Lance Armstrong Investigation: Is it Affecting the Olympic Team?

The rumor mill is speculating that four US cyclists who would normally be considered for the US Olympic cycling team this summer are not going to race because of some involvement in the Lance Armstrong investigation. This rumor comes from the following statement published by USA Cycling:

Sir Allen Stanford gets life sentence

Well, the US Justice Department comes through on Ponzi schemer, Allen Stanford and sentenced him to 110 years for running his $7 billion Ponzi scheme. 

Unless you follow fraud like I do, you probably have never heard of Stanford. That is one bizarre effect of the Bernie Madoff fraud. If Madoff hadn't come to light about two months before the Stanford fraud came to light, everyone would know Sir Allen since his Ponzi scheme would have been known as the largest in history, by far. If you want to learn more about Sir Allen, including why I refer to him as "Sir" you can read the posts linked here.

Now, I just hope the Justice Department decides to prosecute some of the fraudsters who caused the mortgage meltdown and put the world economy in a the great recession...

Lance Armstrong Investigation: USADA's Charges and Evidence

Photo from cbsnews.com

I found a copy of USADA's letter to Lance and friends online. From what I've read, some of USADA's evidence came to light from their participation in the grand jury investigation of fraud charges as the Grand Jury heard from the likes of Lance's closest associates including George Hincapie and others. The full letter is included below, along with some key points that I got from it:

Lance Armstrong Investigation: It's Not Over Yet...

Photo taken from WSJ.com (Gettty Images)

Just when you thought maybe the Lance Armstrong doping investigation was going to be over, USADA charged him yesterday with being involved in a massive doping conspiracy for over a decade. Now, I have to ask myself, if USADA doesn't have much of a case would they dare dig this up again and take on the amazing Mr. Armstrong again? I mean, doping charges against Lance have been about as effective as efforts to balance the US budget have been! Of course, no criminal charges in serious cases in the US have gone anywhere lately so Lance is joined by all sorts of high profile fraudsters in dodging criminal bullets. As to these charges, they aren't criminal but they could mean he loses his seven yellow jersey titles if they do stick. Here is a summary of the news, hot off the press:

What happens when you mix Pharma with Politics?

Apparently, the result is shady dealing and crony capitalism at its finest. When favors are made to a vendor or customer in business we call it corruption. In this case, internal emails from sources outside of Washington are providing evidence that deals were cut behind closed doors that will cost taxpayers as companies like Pfizer and Merck get profit protection in return for campaigning for Obamacare. This is according to several sources that are covering the findings of an investigation by the House Energy and Commerce committee of negotiations between the drug companies and the White House.

Here are some links to news sources if you want more details:

More on Fraud and the US Department of Justice

In several recent posts, I've been critical of the US Department of Justice's extremely poor record of prosecuting Wall Street executives who were a big cause of our current economic crisis. The executives of numerous large financial institutions took home hundreds of millions in compensation while pushing their firms to commit illegal business practices. It's obvious that basic mortgage fraud was rampant in many organizations and yet virtually no one has gone to jail yet.

Surprisingly, the lack of vigilance by the current administration is so blatant that even the NY Times has published an editorial by one of its columnists that says the current Democratic administration panders to business more than past GOP administrations did! I'd like to see a study of how often the NY Times has compared a Democratic administration to a Republican one and found the scale tipped to the GOP side of things. It has to be rare.

I recommend reading the analysis that this editorial gives and see if you agree with the bottom line that this editorial makes:

Amazing, isn’t it? George W. Bush has turned out to be tougher on corporate crooks than Barack Obama.

Wow--from the NY Times no less! Can Eric Holder and President Obama fall any further than that?!

Fraud and the Mortgage Meltdown

Charles Ferguson, the person who created the documentary on the mortgage meltdown "Inside Job," has written a book on the topic titled "Inside Job: The Financiers Who Pulled Off the Heist of the Century." I can only seem to find it on Amazon's UK website so I don't know if it will be available in the US. In any case, this article in the Guardian, written by Ferguson, has some interesting comments about the fact that the Obama administration and the US Justice Department is not prosecuting anyone. Ferguson also names several banks that he claims were complicit in the meltdown and committed various forms of fraud. He says that It's pretty disheartening to think this much corruption exists in the financial industry and the government isn't doing much to hold anyone accountable for it. Here are a few excerpts:

CFOs and Fraud

EY just released the latest version of its annual Global Fraud Survey and some of the findings are striking.    15% of surveyed CFOs expressed a willingness to pay bribes and 4% would be willing to misstate financial performance to help their business to survive an economic downturn (versus 9% and 3% last year, respectively).  While the survey was conducted globally, according to the report, "No strong patterns were identified in relation to the jurisdictions, industries or types of companies where these issues were more acute."  That is, these results aren't primarily driven by a few extreme locations or types of companies but appear to apply fairly generally everywhere, to all companies.

Causes and Effects of Cheating in America

Here is an article that describes how the family's failure to instill a strong moral compass (and even corrupting the moral compass of some children) is leading to costly short- and long-term economic consequences. It reports a case where several students were found to buy "ringers" to take entrance exams for them so as to get into colleges where they would otherwise be unable to gain entrance. A troubling statement in the article is: "Parents – who presumably foot the bill for hiring these ringers – feel tremendous pressure to give their children the best odds they can for gaining admission to Ivy League schools, where success would mean better prospects for future careers." Assuming parents are supporting or at least not preventing this sort of behavior, the family is truly failing in this case. The least of the consequences from such a situation are described in the article as follows:

Imagine John Edwards on the US Supreme Court

Check out this article about former Senator John Edwards watching a video of himself lying about his affair. The article states that he was holding out hope to be a US Supreme Court Justice. Wow, that is scary...

Lehman Brothers and the U.S. Department of InJustice

60 Minutes aired what is likely to be the last segment on the global mortgage meltdown and how the U.S. Department of Justice has essentially given the key players a "Get out of Jail Free" card. The latest segment focuses on the Lehman bankruptcy and the fraud involved in that case. Steve Kroft of 60 Minutes says that he has given up hope that the Department of Justice or the SEC will bring any charges against the key players. He says that he is "astounded" that the government has failed to bring cases against the key individuals. In the main video...

U.S. States with Highest Consumer Fraud

24/7 Wall Street published an analysis of consumer fraud that ranked the top ten states in terms of complaints to the Federal Trade Commission per 100,000 people. FTC complaints are put in two categories: identity theft complaints and other fraud complaints. Identity theft was the top category with debt collection fraud coming in second. Here are the top ten states as published by 24/7 Wall Street:

Wealth is a Jealous Master

I was reminded today of a classic quote by a former BYU Professor, Hugh Nibley. Here is the quote:

Wealth is a jealous master who will not be served halfheartedly and will suffer no rival—not even God: “Ye cannot serve God and Mammon.” (Matthew 6:24) In return for unquestioning obedience, wealth promises security, power, position, and honors, in fact anything in this world. … The more important wealth is, the less important it is how one gets it.

My reminder came when reading a story in Bloomberg Businessweek about a fraud in France involving breast implants. Here is the rest of the story from Bloomberg Businessweek...

Wall Street Justice III: Fraud Pays in Healthcare Industries

One of my students forwarded me a link to an article describing numerous pharmaceuticals that have committed fraud only to have the CEO receive a hand slapping and a multi-million dollar bonus on the way out the door. Here are a few of the cases mentioned in the Forbes article: