Saturday, September 29, 2012

ANATOMY OF A FRAUD: Money making techniques used by "genius" investors: Get in, Milk, Get out.

  • Get in (with the intention to make a quick buck, not to "build" a company)
  • Leverage (borrow significant money based on new purchase) & Ponzi (borrow more to pay off old loans)
  • Inflate value (create an artificial bubble, or use props to prop up the stock prices)
  • Milk (Over-pay yourself for work that you assign to yourself - use investors' money to do it / or public money or others money)
  • Cut benefits / margins to others (employees, suppliers, other stakeholders)
  • Milk bankruptcy laws
  • Get out, having made your gains
  • Use smart tax laws to save money
  • If necessary, hide money off shore, so that you don't have to pay taxes, and so that no one knows about your sudden gain in wealth / no one gets suspicious
  • Hunt for the next game (fat cat CEO style)
  • Ethics? What on Earth is that?...And you know what? Once you have made your first hunt and kill, and you see how much "fun" that was, you are now hooked!!! Why work for someplace making $10, $20, $50, or $100 per hour, when you can make big money in one go, in short time periods...
These are just some of the techniques used by people in businesses to commit fraud. Of course, people regularly indulge in cooking the books. Greed is simply part of human nature. In fact, I would be surprised if books were NOT cooked in businesses in some way or another, to lower taxes, and hide personal expenses by executives.

It needs a smart brain to smell or sight a smart fraud. I think I have some of that talent. Just show me your books, people...

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