Search This Blog


This is a photo of the National Register of Historic Places listing with reference number 7000063

Sunday, June 13, 2010

SEC CHARGES KENNETH IRA STAR WITH FRAUD

It seems another Wall Street investment guru has come under the scrutiny of the SEC. It looks like in this case the alleged perpetrators just openly stole funds from their client’s accounts. These alleged perpetrators stole the money in a way that they could easily be caught. The way the smart people on Wall Street steal is to pay themselves fantastical amounts of compensation no matter how poorly their companies are performing. Stealing money out of a company through perks and compensation should be the number one class at all business school. What is nice about looting a business via compensation packages is that it is legalized stealing. The government has given such schemes the stamp of approval. Setting up Ponzi schemes and taking money out of client accounts is just stupid.

The following is part of a press document released by the SEC and posted on their web site:

“Washington, D.C., May 27, 2010 — The Securities and Exchange Commission today charged Manhattan-based financial advisor Kenneth Ira Starr with fraud and is seeking an emergency court order to freeze his assets after he stole client money for his personal use, including the purchase last month of a multi-million dollar apartment where he and his wife now reside.

Starr and two entities he controls — Starr Investment Advisors LLC and Starr & Company LLC — have made unauthorized transfers of money in client accounts that ultimately wound up in Starr’s personal accounts. They violated securities laws pertaining to investment advisers in order to perpetrate the scheme.

Most investment advisers do not maintain physical custody of their clients’ assets, and those assets are instead held by qualified third-party custodians such as a regulated bank or a registered broker-dealer. In this case, the SEC alleges that certain client assets were held in a safe in Starr & Company’s offices despite the fact that Starr and his firms were not qualified custodians. Their ability to steal client funds was enhanced by the failure of Starr Investment Advisors to comply with asset custody rules that require firms to engage an independent public accountant to perform yearly surprise examinations of client assets in the firm’s custody.

“Starr breached his fiduciary duty as an investment adviser in the most egregious manner possible — he stole the funds his clients entrusted to him,” said George Canellos, Director of the SEC’s New York Regional Office. “Starr betrayed the trust of some clients who have looked to him for years for investment advice and financial guidance.”

According to the SEC’s complaint, filed in federal court in Manhattan, Starr and his companies transferred $7 million from the accounts of three clients between April 13 and April 16, 2010, without any authorization. The transferred funds were ultimately used to purchase a $7.6 million apartment on the Upper East Side in Manhattan on April 16. When one of the clients detected the unauthorized transfer and demanded the money be returned, Starr reimbursed that client with money siphoned from the account of another client without authorization. The other two investors have not been reimbursed.

The SEC’s complaint alleges that the unauthorized transfers in April 2010 were not the only instances when Starr misappropriated client funds. In August 2009, Starr and his entities began transferring approximately $1.7 million from the personal account of a client and from the account of a charity run by this client. These were all unauthorized transfers. In April 2010, an additional transfer of $750,000 was attempted from an account belonging to this client. But this time, Starr’s plans were frustrated because the bank alerted the client, who then halted the transfer. The client then reviewed the account transactions and uncovered the unauthorized $1.7 million transfers in 2009. When confronted about these transactions, Starr gave improbable explanations before eventually reimbursing the client with money that appears to have come from the bank account of another unrelated party.

The SEC’s complaint names two relief defendants in order to recover client assets now in their possession:

Diane Passage — Starr’s wife with whom he has a joint bank account.

Colcave LLC — An entity through which Starr purchased the apartment.

The SEC’s complaint charges each of the three defendants with violations of Sections 206(1) and 206(2) of the Investment Advisers Act of 1940 and, further, charges Starr Investment Advisors with violations of Section 206(4) of the Advisers Act and Rule 206(4)-2(a)(1) thereunder. In addition to the emergency relief, the SEC’s complaint seeks permanent injunctions barring future violations of the charged provisions of the federal securities laws, disgorgement of the defendants’ and relief defendants’ ill-gotten gains plus pre-judgment interest, and financial penalties from the defendants.”

With all the fraud charges the SEC actually files you hear of almost no criminal follow-up by the FBI or any authority that could put a few of the bad guys behind bars for at least the summer. At the very least they should have to wear a T-shirt for a month that says “I’m A Wall Street Fraudster”.

