William Black is a professor at the University of Missouri-Kansas City. He is also the author of a wonderful book titled The Best Way To Rob A Bank Is To Own One which chronicled the S & L crisis of the 1980’s. He is making the rounds again and speaking out about the latest wave of corporate fraud in the wake of the current financial crisis.
Mr. Black focuses on “control fraud.” This is fraud that is committed against a business by the folks who control that business. It’s corporate looting. Black likens the practice to a term used to describe the way the mafia operates their businesses i.e. “The Bust Out.”
The mafia does not take over businesses to run them in a legitimate fashion. The mob takes over and controls businesses to loot them.
The same is true for many corporations. Black draws comparisons with the mob and corporate CEO’s who pump up their stock and then dump it before it tanks. Investment banks collect huge underwriting and origination fees for underwriting bonds then dump the losers on their captive investors.
But isn’t this illegal just the same? And won’t the government prosecute these wrongdoers? Not based on their track record. The number of convictions arising out of the current financial crisis: Zero.