Ex-Banker Indicted for Muni-Derivitives Fraud

NYT  - July 21, 2012 -  Phillip D. Murphy, former head of Bank of America's Municipal Derivitives trading desk faced  indictment for wire fruad, conspiracy to defraud the United States and making false entries in bank  records.   He joins 13 other individuals of similar crimes who have pled guilty and their banks JPMorgan/Chase, Bank of America, UBS,  Wells Fargo and company General Electric have paid $700 million in penalties. Bank of America aided the Justice Department's investgation over a period  of 4 years.

LIN CHUMPING TAKES A THUMPING

     Denver Post - Lin Chumping,  a Chinese buyer and seller of rice, has claimed to have paid $60 million for the Atlantic Bank in Delaware.  It  turns out there is no such bank in Delaware and he did not spent $60 million for any such thing as a bank anyplace.  Arrested in China on an unrelated fraud, he  was forced to step down from his "Municipal-level appointment to the Chinese People's Political Consultive Conference", a governmental advisory group.  At least he's gained a reputation for a novel scheme.

GUPTA CONVICTED FOR LEAKING INSIDER INFORMATION

     NYT,etc - Mr. Ragat  Gupta, former CEO of McKinsey and Company and past Board Member of Goldman Sachs, was found guilty and convicted June 15, 2012 for securities fraud and conspiracy.  It's another "victory" for federal prosecuting attorney Bharara in Judge Jed S, Rakoff''s court room. Attorney Bharara has successfully charged 66 executives and traders in the past 3 years on insider trading crimes, with 60 of them pleading or found guilty.  "The government wants to protect investors, sending the message that the stock market is a level playing field and not a rigged game favoring Wall Street professionals" states the NYTimes. 

 

     Mr. Gupta is from Kolkata, India and per the Times article was "an orphan who earned an engineering degree and came to the United States to attend the Harvard Business School on a scholarship.  The global world has been stunned by the charges against Mr. Gupta".  Sentencing has been set  for October but an appeal is likely.

EXECUTIVE COMPENSATION PER EQUILAR, INC.

     NYT - The New York Times has published the total compensation of 200 Chief Executive Officers of U. S. public companies for the year 2011.  These  200 employees averaged $19,801,485 each. Total compensation includes base  salary, cash  bonus. perks/others, stock awards and option awards.  The average base salary was $1,322,908. Heading total compensation list of the 200 is CEO of Apple, Timothy D. Cook, with $377,996,537 (that's $3/8's of a $Billion). The next 4 CEO's are:  David Simon of Simon Property Group with $137,206,818; Lawrence J. Ellison of Oracle  with $77,556.015; Leslie Moonves of CBS with $68,422,211; and  Ron Johnson of J.C.Penny with $53,281,505.  If the annual compensation of the "average" worker is about $58,000.00 and the average annual compensation of the 200 Executives under discussion, the average executive is annual paid 341 times that of the average worker.

     It is not disclosed how many of these CEO's are also the Chairman of their Board of Directors, but it's a fair assumption the majority are also their Boards' Chairman. ALL German and Dutch public companies DO NOT allow dual CEO/Chairman roles.  79% of British companies have a 2-tier CEO-Board Chair relationship. (See Chapter 9, Lax Board of Directors, in the book "The Greedsters", pages 325-353 and especially page 334).

    It's only fair to shareholders to separate the roles of CEO and Board Chairman. The corporation will be better off because of it.

LONG SENTENCES FOR NON-VIOLENT CRIMES VERY COSTLY

     NYT - An editorial in the New York Times raises the question of the costs of long confinement of non-violent prisoners whose early releases would have little risk to public safety and would save $billions of dollars in the long run.  Ask someone who has been fleeced of life-time savings, whose children have been deprived of a good education, whose life styles have been severely altered by "non-violence"  crimes. Their "penalty" is a changed life style.  Madoff's ponzi caused at least two suicides, and who knows the effects of many other "non-violent" crimes.  Today's sentences may be questioned, but isn't living a degraded innocent life destroyed by a crime worse then incarceration for life?  The non-violent crimes are committed by those who should know the consequences, whereas many victims of such crimes unknowingly are at risk. Who should deserve the long penalty?  Certainly not the innocent. A crime deserves a punishment but when is enough? - when is too much?  Tough questions.

STANFORD GETS 110 YEARS IN PRISON

WSJ - .NYT - StarTrib - No longer  "Sir ", but rather "Stir" R. Allen Stanford was handed a sentence of 110 years in Federal Prison on June 15, 2012. (no parole but possible appeal).  Mr. Sanford is detailed on pages 181-202 in the book "The Greedsters". The 6 foot 4 inch Texan maintained his innocence despite testimony by his former Baylor University roommate, James M. Davis, who was also his chief financial officer but main informant.  Mr. Stanford said after being convicted and sentenced, "I am not a thief".  One victim who lost $1.5 million to Stanford said in court, "You deserve what's coming to you. You are a dirty rotten scoundrel".  Federal Judge Hittner, besides the prison sentence,  ordered Mr. Stanford to forfeit $5.9 BILLION in his bank's deposits associated with his misdeeds. A severe prison beating had caused Stanford to suffer a memory loss, but the Judge stated Stanford  had "exaggerated  his impairment" and he was competent to stand trial.  Three of the perpetrators of the largest ponzi schemes have been sentenced: Madoff to 150 years, Petters to 50 years and now Stanford to 110 years.  All three will probably die in jail - were  the crimes worth it?  In 2000 Mr. Sholam received an 845-year sentence for fraud and in 2008, Mr. Norman Schmidt was given a 330-year sentence for an investment fraud. Why don't others learn from these experiences?

BANKS PAY RECORD FINES FOR ILLEGAL FOREIGN EXCHANGE

     WSJ - Sanctions enforced  by the U.S. Treasury Department's Office of Foreign  Assets Control against foreign banks for "moving" sums of money without disclosure to the Treasury have resulted in big fines to several banks.  The Wall Street Journal announced the ING Bank, a unit of ING Group NV (a large Netherland bank) "stripped" mention of some foreign countries when moving large sums through the processing by the U. S. Treasury in Manhattan where most dollar payments are "filtered" to spot terrorists and those involved in money laundering.  ING agreed to a penalty of $619 MILLION.  The Credit Suisse Group AG bank paid $536 MILLION and  Lloyd's Banking Group forked over $350 Million in 2009.  In 2010, Barclays PLC Bank was fined $298 MILLION.  One of the common money routings used Cuba and Iran to get around clearing through Manhattan.  By stripping "little white lies", forming shell companies and other  devices, transactions were most difficult to trace.  So you think "banking" is an honorable profession?  Only sometimes!!! 

3 MORE SNAGGED IN COOKS' PONZI SCHEME

     StarTrib - Trevor Cook was found guilty in a massive Ponzi scheme in 2010 and is now serving a 25 year prison term.  3 more men were convicted  yesterday of varying degrees of fraud and money laundering related to Cook's misdeeds.  Cook concentrated mainly on hedge funds, Jason "Bo" Beckman, Patrick Kiley and Gerald Durand essentially targeted individuals.  Mr. Cook had explained earlier to authorities his program, created by him, dealt with fraudulent currency investments, working through special access with banks that comply with Islamic Shariah law prohibiting interest charges, thereby affording his investments a higher rate of return.  It takes all kinds---.  

ABACAS, A CHINESE AFFINITY BANK

     NYT - In 1984, Mr. Thomas Sung, along with business leaders from the Chinese community that included Lower Manhattan, formed the Abacas Federal Savings Bank. The bank became an important financial source for Chinese  people in northeastern United States.  Because the bank was primarily for Chinese customers, it can be classed as an "affinity bank".  Abacas mortgages were sold to other financial institutions to raise cash for the bank after a "run" occurred on the bank when it was disclosed a bank manager had helped himself to $1 million of customers' money.  It was discovered very lax mortgage requirements applied to many of the sold mortgages, smacking of a scheme.  Ms Jill Sung became Bank CEO and her father Thomas became Chairman of the Board. 

