Three of the biggest stories of our times continue to go unreported.
1) For decades now, hometown drug pushers have ravaged their domain with impunity. Way too many of our own acquaintances tell of kin who’ve fallen into the personal hell these monsters are selling. The saddening tales we're confronted with are truly appalling. Surely, family catastrophe has always been a local issue, havoc wreaked on a community’s own, happening down the block or on the next one over, but the fish wrappers cover the drug scourge as some kind of Latin American thing, a preposterous foreign “war” trumped-up to take place thousands of miles away, thus not on their beat.
2) Starting in the 1800’s, elected Washington stooges have enabled Wall Street Dons to systematically plunder the country’s wealth by gangbanging our holdings of public securities with fraudulent bookkeeping transactions known as “short sales” that purport to sell real securities while only posting a fake accounting entry in the swindled buyer’s account that must be closed out at a later time with an equally phony entry before any genuine shares actually pass hands. Because a short-seller doesn’t even own the certificates he represents that he’s selling to us, these grifters have to buy them later on in order to slip bona fide stock into Mob-controlled accounts of marks who’ve been duped into thinking they own some. Gangland’s vast resources generate a gigantic tidal wave of selling, and the immense volume of bogus shares swamps prices of real securities, crushing the entire civilized world and Iceland last time.
A while back, Bloodbath Mary Schlepiro, Chief Obfuscation Officer of the Securities & Excuses Commission (SEC), cancelled public hearings on short-selling, claiming that short-selling had nothing to do with the Financial Apocalypse caused by short-sellers, and that got media attention for one day, pretty much the only kind of media attention short-selling ever gets. Our own calls to waterboard the complicitous b!tch to find out what the real reason was for slamming the door on those proceedings, remain unheeded.
3) Since 1981, CEOs and them have skimmed the entire amount of our December 1980 savings into their own pockets with another legislated swindle cleverly mislabeled "stock options". CEOs and them have their sights on holding 90% of the nation's wealth any year now, up from a whole lot closer to 0% back there in 1980, but talking heads aren't talking about this one at all, presumably because they‘re counted among the swindlers, or at least working for a bunch of them. CEOs grabbed control of the media about the time they started making middle class victims out of even seasoned investors.
And so, when, just the other day, fish wrappers, talking heads, and the remarkably ill-informed gurus they keep rolling out, plus whatever else we’ve got now, jumped all over this UBS rogue trader story with indignation, financial headlines screaming that one scapegoat or another needs to be served up for letting this guy drop $2.3 billion (at latest count) right under their somebody's very nose, we at The MacDougal Post were inclined to just let it slide. One more irrational take in another fantasy episode of the fictionalized soap opera our preposterous newshounds want us to think we’re living in. And on a tale that’s been told many times before as well.
However, duty calls, and thinking back on one great big theme drilled into an Auditing 101 class back in the day, the first words out of our professor’s mouth, constantly repeated at least daily, we feel it warrants presentation here and now. NOBODY can stop a good bookkeeping fraud. No accountant, nor accounting system, nor Government regulator, nor Government regulation, NOBODY NOWHERE NOHOW can beat a diligent, resourceful, hard-driven arch-criminal in the pursuit of accounting no good. And please, never ever count on your company’s independent auditor finding the creep out.
Your company’s independent auditor is the very target that this overachieving super-villain is hell-bent on beating.
There’s a lot to this, but when you finally get to the nitty-gritty, the part about accounting fraud prevention, the relevant part anyway, eventually it all turns on the confirmation of unrelated party transactions by the unrelated parties. The outfit under audit buys or sells something from or to somebody on the outside, and that somebody checks his records and confirms that said transactions took place.
So here’s what’s up with that. In a famous case from a decade or so ago, the bad guy started doing business with customers he totally made up, some run by people who were totally made up too, and he and a cohort or two were everybody else as well. He and his posse did all the paperwork for all parties involved, played the parts of every outsider, whether client, clerk, supervisor, CFO, CEO, or anybody else needed to pull the crime off. As time went by, the whole insane business was mostly being done this way. In the hands of a real gourmet numerologist, cooking the books is ridiculously time consuming, and there probably weren’t any minutes left in the day for the guys to go out and find some real sales to log.
After all was said and done, this fair-sized public company had been reporting remarkable growth in what turned out to be no business at all.
And it went to show everybody just what CPAs, and all your gallant pencil pushers out there with them, can be up against too.
With any company, at the financial control level all we’re really talking about is numbers. Realizing this, Post subscribers should be able to understand how the accounting profession might expect dodgy types to continue to pull off stuff like this. Take a few days if you need to, and most non-accountant investors do, and come to grips with your own risk here. (Helpful hint: If an industry keeps coming up with all manner of lunatic calamari like this, maybe one might want to stop throwing one's hard-earned and even harder-saved wherewithal into the horror of it all.)
The only protection a stockholder, or anybody else for that matter, has is the character of the people he’s gotten himself thrown in with. All a financial controller is going to do for you is try to stop crimes. That's right, only try.
Stopping doesn’t always happen. In the profession it isn’t even expected to. Except for the perp(s), the human factor is zero on this one. What we've got here is a real good bookkeeping fraud.
It’s all about numbers with the real good bookkeeping frauds, meaning you don't always have a handle on them. Sometimes they just get away.
Those slippery little rascals are funny that way.
