See previous posts (See “Does a Leopard Change Its Spots: New Case Reprise, Nov 1; “Where’s the Personal Accountability, Nov 2, and “The Whole Thing is Largely a Joke, Nov 3).
Our blogging team has moved into a new, but related, quadrant of thought about bank recidivism in returning to illegal behaviors, ushered in by Joe Koletar’s observations regarding the motivations of the prosecutors involved. Joe adds, “I could go on and on about this. I saw it in 1969, when I first got involved in Federal law enforcement. It is a structural issue. Probably no more than 5% of Federal prosecutors serve a full, 20-30 year career. Most want to get their ticket punched and then move on for financial or political reasons. “
Daven Morrison’s reaction: “Sheesh. That can make any one be even more cynical. I think this is what Geithner did – punched his ticket and joined a hedge fund—the same financial industry “clique” that almost caused a collapse in 1999 with LTCM.”
And now, we hear from Sridhar Ramamoorti: “To continue the Fox and Chicken House analogy, indeed it seems that the chickens have come home to roost after “Mr. Fox” was appointed Treasury Secretary (you should read his book, “Stress Test”). A new name for LTCM : Long Term Chicken Management!
What you have described re government employees leaving for the private sector or vice versa (a conflict of interest, ever since the shameful episode of Tom White at Enron, more on this below) is now called the “revolving door problem.”
From Wikipedia: While serving as Vice Chairman of Enron Energy Services, Thomas E. White had actively pursued military contracts for the company and in 1999 had secured a prototype deal at Fort Hamilton for privatizing the power supply of army bases. Enron had been the only bidder for this deal after White had controversially used his government and military contacts to secure key concessions.
In his first speech just “two weeks after he became secretary of the Army, White vowed to speed up the awarding of such contracts” like the Enron Ft. Hamilton contract, despite the fact that he still held a considerable interest in Enron. A Pentagon spokeswoman responded to suggestions of a possible conflict of interest by saying that “Defense Secretary Donald Rumsfeld sees no conflict and has complete confidence in the Army secretary”.
The Washington Post reported that in late October 2001, White made numerous phone calls to Enron executives including Vice President Jude Rolfes, former CEO Jeff Skilling and the then current CEO Ken Lay. Shortly after the calls were made, White unloaded 200,000 Enron shares for $12 million.”
In the book, “The A.B.C.’s of Behavioral Forensics (Wiley 2013), Koletar, Morrison, and Ramamoorti describe the hidden costs of fraud. We’d like to hear YOUR views regarding the hidden costs of fraud prosecutors punching their tickets and then exiting through the revolving door.
Join us for more insights into behavioral forensics (behind fraud and similar white collar crimes) from the authors of ABCs of Behavioral Forensics (Wiley, 2013): Sri Ramamoorti, Ph. D., Daven Morrison, M.D., and Joe Koletar, D.P.A., along with Vic Hartman, J.D. These distinguished experts come from the disciplines of psychology, medicine, accounting, law, and law enforcement to explain and prevent fraud. Because we are inspired to bring to light and address the fraud problems in today’s headlines, we encourage our readers to come back and revisit us regularly at BringingFreudtoFraud.com.