    
 Neither Sung has been charged in the mortgage schemes.  However, 19 "former" employees were charged, with some of them requiring a translator for them to understand the charges.  Mr. Yiu Wah Wong was the most senior manager of the bank and one of those charged.  According to Mr. Edward Starishevsky. an assistant district attorney,  "Mr. Wong was involved in this entire conspiracy from beginning to end".  He was arrested in April and has been free on $100,000 bail. Those charged could face up to 25  years in prison.  It's not uncommon for a specific race or group to be called an "affinity" when gathered together.

DENNY HECKER MOVED AGAIN

     StarTrib - For at least 6 times in 5 months, prisoner Denny Hecker has been moved, this time to the U. S, Penitentiary in Canaan, Pa. from a transfer facility in Oklahoma City. Mr. Hecker has been "given diesel therapy" for breaking prison rules. He has been sentenced to 10 years in prison for fraud. He had compiled debts of $767 million while living a high life style with and through 26 car dealerships. " Diesel Therapy" is an insider's description of penalizing a prisoner by constantly moving him or her from state to state and prison to prison, "to show who's the boss", disrupting contacts and maintaining some semblance of privacy as to where the  prisoner is.  Hecker can be classed as a "greedster" but was not included in the book "The Greedsters" because sentencing came after the book was published.

BEAR STEARNS EXECS SETTLE FOR $275 MILLION

     WSJ - Wreckage from Bear Stearn's March, 2008 demise reared its ugly head once again when it was announced yesterday the settlerment of a shareholders' lawsuit against top executives of the firm. The settlement? $275 million on behalf of sued executives that included Mr. James Cayne and Mr. Alan Greenberg.  What does this settlement cost the executives?  Not much.  When J.P.Morgan Chase took over Bear Stearns in 2008, a $9 billion fund was established by J. P. Morgan for probable settlements.  Part of this $275 million settlement is a statement that executives involved denied any wrongdoing.  An article in the Wall Street Journal stated in 2010, a Countrywide Financial lawsuit was settled for $600 million and in 2009, Merrill Lynch paid $475 million, after these two firms had been purchased by Bank of America.  In 2011. Washington Mutual paid $208.5 million settlement in a lawsuit and was snapped up by J,P,Morgan, and in May, 2012, a $90 million settlement of an investors lawsuit was reached regarding Lehman Bros.  Much of the settlement money came from "Directors and Officers Insurance". 

     It's a warning to all Boards of Directors - be sure the company you represent have you covered with adequate insurance. You're at risk. See  Chapter 9 in the book "The Greedsters".

DUAL ROLE OF CEO/BOARD CHAIR UNDER ATTACK

     WSJ- At  long last, the pendulum is swinging towards non-sharing of the roles of CEO and Board Chairman by the CEO.  According to head-hunter Spencer Stuart, 20% of S&P companies now have separate individuals as CEO and Board Chair compared to 12% in 2007.  This development "is creating a second seat of power (and responsibility) at the top of big companies".  Mr. Stephen Davis of Yale's School of Management states "Shareholder resolutions have been critical in opening boards' minds to splitting the chair and CEO".   At Nabors Industries, Ltd., a shareholder's resolution was approved to give shareholders a better way for making choices felt when voting occurs.  A  restriction on shareholders limits a shareholder's vote, however, to one who has held at least a 3% ownership position in shares for more than 3 years to nominate competing candidates for up  to a fourth of the Board's seats. It's a start, at  least.

CLAWBACKS HAVE SHARP CLAWS

Star Tribune - Tom Petters ran a $3.65 Billion Ponzi fraud in 2008. He declared bankruptcy and  has been convicted in Federal Court and sentenced to 50 years in prison.  But - effects of the fraud live on.  The law firm of Fredrickson & Byron in Minneapolis on May 31 announced a settlement with the bankruptcy trustee and returned $13.54 million in fees collected for legal work during the Ponzi scheme period.  The firm stated its payment was fully covered by a professional insurance policy.  The law firm denies any awareness of the Ponzi.  

     Also, the trustee said on May 31 it collected $1.25 million in settlement with the John T. Petters Foundation, monies contributed to it by Petters and others. On May 30, the trustee had announced collecting $19 million from General Electric Capital Corp with GE professing no knowledge of the Ponzi.  These figures swell the Petters clawback total to $299 million. The threat of a court trial showed the sharp claws of the recovery.  Settlements must be approved by Judge Gregory Kishel of the Federal Bankruptcy Court. 

