren Buffet

As I read the story of the latest Wall Street fraudster, Bernard Madoff, I was struck by something interesting – at least to me.

Over the years as I covered mobsters and other white collar criminals, I was surprised to discover they all had the same weakness. While millions, tens of millions and even hundreds of millions of dollars went through their crooked hands, most of them lost most of it.

I recall those bilked by these guys all asking the same question once these guys were arrested, “Where'd all the money go?”

Charlie Bazarian, one of my personal favorite S&L crooks, swindled banks and thrifts out of as much as $200 million during the 1980's. But by the time the feds locked Charlie up most of it had vanished. Was it off shore? Nope. It really was gone.

Where did it all go? Here's the corker...almost every time I tracked the money, it turned out to had been invested in other schemes by other white collar crooks. Because, it turns out greedy swindlers can't resist the chance to get in on another crook's swindle. And, since there really is no honor among thieves, the swindler himself gets swindled. I saw it happen more times than I can count.

For example I discovered one of my Colorado S&L swindlers got taken to the cleaners by a mob guy from New York who offered to help him launder his ill-gotten S&L cash by selling him gold bars.... which turned out to be gold-plated lead bars.

In short, swindlers are often the biggest suckers of all.

That observation was confirmed for me once more when I saw the list Madoff's decidedly upscale investors. He may well go down in history as Wall Street's all time swindler's swindler. Madoff -- if you'll excuse the pun – is said to have “made off” with something approaching $50 billion. (Eat your heart out, Bazarian.)

And that's precisely what seems to have happened in the Madoff case. The big fish who got fat feeding off the scrimp over the past eight years, then swam right into the mouth of the biggest fish of them all, Bernard Madoff.

You gotta admit, there's some delicous irony and justice in this case.


Readers often wonder why reporters are among the most cynical folks on earth. Well, cases like Madoff and those who preceeded him, like Bazarian and Charlie Keating, Mike Milken and ever so many more ... are one of the reasons. Those of us who covered their swindles got to see and hear stuff that rarely reaches the public's eyes or ears. It not exactly a conspiracy of silence though. It's more a case of either editors or their lawyers refusing to publish some stuff because they believe it could be too prejudicial, too inflamatory or – in most cases, simply too long, like wonderfully entertianing and revealing transcripts of FBI wiretaps.

So we get to read or hear that good stuff then they end up in our files -- or if we write books, they end up there.

In such material what we see and hear are men and women who talk about stealing other people's money with the same casualness you and I discuss the weather. They even joke about it.

When the feds moved in on Charlie Bazarian his wife, Janice, an aspiring singer, penned a song sung to the music of the Village People's YMCA:

“F-D-I-C,
It's time to pay the F-D-I-C.
They have everything that you signed and agreed,
You can hang out in bankruptcy.
F-D-I-C.
It's time to pay the F-D-I-C.
You can get yourself clean, you can make an appeal,
The bank is gone and these guys won't deal.”Music seems to be in the DNA of white collar swindlers. Another bank swindler in New York penned a similar ballad, sung to the tune of “Strangers in the Night,” entitled “Swindlers in the Night.”

All very amusing, unless of course you're on the losing end of their humor.

Another reason the public seldom gets the full picture in cases of massive financial fraud is because, amid all the generic crookery, reporters often stumble across the finger and foot prints of high public officials, such as regulators asleep at the switch, politicans running protection rackets in return for contributions, and sometimes even spies and spooks loitering around all the loose change.

When editors see that kind of stuff they tend to just shake their heads, get out the red pencils and scratch it out while muttering things like, “Oh great, more Roswell UFO sightings....”

Anyway, I just wanted to share that with you. And to offer you a sampler of what I just mentioned from a chapter in our 1989 S&L book. (Excuse the scanning errors in some of the text) Half way through reading this chapter you will surely be saying, "Oh, come on Pizzo, what were smoking?" But every word of it was confirmed by a battery of McGrawHill lawyers. Read it and tell me how much of it you read in your local papers back when you were being asked to bail out the S&Ls. Not much, if any.

It will, or should, also cause you to ask yourself how much of the current bailout mess no one is telling us about.

Have a nice day.

Chapter 9: INSIDE JOB
Click Here
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