Sunday, June 6, 2010

MAKER OF ATM AND VOTING MACHINES CHARGED WITH FRAUD

The security firm Diebold, Inc., of Canton Ohio, has been charged along with three former executives with fraudulent accounting. Diebold is listed on Wikipedia as one of the largest ATM manufacturing companies in the United States. The executives at Diebold Inc., tried to get their earnings numbers to correspond to the estimates given by Wall Street analysts. Companies who miss estimates often have their market value slide lower and can even have more difficulty in obtaining credit. Most importantly to many executives is the fact their bonus might not be as lucrative if the stock price takes a nose dive because the management did not meet the expectations of market analysts. The following is an excerpt of the post the SEC has put up:

“Washington, D.C., June 2, 2010 — The Securities and Exchange Commission today charged Diebold, Inc. and three former financial executives for engaging in a fraudulent accounting scheme to inflate the company's earnings. The SEC separately filed an enforcement action against Diebold's former CEO seeking reimbursement of certain financial benefits that he received while Diebold was committing accounting fraud.

The SEC alleges that Diebold's financial management received "flash reports" — sometimes on a daily basis — comparing the company's actual earnings to analyst earnings forecasts. Diebold's financial management prepared "opportunity lists" of ways to close the gap between the company's actual financial results and analyst forecasts. Many of the opportunities on these lists were fraudulent accounting transactions designed to improperly recognize revenue or otherwise inflate Diebold's financial performance.

Diebold — an Ohio-based company that manufactures and sells ATMs, bank security systems and electronic voting machines — agreed to pay a $25 million penalty to settle the SEC's charges. Diebold's former CEO Walden O'Dell agreed to reimburse cash bonuses, stock, and stock options under the "clawback" provision of the Sarbanes-Oxley Act.

The SEC's case against Diebold's former CFO Gregory Geswein, former Controller and later CFO Kevin Krakora, and former Director of Corporate Accounting Sandra Miller is ongoing.

“Financial executives borrowed from many different chapters of the deceptive accounting playbook to fraudulently boost the company's bottom line," said Robert Khuzami, Director of the SEC's Division of Enforcement. "When executives disregard their professional obligations to investors, both they and their companies face significant legal consequences."

Scott W. Friestad, Associate Director of the SEC's Division of Enforcement, added, "Section 304 of Sarbanes-Oxley is an important investor protection provision because it encourages senior management to proactively take steps to prevent fraudulent schemes from happening on their watch. We will continue to seek reimbursement of bonuses and other incentive compensation from CEOs and CFOs in appropriate cases."
Section 304 of the Sarbanes-Oxley Act deprives corporate executives of certain compensation received while their companies were misleading investors, even in cases where that executive is not alleged to have violated the securities laws personally. The SEC has not alleged that O'Dell engaged in the fraud. Under the settlement, O'Dell has agreed to reimburse the company $470,016 in cash bonuses, 30,000 shares of Diebold stock, and stock options for 85,000 shares of Diebold stock.

According to the SEC's complaint against Diebold, filed in U.S. District Court for the District of Columbia, the company manipulated its earnings from at least 2002 through 2007 to meet financial performance forecasts, and made material misstatements and omissions to investors in dozens of SEC filings and press releases. Diebold's improper accounting practices misstated the company's reported pre-tax earnings by at least $127 million. Among the fraudulent accounting practices used to inflate earnings and meet forecasts were:

Improper use of "bill and hold" accounting.
Recognition of revenue on a lease agreement subject to a side buy-back agreement.

Manipulating reserves and accruals.
Improperly delaying and capitalizing expenses.
Writing up the value of used inventory.

Without admitting or denying the SEC's charges, Diebold consented to a final judgment ordering payment of the $25 million penalty and permanently enjoining the company from future violations of the antifraud, reporting, books and records, and internal control provisions of the federal securities laws.

The SEC charged Geswein, Krakora, and Miller, in a complaint filed in U.S. District Court for the Northern District of Ohio, with violating Section 17(a) of the Securities Act of 1933, Sections 10(b) and 13(b)(5) of the Securities Exchange Act of 1934, and Exchange Act Rules 10b 5 and 13b2-1; and aiding and abetting Diebold's violations of Sections 13(a), 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Exchange Act Rules 12b-20, 13a-1, 13a-11, and 13a-13. In addition, the SEC charged Geswein and Krakora with violating Exchange Act Rules 13a-14 and 13b2-2 and Section 304 of the Sarbanes-Oxley Act. The Commission seeks permanent injunctive relief, disgorgement of ill-gotten gains with prejudgment interest, and financial penalties. The SEC also seeks officer-and-director bars against Geswein and Krakora as well as their reimbursement of bonuses and other incentive and equity compensation.”