SHAREHOLDERS KEPT IN DARK ON MERGER LOSSES

     Three and a half years late, it was revealed in court documents filed June 3, 2012 (in advance of a shareholder's lawsuit) that in the merger of Bank of America and Merrill Lynch on September  12, 2008, B&A  failed to disclose to shareholders (voting for a Merger in person and in a proxy)) that huge losses to B&A were probable because of the Merger.  Subsequent undisclosed losses totaled at least $14 billion. As these losses unfolded after the Merger, the common stock of B&A fell more than 50%, wiping out about $50 BILLION in market value. Per the New York Times article of June 4, 2012, 2 days after that shareholders meeting, B&A's Board of Directors met and were told of the loss of $14Billion in the 4th quarter of 2008. The Bank's General Counsel, Mr.Timothy Mayopoulos, lost his job the next day after he expressed  surprise by the size of the losses. "He was fired without explanation and immediately escorted from the premises without being given the opportunity to collect  his personal belongings".

      At Merrill Lynch, before the Merger, Mr. John Thain displaced Mr. Stanley O'Neal as CEO and Board Chairman in November, 2007. Previously, Mr. Thain had been Co-Chief Operating Officer for Goldman Sachs, COO and CEO of NYSE and NYSE Euronext, Inc.  Merrill Lynch under-performed badly in 2008 and Mr. Thain finally found B&A agreeable to a merger which  was consummated on September 12, 2008. Mr. Thain received total compensation of $83 million for his less than a year at Merril Lynch. He was slated to be the new CEO and probable Board Chairman of B&A after the Merger was completed.in January, 2009. After 2008 multi-billion dollar losses (with  many days losing $16.5 Million every HOUR of an 8-hour day) at Merrill Lynch for the 4th quarter were announced, Mr. Ken Lewis ( the CEO at B&A who Mr.Thain was replacing) called Mr.Thain, after which Mr. Thain was fired the next day, receiving $93 million for his 53 days associated with B&A.  In 2010, Mr. Thain became CEO of the CIT Group Inc. at a salary of only $6 million. Wall Street is unbelievable, isn't it?  

WSJ SCOOPED BY NEW YORK TIMES

The Greedsters Sequels originates in Minneapolis, Minnesota.  Where the printed editions of home-delivery-week-day Wall Street Journal and New York Times papers are completed aren't totally known, but the Journal's  Monday, June 4, 2012 home edition carried nary a trace of the news pertaining to Bank of America's current announcement of the lack of notice to its shareholders of the pending horrendous losses in the merger with Merrill Lynch in December, 2008.  The New York Times carried a front-page story in  IT'S June 4, 2012 home edition with the column headline, "Merrill Losses Were Hidden Before Merger". 

 

     This news item is a major development from the 2007-2012 financial disaster and will be detailed in another Sequel.  Somebody at the WSJ certainly has egg on his or her face but you can't win 'em all!!

"THE GREEDSTERS' ON KINDLE

     NOTICE: The new book "THE GREEDSTERS" has recently been listed on Kindle, for sale at $16.99. The Greedsters had its initial printing in late April, 2012 and is now being distributed in the market. The 400-page paperback will be available through most bookstores and other forms of availability.  Early comments from readers include "astonishing" and "a must for every household and business".  "THE GREEDSTERS SEQUELS"  is available on the Internet as to current information on  individuals, companies and organizations contained in the book plus any related items not contained in the book because of its publication date. The purpose of the Sequels is to keep "The Greedsters" book up-to-date so it has a life of its own.

THIEVES STEAL BRONZE STARS FROM VETERAN'S GRAVES

     Mpls. StarTribune - A cemetery in Isanti County, Minnesota has been raided by thieves removing 5-pointed bronze stars, with a holder on back to display an American flag, from graves of veterans.  The Commissioner of Minnesota's Department of Veteran's Affairs Larry Shellito has made it one of his priorities for the State agency to have  a 2-year supply of these special bronze stars to "accommodate the 10,000 Minnesota veterans who die each year". They cost $ 30,00 each but the metal in them is worth much less.

DENNY HECKER DEFIES PRISON RULES

     StarTribune - Ex-car dealer Denny Hecker has been moved to a 5th prison in 4 months for defying certain prison cell phone rules.  Such  repeated moves is termed "diesel therapy" by the "trade".  Mr. Hecker is serving 10 years for fraud.  He owned or shared ownership in 26 car dealerships but declared bankruptcy owing debts of $767 million.
 A bankruptcy auction of assets included cars and boats and 71 fancy watches, one of which was a $24,100 Rolex.  His car advertisements often featured his picture. 

     He married his girl friend by cell phone while both were in separate prisons but a judge declared the marriage null and void because of the phone ceremony.

CHESAPEAKE ENERGY CUTS COMPENSATIONS

      AP-Criticism of certain payments have led Chesapeake Energy to consult with an outside compensation advisor.  As a result, the company will cut the pay of its chief executive officer, name an outsider to the seat of Chairman of the Board, eliminate the personal use of company aircraft and ban personal company loans to executives.  From now on, outside directors will be paid $100.000 in cash and $250,000 in company common stock per year.  The company claims these changes bring outside director compensation to be more similar to their corporate peers.  A good move!

ND FLOWS PAST AK AS US #2 OIL PRODUCER

     WSJ - In 2008, North Dakota produced 144,000 barrels of oil daily, ranked 8th in US.  In March, 2012, ND pumped 575,490 bbls daily to take the # 2 spot ahead of Alaska (pumped 567,480 bbls daily. Texas pumped 1,700,000 bbls daily in February, 2012 for the # 1 spot). Oil production has skyrocketed in ND since hydraulic fracturing or fracking has tapped geologic shale for gas and oil.  

ND has its Bakken shale which is triggering budget balances ahead of plan, motel rooms reserved years ahead, highways clogged with trucks and even restaurants with long lines of waiting customers.  Happy days for the roughnecks but beware of boom days.

SHAREHOLDERS OF JPMORGAN HAD THEIR CHANCE

     WSJ-NYT - The annual shareholders meeting for J P Morgan/Chase was held in Tampa, Florida on Monday, May  14, 2012.  The meeting couldn't occur at a worse time after the disclosure of horrific trading loss the previous Thursday.  Two majors items appeared on the Agenda: (1) Should Jamie Dimon remain as CEO, and (2) If he remains Chief Executive Officer , should he continue as Chairman of the Board. Both issues were eventually voted in the affirmative.  It seemed shareholders had their chance to demote or even oust Mr. Dimon from one or both of those most important corporate positions.  Many shareholders felt strongly that Mr. Dimon  should be replaced, especially after the "London Whale" fiasco of losing more than $2 billion -  and maybe as much as $4 billion - in crazy (it turned out) investments in derivatives called credit default swaps. Why didn't the shareholders vote negatively and "toss the rascals out"?  As a practical matter, votes at shareholder's meetings  don't carry the weight you might think  they should. A ton - and a  majority - of votes were probably declared by proxy BEFORE  the meeting, before the London Whale Affair was made public on May 10, 2012,  Mr. Dimon, apparently in late April, 2012, was advised of a potential major problem in the London investment office. In the ensuing 2 weeks or so,  Mr. Dimon was trying to modify or at least calm a brewing storm. He couldn't as the trade values had  started to skid,  JPM was forced to come up with gobs of cash and tried to find some sort of buyers for all or at least part of their positions, to no avail. The point is - it's very doubtful many shareholders knew the enormity of the problem - Friday, before the Monday  shareholders' meeting, 
   
JPM announced a FURTHER LOSS OF  $ 200,000,000 that single day and there were few if any buyers for their positions.

The shareholders' proxy votes were before the fact - before the announced losses.  Mr. Dimon's jobs as CEO and Board Chairman were judged before the roof fell partly in.  

DIMON SURVIVES JPM/CHASE ANNUAL MEETING

     WSJ/NYT - On Monday, 5/14/12, the Annual Shareholders' Meeting of J P Morgan/Chase was held in Tampa, Florida. This only four days after announcing the fiasco of losing a plus $2 Billion in investment/trading losses in London mainly by the so-called  "London  Whale", Bruno Michel Iksil . Shareholders at the Tampa meeting, in person or by proxy, represented majority affirmative totals to (1) retain Mr. Jamie Dimon as CEO and (2) retain Mr. Dimon on the company's Board of Directors where he is Chairman. These two actions swim against the corporate tide of gradually separating the CEO/Board Chairman tie held by the same person. 

 

     Mr. Dimon was contrite in his speech to the shareholders, taking full blame for London losses because "the buck stops with me".  It was disclosed on Friday, 5/11/2012, a further $200,000,000 (that's million) was lost on that day, large losses were still occurring and total losses could reach a total of $4 Billion.  It should be noted the total votes cast on Monday, 5/14  could include proxies exercised BEFORE  the previous Thursday's announcement of London losses.  Proxies could be recalled in person at the meeting.  Mr. Dimon is not off the hook but he has a fine reputation to ride upon.

MR.JAMIIE DIMON LOSES HIS LUSTER

     May 13, 2012 - A startling trading loss of $2 BILLION dollars (and could get worse) by J. P. Morgan/Chase was exposed to the world today.  Mr, Bruno Iksil, a JPMorgan trader in London, has been called the "London Whale" for piling up huge risks in credit default swaps, a form of derivatives, which threatened to upend the entire derivative market. CEO Jamie Dimon knew of the terrible overall risk on April 13, 2012, and dismissed it by labeling it "a tempest in a teapot".  

 

     NYT's writer Jason Zweig suggests the principle of famous physicist  Richard Feynman be applied.  The principle is clear: "You must not fool yourself - and you are the  easiest person to fool".  A handy investment reminder is the biggest dangers in finance is self-deception.   Columnist Joe Nocera has stated our financial system has lost both its moorings and its ethical compass.  During the last half of April and early May, JPMorgan was LOSING $200 million per day.  Mr. Dimon has now admitted the bank's strategy was flawed, complex, poorly reviewed, poorly executed, and poorly monitored. Ouch!!! it's enough to sink the London Whale.   

NEW YORK CITY LAW FIRM COLLAPSES

     May 13, 2012 - WSJ - NYT  -  The old and huge New York law firm of Dewey and LeBoeuf seems to be calling it quits because of over-powering debts.  Partners in droves have packed up and left.  Partners were required to put money into the firm when they joined - and that  investment is gone.  Even worse, pensions may be wiped out or severely reduced and money paid to them in the past might be reclaimed.  The firm with 100-year roots had 2,000 world-wide employees. 

 

     Former Vice-chairman of Dewey, Morton A. Pierce, is indicative of the hurt that will be suffered: his contract calls for $8 million annually and he says the company owes him $61 million. His "Boeuf" (beef) is he may never be paid what he  is owed.

CHESAPEAKE ENERGY REBUKES CEO/CHAIRMAN

     5/8/12- WSJ - The Greedsters Sequels covered Mr. Aubrey Mclendon being booted out as Chairman of the Chesapeake Energy Corp on May 5, 2012.   While CEO and Chairman of the Board, he amassed an amazing array of personal assets during his long tenure of plus 20 years. He was involved with a hedge fund, two venture-capital companies, owned part of the Oklahoma City Thunder, owned a portion of a TV station, restaurants, a cattle ranch, cancer-treatment center, and outlets vending soft drinks. A variegated businessman !!!

BANK OF AMERICA SHAREHOLDERS IRATE

    May 10, 2012 - WSJ - B&A common stock was down 58% in 2011. Of course the shareholders were  unhappy but even so, at the annual stockholder's meeting on 5/10/12, 92% of the shareholders approved the CEO's 2011 compensation of about  $7 million including a base salary of $950,000 and $6 million in

restricted stock. 

 

     A demonstration at the Charlotte, N. C. shareholder's meeting "staged a boxing match dubbed 'Bank of America vs America'" and bounced a large ball around labeled "debt".   

 

     Bank of America is widely referenced  in "The Greedsters" in 24 separate pages.

REVERSE GREED FOR FREDDIE MAC

     NYT - The Federal Government controls the mortgage giant Freddie Mac after shoveling $13 billion into the company in 2010 to rescue it from default. Then, in 2011, Uncle Sam  forked over an additional $ 7.6 billion.  Now, on May 4, 2012, Freddie Mac has requested $19 million more for the first quarter of 2012 ( loss for the first quarter totaled $1.2 billion).  All of this can be labeled "reverse greed".

MANY COLLECTORS ARE GREEDY!!

     Denver  Post  - Heritage AuctIions announced an anonymous buyer paid $418,250.00 on May  4, 2012 for the baseball that rolled through the legs of Boston Red Sox first baseman, Bill Buckner, that enabled the New York Mets to win the game and eventually the World Series in 1986.  It proves there is a serious buyer for anything.  You wonder how many baseballs Mr. Buckner has collected. 

ONE OF WORLD'S RICHEST MEN GETS DEMOTED

      WSJ - 5/3/2012 Founder, Board Chairman, and CEO Mr. Aubrey Mclendon of Chesapeake Energy Corporation was dealt a blow by his Board of Directors when they voted to  replace him as Board Chairman without an immediate replacement. As a leader in the recent gas-drilling frenzy and fracking of shale formations to release trapped gas and oil, Mr. McClendon had a neat deal with the company that allowed him to purchase a 2 1/2% share in every well drilled by the company.  That right was terminated when he stepped down on Tuesday, May 1 as Chairman.  Talk about sweet-heart deals: In the first full year of his right to buy into new wells, Chesapeake drilled 19 wells. In 2011, they drilled nearly 1,700 wells, and Mr. McClendon's personal cost of the 2 1/2% of each well was $457.2 million.  He borrowed money from private sources -  as well as from Chesapeake without the Board being fully informed.  It's another example of misuse of a financial position when being CEO and Board Chairman.  More and more  companies are finally realizing the financial risk of the dual voting positions of CEO and Board Chairman. being the same person.

FORMER NY STATE SENATOR SENTENCED TO 7 YEARS IN PRISON

     A former New York State Senator, Carl Kruger, pled guilty before Federal District Court Judge Jed Rakof to accepting $1 million in bribes.  Despite pleas for a lighter sentence, the Judge said, " once corruption takes hold, democracy becomes a charade". A co-defendant, Dr. Michael Turano, received a 2 year sentence for lesser bribes but should go to prison "because he did help to corrupt our government".  Judge Rakof is a very active Judge and has been deeply involved in important inside trading cases.

WILT SCORED 100 POINTS 50 YEARS AGO

     WSJ - 2/28/12- With NBA basketball playoffs underway, it's only proper writer Gary Pomerantz recalled the historical basketball game played in Hershey Stadium on March 2, 1962. Wilt Chamberlain, on the Philadelphia Warriors team against the New York Knicks, scored 100 points, made 36 of 63 field goal attempts (without 3-point shots), and sank 28 of 32 free throws. At 7 foot 1 inch and 260 pounds, his stride coming down  the floor measured 8 feet.  Dolph Schayes of the Syracuse Nationals has said Chamberlain was "the most perfect instrument made by God to play  basketball".  A heart attack in 1999 killed Wilt at the age of 63.

ARTHUR ANDERSON EX-CEO FINED $ 400,000.00

     Den.Post--Recently, H. Clayton Peterson,  former Chief of the Denver office of accounting firm Arthur Anderson pled guilty to charges of relaying inside information on a pending acquisition of Mariner Energy.  He was sentenced to a 2-year probation, 3 months of home confinement, and a $400,000.00 fine  As a Director of Mariner, Peterson relayed inside information to his son, Drew, who is awaiting sentencing after pleading guilty.  He passed inside information on to hedge fund manager, Bo Brownstein, who made $2.5 million on the information.  He also pled guilty and is awaiting sentencing.  Peterson's attorney stated his client had limited assets, although records show liquid assets of $2.1 million and real estate worth  $1 million in Denver, Beaver Creek, and Phoenix.

LONG HAIR A CRIME

     LATimes- Seven members from a splinter cult-like Amish group from Bergholz, Ohio recently may face life imprisonment  for assaulting other Amish males by giving unwanted haircuts to those who have married. Such acts, according to Amish religion, are regarded as especially "heinous".  FBI agents conducted the haircut raid, and those committing  the crimes have been charged and face sentences of as much as life imprisonment. Removing men's beards and women's hair after marriage is prohibited by the conventional Amish.

NADEL DIES IN PRISON

      WSJ- The Greedsters page 61:
     Ponzi artist Arthur Nadel  died at the age of 80 in Federal Butner prison, N. C. He was guilty of fleecing the elderly of $397 million - a mini-Madoff. He faked suicide, then turned himself in.  His auditor was also fraudulent. Nadel said "I have been my own worst enemy".                    

ALL ABOUT RICHARD G. "DICK" GRAY, SR., D.Sc. (HON), AUTHOR OF "THE GREEDSTERS".

     Dick Gray is the author of the unique, fascinating financial book, "The Greedsters", published in the year 2012.

  It has been said Dick Gray is a true Renaissance Man of many talents. Born on April 6, 1918 in Peoria,  Illinois, he likes to describe himself as one who has lived many different types of lives during his 94 years through 2012.

  He  was educated as a Petroleum Engineer at Dartmouth College, the University of Wyoming and the University of Minnesota, from which he graduated in 1940. Montana State University has recognize d his contributions to science with an Honorary  Doctorate Degree in Science (D.Sc. (Hon). TheUniversity of Minnesota has honored him with an  Outstanding Achievement Award and he has received many other similar recognitions, including the Proclamation at  the State Capitol  by the then Minnesota Governor Tim Pawlenty of Dick Gray Day for the State of Minnesota on April 24, 2006.

  As a U.S. Naval Officer during WWII, he was aboard an amphibious attack ship (APA) and covered  68,000 miles of the Pacific Ocean in areas of engagement that included the invasion of Iwo Jima.

  In 1948, he founded the Minnesota Corporation, Zero-Max Industries, Inc. and for 33 years sold a patented mechanical variable speed device throughout the world. He owned a company in Basel, Switzerland, Zero-Max, A.G., which was used for a free-port distribution system for Europe. Zero-Max Industries Inc. was sold in 1981 to the Miki Pulley Company of Kawasaki, Japan with American headquarters in Golden Valley, Minnesota. Zero-Max products are widely sold and used in the world today.

  In 1968, Mr. Gray joined the Board of Directors of the Investors Group of Companies in Minneapolis, a mutual fund complex of 35 companies, sold by IDS (later American Express and Ameriprise Financial), at the time the largest complex of funds in the world and today has assets in excess of $one hundred million. He was a Board member of all companies for 25 years and CEO for 5 years. He was a member of the Investment Company Institute (ICI) of Washington, D. C. and became familiar with numerous major financial companies, their executives and many of their policies.

  Also in 1968, Mr. Gray founded what today is The Freshwater Society. He led a drive to raise $multi-millions to plan, build and equip a 52,000 square foot research facility which was donated to the University of Minnesota's College of Biological Sciences for freshwater research. He continues to be a Board member of the non-profit The Freshwater Society.

  A world traveler, Dick  Gray has had residences in Minnesota, Colorado and Arizona, where he has been active in a multitude of non-profit organizations, including the Minneapolis YMCA, Center for the Great Lakes, Minnesota Planned Parenthood, Science Museum of Minnesota, Wolf Ridge Environmental Learning Center, Lamont-Doherty Geophysical Laboratory atColumbia University and the Marion Downs Hearing Center Foundation in Denver , Colorado.

  Because of his worldly business, financial, charitable and executive experiences, he felt he was qualified to write "The Greedsters", a book full of greed examples  on Main Street, Wall Street and other financial scenes around the globe

What is "THE GREEDSTERS"?.

 Post (2) : April 16, 2012- :"The Greedsters" is a new financial book that is fascinating and easy to read   - a must  for anybody's library. This 400-page paperback describes the History of Greed in the Western World; Greedsters Today; Greedsters Ponzi Schemes; Greedster Madoff; Greedster Stanford; Greedster Banks; Greedsters on Wall Street; Greedsters on Main Street; Lax Boards of Directors; the Federal  Reserve System; and seven pages of Terminology and new financial terms. The book is available for $16.99 at  most bookstores, on Kindle and Kindle Fire and other "Readers", from Amazon or directly from The Cherry Creek Co., LLC, 130 Holly Lane North, Plymouth , MN. 55447.