Both of these individuals operated for years with little to no oversight, despite the fact that their massive businesses appeared to be nothing more than thin facades.
The damage that these men have done isn't just to wealthy investors - many charities, universities and foundations invested with these men. For instance, Holocaust survivor and Nobel Prize winner Eli Wiesel had invested the entire $15.2 million of his charitable foundation with Madoff. Nothing is left. Those funds were earmarked to help Darfuri and Ethiopian refugees to rebuild their lives, amongst other things.
But Madoff and Stanford are just the tip of a very cold and ugly iceberg - with the rise of computer crime and the increasingly complicated nature of financial transactions, a wide range of financial crime is now threatening all of us. Identity theft is on the rise, as is phishing. Thousands of Americans are about to lose their homes due to fraudulent or illegal mortgage practices. And, of course, we may yet find that significant financial fraud was behind the current financial sector collapse - investigations are ongoing.
It seems to me that what we are experiencing right now is a massive crime wave sweeping the country - just the same as if thousands of masked muggers had suddenly taken to the streets. But at the moment we don't have anything like the resources we would need to fight it.
We need lots more law enforcement officials with specialist training in financial crime.
That's why Obama's budget now includes significant funds to add:
- Additional FBI Agents with financial training
- More federal prosecutors and civil litigators and
- Bankrupcy attorneys
All of these will help to protect investors and will safeguard the American taxpayer. The disastrous decision to leave financial oversight in the hands of the SEC has proved unbearably costly. From now on, we need to invest more in strong federal oversight and prosecution, not only to brign these criminals to justice but, hopefully, to deter such crime in the first place. Money well spent.