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Old 12-29-2009, 12:45 AM   #1
Parker Willis
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Join Date: Dec 2009
Posts: 7
Default The CF Finances Thread

I posted this on Robb's blog, I'm not sure how many people saw it.

From “The Best Way to Rob a Bank is to Own One” by William K. Black
(page 1) “A control fraud is a company run by a criminal who uses it as a weapon and shield to defraud others and makes it difficult to detect and punish the fraud (Wheeler and Rothman 1982). Fraud is theft by deception: one creates and expoits trust to cheat others… Successful control frauds have primarily one skill: identifying and exploiting human weakness. Audacity is the trait that sets control frauds apart…Well-run companies have substantial internal and external controls designed to stop thieves. The chief executive officer (CEO), however, can defeat all of those controls because he is in charge of them… Control frauds create a “fraud friendly” corporate culture by hiring yes-men. They combine excessive pay, ego strokes (e.g. calling employees “geniuses”), and terror to get employees who will not cross the CEO. Control frauds are control freaks (Black 2000)… The CEO causes the firm to engage in transactions that are ideal for fraud. Control frauds are accounting frauds. Investments that have no readily ascertainable value are superior vehicles for accounting fraud… Control frauds grow rapidly (Black 1993d). The worst control frauds are Ponzi schemes, named after Carlo Ponzi, an early American fruad. A Ponzi must bring in new money continuously to pay off old investors, and the fraudster pockets a percentage of the take. The record “income” that the accounting fraud produces makes it possible for the Ponzi scheme to grow. .. Control frauds are predators. They spot and attack human and regulatory weakness.

The author William K. Black is legit. PhD in Criminology, JD, professor at UT, regulator during S&L crisis.

With that in mind, I'd like to start a running list of verifiable facts and figures on CF finances. I'd appreciate any help in answering the following questions: Where does the money come from? How is money spent? How much are people paid? What are the expenses? What are the liabilities? Plus any other pertinent questions I forgot to ask.
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