Saturday, August 28, 2010

All this and only 21st !?

Penalties needed in fraud settlement
New Jersey became the first state last week ever charged with fraud by the Securities and Exchange Commission. The agency cited the state for misleading bond investors into thinking that it was adequately funding pension funds for teachers and government workers when it was clearly not.

The sordid episode is disturbing on a number of levels. First, the fact that administrations of several governors — both Democratic and Republican — presided over and enabled this wholesale extended fraud speaks to a deep-seated culture of political irresponsibility that is breathtaking.

Even more disturbing is the fact that it took the SEC so long to uncover Trenton's financial shenanigans when it comes to something as monumentally important as the adequate, and lawful, funding of public pension funds.

And to top it all off, when the SEC finally did get around to addressing the wrongdoing, it somehow managed to fail to name any of the treasurers who certified the financial sleight-of-hand or any of the other professionals who presided over the sale of state bonds under fraudulent conditions.

New Jersey accepted the settlement without admitting or denying the findings and the SEC imposed no penalties. Herein lies the heart of the problem.

Until high-ranking politicians and officials are heavily fined or even start going to jail for breaking the law — in this case for helping perpetuate a multibillion dollar fraud affecting both honest investors and hard-working employees alike — we can expect such arrogant licentiousness to continue.

Corruption in New Jersey
Federal authorities arrested 44 people in New Jersey and New York in a broad-ranging corruption and international money laundering investigation that led to charges against two N.J. assemblyman and mayors of Hoboken, Secaucus and Ridgefield. The FBI and IRS investigation also ensnared rabbis from the Syrian Jewish communities in Deal and Brooklyn.

At the center of the case was Solomon Dwek, a failed Deal real estate developer. After he was caught allegedly trying to pull off a $50 million bank scam, he agreed to wear a wire and was allegedly able to ensnare the public officials and religious leaders in a massive web of money laundering, corruption and fraud.

• Full coverage of the New Jersey corruption probe

N.J. ranks 21st in analysis of 'Most Corrupt States'
Tennessee was ranked number one, while Delaware is four, Pennsylvania is 8 and New York is 24.

New Jersey only ranked 41 in embezzlement, but took fifth for arrests in racketeering & extortion. The list, calculating the numbers on a per-100,000 people basis to figure in differences in size, used a decade's worth of federal data analyzing the number of convictons of elected officials investigated by federal agents, organized crime convictions, arrests for counterfeiting, arrests for fraud and arrests for embezzlement.

And where is this analysis of how those states got so ranked?
As money pours into the Gulf, The Daily Beast crunches the numbers, from public embezzlement to private sector fraud, for all 50 states to rank which play dirty—and which have cleaned up their act.

The Daily Beast examined a wide range of available data to rank the level of corruption in all 50 states. Each of the following data sets was weighted equally:

•Public corruption, 1998—2008: Convictions of elected and other public officials investigated by federal agents over an 11-year period, from the Department of Justice.

•Racketeering and Extortion, 1998—2008: Code for organized crime convictions, also investigated by federal agents over an 11-year period, from the Bureau of Justice Statistics.

•Forgery and Counterfeiting, 1999—2008: Arrest numbers for producing or distributing fake money and goods over a 10-year period, from the FBI.

•Fraud, 1999—2008: Arrests for false statements or documents produced for personal gain over a 10-year period, from the FBI.

•Embezzlement, 1999—2008: Arrests for surreptitious theft of money over a 10-year period, from the FBI.

By using a decade’s worth of federal data, we were able to minimize changes in local law enforcement efficacy, though some flaws remain: local cases go undocumented, and the FBI data is self-reported by local law enforcement. When combined, however, the data provides a fairly deep look into which jurisdictions are uncovering the most corruption. We leveled the playing field by calculating the numbers on a per-100,000 people basis.

That debate will surely pick up around the Gulf, as billions begin to flow down to cover what could become one of the biggest [oil] cleanups in world history.
The Daily Beast provides its rogues gallery here.

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