Most people should feel just a bit uneasy to know that the company responsible for the security of their bank and many other financial transactions has just been found guilty of accounting fraud. Diebold Inc. seems to have a lot of issues in regards to honesty and integrity. The following is from Wikapedia and helps to outline some of the company’s ongoing problems.

“In August 2003, Walden O'Dell, then the chief executive of Diebold, announced that he had been a top fund-raiser for President George W. Bush and had sent a get-out-the-funds letter to 100 wealthy and politically inclined friends in the Republican Party, to be held at his home in a suburb of Columbus, Ohio.

In December 2005, O'Dell resigned following reports that the company was facing securities fraud litigation surrounding charges of insider trading.
In March 2007, it was reported by the Associated Press that Diebold was considering divesting itself of its voting machine subsidiary because it was "widely seen as tarnishing the company's reputation".
In August 2007, Wikipedia Scanner found that edits via the company's IP addresses occurred to Diebold's Wikipedia article, removing criticisms of the company's products, references to its CEO's fund-raising for President Bush and other negative criticism from the Wikipedia page about the company in November 2005.”

Sunday, May 30, 2010

SEC GETS NEARLY 180 MILLION BACK FOR INVESTORS

The SEC has forced Millennium Partners to return 178 million dollars to investors. Unfortunately this distribution of funds fraudulently obtained by Millennium was from an enforcement action started way back in 2005. Can the wheels of justice turn any more slowly when it comes to financial crimes? The following is an excerpt of the action taken by the SEC and posted on their government web site:

“Washington, D.C., May 21, 2010 — The Securities and Exchange Commission today announced the completion of a distribution of more than $178 million to investors affected by improper market timing by Millennium Partners and its related entities. The Millennium Fair Fund distributions went to more than 1,000 mutual funds and annuities.

“The total distribution of more than $178 million in this case further demonstrates the SEC’s commitment to holding wrongdoers accountable and recovering funds for injured investors from illegal activity,” said George Canellos, Director of the SEC’s New York Regional Office.

The Sarbanes-Oxley Act of 2002 gave the SEC authority to increase the amount of money returned to injured investors by allowing civil financial penalties to be included in distributions. Prior to Sarbanes-Oxley, only ill-gotten gains could be returned to investors.

In 2005, the SEC brought an enforcement action charging Millennium Partners, L.P., Millennium Management, L.L.C., Millennium International Management, L.L.C., and several individuals with devising and carrying out a fraudulent scheme to avoid detection and circumvent restrictions that mutual funds imposed on market timing. The Millennium Fair Fund distribution fully reimburses the recipient mutual funds and annuities for their injury from the market timing. Pursuant to the Plan of Distribution, any remaining funds will be sent to the U.S. Treasury."

It appears that in this case the Sarbanes-Oxley Act that was mentioned so prevalently in the press when it was passed in 2002, made a difference in regards to the amount of the recovery for investors. Under Sarbanes-Oxley civil financial penalties were increased which allows for increased compensation for the parties who were harmed by criminal activities.

Sunday, May 16, 2010

TWO SHORT SELLERS FOUND TO HAVE VIOLATED THE RULES

The SEC has caught two more individuals that were illegally shorting stocks. This is the first enforcement actions brought under rule 105. Rule 105 is meant to help stop the malicious market manipulations which has caused harm to the markets and has driven many retail (individual) investors away. Short selling when used as a hedge against sharp losses is a good thing. Short selling as a method of gambling is a dangerous thing to do for the short seller. The only time it is not dangerous is if the short seller has taken his own risk from the gamble via manipulating the market so that the stock will go down. It is like playing with a loaded deck of cards and that is perhaps a greater threat to capitalism than communism, fascism or any other ism.

The following is an excerpt from the SEC internet site. The SEC is at least finding some of the miscreants. It is too bad The Department of Justice does not take a keener interest in what may be the greatest threat to our national survival since WWII.

“Washington, D.C., May 11, 2010 — The Securities and Exchange Commission today charged two Boca Raton, Fla., residents for engaging in illegal short selling of securities in advance of participating in numerous secondary offerings to make illicit profits.

These mark the first enforcement actions brought by the SEC under Rule 105 of Regulation M against individuals with no securities industry background. Rule 105 helps prevent abusive short selling and market manipulation by ensuring that offering prices are set by natural forces of supply and demand for the securities in a secondary offering rather than by manipulative activity.

In separate orders issued by the Commission, Peter G. Grabler was charged with repeatedly violating Rule 105 over a period of more than two years for gains of $636,123. Leonard Adams was charged with similarly violating Rule 105 for gains of $331,387. According to the orders, Grabler and Adams engaged in a strategy of participating in numerous secondary offerings of stock in public companies in order to improve their access to initial public offerings underwritten by the same broker-dealers through which they participated in the secondary offerings.

Grabler and Adams, who both lived in Massachusetts during the period of the wrongdoing, agreed to pay a combined total of more than $1.5 million to settle the SEC's charges.

"Rule 105 applies just as much to individuals trading in their own accounts as it does to investment advisers and their related funds, which have been the subject of prior SEC enforcement actions," said David P. Bergers, Director of the SEC's Boston Regional Office. "Grabler and Adams engaged in a trading strategy that by its very nature violates the SEC's rules."

Short selling ahead of offerings can reduce the proceeds received by public companies and their shareholders by artificially depressing the market price shortly before the company prices its offering. The SEC amended Rule 105 effective October 2007 to prevent this trading practice known as "shorting into the deal." The revised rule generally prohibits the purchase of offering shares by any person who sold short the same securities within five business days before the pricing of the offering.
According to the SEC's orders, Grabler engaged in transactions prohibited by Rule 105 on at least 119 occasions between February 2006 and November 2008, involving secondary offerings by at least 102 issuers. Adams engaged in illegal transactions on at least 94 occasions between March 2006 and November 2008, involving secondary offerings by at least 86 issuers. The SEC found that Grabler opened or controlled at least 52 brokerage accounts at more than a dozen broker-dealers and that Adams opened or controlled at least 32 brokerages accounts also at more than a dozen broker-dealers.
In settling the SEC's charges without admitting or denying the SEC's findings, Grabler and Adams separately consented to cease and desist from violating Rule 105. Grabler will pay more than $988,000 to settle the SEC's charges, and Adams will pay more than $514,000”

Well, the SEC has caught and fined more crooks. As a long time investor in securities and commodities I have seen a lot of market manipulation. In this case the criminals were stealing a relative small amount of money but, they did get a just fine and perhaps they should get some criminal charges brought against them but unfortunately, the SEC cannot try people and put them away.

One thing that should be noted in this case is how much trouble a couple of guys can cause through illegal short sales. It would be good if the SEC would look into a lot of the shenanigans that went on in the 2007-2008 melt down. Several major brokerages have been rumored to have made a tremendous fortune shorting stocks so far down that the underlying businesses could not get loans to stay in business. Some of these short sellers may have been such large institutions that they created the short selling market for these stocks which wiped a lot of retail investors out and forced good companies to lay off employees. The aforesaid happens if the collapsing price of a stock of a business causes that business to have problems getting loans to fund day to day operations.

Monday, May 10, 2010

BROKERS ACCUSED OF HELPING TO SELL PENNY STOCKS UNLAWFULLY

The sale of penny stocks are often looked upon as controversial way to raise capital. Many investors will not purchase stocks that sell for under $10.00 for fear the company may not have the financial ability to survive. However, sometimes a stock may be undervalued by the market and becomes a really good value at really low prices.

Of course anyone with a copy machine can print off stock certificates and anyone with a computer can set up bogus securities to sell to the public. Most people remember all the anecdotal stories of Internet companies being formed and then raising capital on the basis of just an idea with no real business behind the issued securities. This type of behaviour is something the SEC is mandated to investigate.

Because companies who engage in security sales are required to make sure that bogus the securities they sell are legitimate; the SEC brought the following action against Leeb Brokerage Services:


"Washington, D.C., April 27, 2010 — The Securities and Exchange Commission today announced administrative proceedings against five securities professionals accused of facilitating unlawful sales of penny stocks to investors and failing to act as "gatekeepers" as required under the federal securities laws.

The SEC's Division of Enforcement alleges that three registered representatives and two supervisors at Leeb Brokerage Services allowed customers to routinely deliver large blocks of privately obtained shares of penny stocks into their accounts at the firm. The customers would then sell them to the public in transactions that were not registered with the SEC under the securities laws. The accused securities professionals allowed these sales without sufficiently investigating whether they were facilitating illegal underwriting, and they also caused the firm's failure to file Suspicious Activity Reports (SARs) as required under the Bank Secrecy Act to report potential misconduct by their customers.

-"Firms whose customers repeatedly bring in large blocks of microcap securities for sale to the public have an obligation to ensure they are not facilitating wrongdoing," said George S. Canellos, Director of the SEC's New York Regional Office. "Securities professionals who turn a blind eye to suspicious customer conduct are not fulfilling their duties as gatekeepers and risk violating the securities laws themselves."

The SEC's Division of Enforcement alleges that Leeb registered representatives Ronald Bloomfield, John Earl Martin, Sr., and Victor Labi failed to conduct a reasonable inquiry before allowing the public sales of the large blocks of penny stocks in violation of the registration provisions of the federal securities laws. The Enforcement Division further alleges that the firm's president Eugene Miller and its chief compliance officer Robert Gorgia failed to reasonably supervise the conduct of these representatives. All five individuals are accused of aiding and abetting the firm's failure to file SARs. These events occurred between 2005 and 2007. Leeb is no longer in business.

According to the Commission's order instituting administrative proceedings, the Leeb representatives ignored obvious red flags indicating that their customers were violating securities laws by engaging in illegal distributions of securities through their Leeb accounts. One group of customer accounts was affiliated with an individual who had previously been involved in a pump-and-dump scheme, and with a stock promoter who routinely received shares in compensation for promotional services for penny stock companies. The accounts earned more than $20 million in proceeds while repeatedly depositing privately obtained shares and then selling them to the public, raising the constant specter that Leeb was facilitating "scalping." Another Leeb customer wired more than $30 million in penny stock proceeds to a bank in Liechtenstein, a tax haven.

The SEC's Division of Enforcement alleges that despite these and other suspicious activities of their customers, the accused Leeb representatives and supervisors ignored their obligation to report the possible misconduct to authorities. Such disregard of the firm's reporting requirements under the Bank Secrecy Act enabled Leeb's customer activity, and the commissions it generated, to continue unfettered. And the public was exposed to repeated risk of unlawful distributions of penny stocks.

A hearing will be scheduled before an administrative law judge to determine whether the accused individuals committed the alleged violations and provide them an opportunity to defend the allegations. The hearing also will determine what sanctions, if any, are appropriate in the public interest."

The above was quoted from the SEC official web page. The possibility of fraud is great in an unregulated industry and it is good that there are regulations to help protect the public from being victims of heinous crimes. The unfortunate thing is that too many politicians believe that it is alright that people loose their life savings to fraudsters. These politicians believe that stealing from people is just one very legitimate form of capitalism that should be protected from governmental intervention. This form of capitalism only works if the public is allowed to exact vengeance upon fraudsters the same way vengeance was enacted upon horse thieves in the old west. "Horse Thief Capitalism" only works if you have a "Horse Thief Justice System" otherwise, it is important to have strong aggressive governmental institutions to protect the public from fraud and the fraudsters from "Horse Thief Justice".

Saturday, May 1, 2010

SEC CHARGES DETROIT FIRM WITH FRAUD

It seems the penchant for securities dealers to steal pensions never ends. The Detroit area is one of the most economically ravaged areas of the U.S. and then to have some Wall Street fraudsters come along and rub salt in the wounds of this ancient French Fort City is just unconscionable. At any rate, the SEC feels it can go ahead and get some of the money back. The following excerpt was taken from the SEC site and explains in pretty good detail the crimes that were committed:

"Washington, D.C., April 22, 2010 — The Securities and Exchange Commission today charged a private equity firm, a money manager and his friend with participating in a fraudulent scheme through which they stole more than $3 million invested by three Detroit-area public pension funds.

Detroit-based Onyx Capital Advisors LLC and its founder Roy Dixon, Jr., raised $23.8 million from the three pension funds for a start-up private equity fund created to invest in small and medium-sized private companies. Often to cover overdrafts in his bank accounts, Dixon illegally withdrew money invested by the pension funds from the bank accounts of the private equity fund. Assisting in the scheme was Dixon’s friend Michael A. Farr, who controls three companies in which the Onyx fund invested millions of dollars. Farr diverted money invested in these entities to another company he owned, withdrew the money from that bank account, and gave the cash to Dixon. Farr also kept some money for himself, and used investor funds to make payments to contractors building a multi-million dollar house for Dixon, who lives primarily in Atlanta.

The SEC’s complaint, filed in federal district court in Detroit, also alleges that Dixon and Onyx Capital made a number of false and misleading statements to defraud the three pension funds about the private equity fund and the investments they were making.

“These public pension funds provided seed capital to the Onyx fund, and Dixon betrayed their trust by stealing their money,” said Merri Jo Gillette, Director of the SEC’s Chicago Regional Office. “Farr assisted Dixon by making large bank withdrawals of money ostensibly invested in Farr’s companies, and together they treated the pension funds’ investments as their own pot of cash.”

According to the SEC’s complaint, shortly after the three pension funds made their first contributions to the Onyx fund in early 2007, Dixon and Onyx Capital began illegally siphoning money. Dixon and Onyx Capital took more than $2.06 million under the guise of management fees, and Farr assisted in diverting approximately $1.05 million through the Onyx fund’s purported investments in companies Farr controlled. Dixon used the money to pay personal and business expenses, including construction of his house in Atlanta and mortgage payments on more than 40 rental properties Dixon owns in Detroit and Pontiac, Mich.

Under the partnership agreement for the Onyx fund, Onyx Capital was entitled to receive an annual management fee of 2 percent of the committed capital within the fund, or $500,000 per year, payable on a quarterly basis. The SEC alleges that instead of deducting management fees on a quarterly basis, Dixon withdrew money whenever he desired from the Onyx fund’s bank accounts under his control.

According to the SEC’s complaint, Onyx Capital invested more than $15 million from the Onyx fund in three related entities controlled by Farr – Second Chance Motors, SCM Credit LLC, and SCM Finance LLC. Farr diverted a portion of the pension fund investments in Farr’s companies to 1097 Sea Jay LLC, another entity that Farr controlled. Farr then withdrew large sums of cash and provided most of it to Dixon while retaining at least $229,000 for his own benefit. Farr also used Sea Jay’s bank accounts to make at least $522,000 in payments to construction companies performing work on Dixon’s house in Atlanta.

The SEC further alleges that Dixon and Onyx Capital made numerous false and misleading statements to Onyx Capital’s public pension fund clients. For example, one pension fund had concerns about Dixon’s inexperience in private equity. To allay the concerns and ultimately convince the pension fund to fund the investment, Dixon sent a letter falsely stating that a purported joint owner of Onyx Capital with substantial experience evaluating private equity investments would devote all of his efforts to the Onyx fund. The letter contained a forged signature of that individual, who had reviewed certain investment opportunities for the Onyx fund during his spare time, but has never owned or been employed by Onyx Capital. He instead had been working full-time for another company since 1996.

As alleged in the SEC’s complaint, Dixon and Onyx Capital violated and Farr aided and abetted violations of the antifraud provisions of the federal securities laws. The SEC is seeking a court order for emergency relief, including temporary restraining orders, asset freezes and accountings. The complaint seeks permanent injunctions, disgorgement of ill-gotten gains and financial penalties."

It is just too bad the SEC can't prosecute these individuals as real criminals and send them off to prison. It seems Congress made sure many years ago that the most that can happen to Wall Street fraudsters is that they might have to give back at least some of the money they stole. People who steal candy bars at convenience stores get greater punishments. The Department of Justice is supposed to handle criminal prosecutions of Wall Street fraudsters but, they don't seem to have the accountants who can find the fraud or the lawyers who can understand the fraud once it is found.

It might be noted that a fraud of just a few million dollars is not that big however, these frauds are being perpetrated by perhaps the hundreds or even thousands across the United States. Of course with the penalty of being caught being no greater than giving back what was stolen then "why not steal?" In this country it seems we have banks too big to fail and Wall Street bankers too rich to go to jail.