It's a National Corruption Crime Wave

The frauds among us
A Journal News editorial - February 27, 2009

The more the sour economy puts the squeeze on all of us, the more illusions about the people and entities around us seem to come into view. As Warren Buffett's classic quip goes, "It's only when the tide goes out that you learn who's been swimming naked." Not so funny, though, are the people damaged, even left destitute, by the confirmed and alleged ripoff artists, those who abused the trust of others to sustain lavish lifestyles and frolic in what used to be deep waters.

Both in the very same day, Pearl River investment firm owner James Nicholson was accused of defrauding hundreds of investors out of more than $100 million and North Salem Supervisor Paul Greenwood was hit with fraud charges stemming from his investment management business. His alleged fraud totals a jaw-dropping $553 million. That's just this week's headlines. Details of Bernard Madoff's purported $50 billion Ponzi scheme are still coming to light, likewise Texas businessman R. Allen Stanford's alleged $8 billion fraud. Together, they make your mattress look like the Fort Knox of investment havens. Those of us without millions in the bank might marvel at how those who do (or did) have been so easily duped by fake balance sheets, fraudulent statements and other illusions. But not even the mighty Securities and Exchange Commission could sniff out Madoff's mess, despite benefit of a roadmap provided by various sources. And some trappings of wealth just seem to engender more trust and more confidence. Stony Point-bred Nicholson lives in a lovely brick mansion in upscale Saddle River, N.J. Greenwood and his wife have hosted numerous equestrian and fundraising events at their 250-acre horse farm that straddles the Southeast-North Salem town line. Greenwood forswore any payment for the town supervisor position.

Nicholson is accused of defrauding hundreds of investors through his Pearl River-based Westgate Capital Management LLC, using faked investment reports and misleading marketing brochures to draw in more money. Problems came to the surface when investment checks began to bounce. Greenwood and his investment management business partner are accused of using their clients' money as their own personal piggy bank - blowing through more than $160 million on personal expenses, including horses and collectible teddy bears, according to a civil complaint by the Commodities Futures Trading Commission. But there's no room for anyone to be smug. As the tide goes out, it becomes increasingly clear that the entire nation has been "swimming naked" as acute problems in the housing markets, Social Security, health care, employment and taxation, to name just a few areas of both illusion and delusion, are bared. It just took wholesale calamity to start opening eyes.