Category Archives: Ridiculously obvious scams

Is Power8, Sponsor of Everton FC, Fulham FC and RCD Espanyol, a Giant Ponzi?

Yves here. Richard Smith is on the trail of what looks to be his biggest international scam find ever, orders of magnitude larger than the usual below the radar single to low double digit million dollar/pound/euro operation that he has ferreted out in the past. And mind you, even though he focuses on the dubious looking inter-corporate relationships and the often evident lack of normal investors protections and business substance, these companies sell hope and glamour to typically credulous retail investors who lose their money and have no recourse.

New Zealand’s Cathy Odgers Bungles Her Resignation From Pacific Fiduciaries

There’s no end in sight to Odgers’ inept duplicity: she can’t even tell the truth about her resignation from Pacific Fiduciaries

KKR’s Botched Document Cover-Up Reveals Washington Public Pension Fund Cronyism

As we’ve been examining private equity abuses, readers have been incredulous that investors have put up with one-sided, deliberately vague, complex, and/or obfuscatory contracts, unreasonable demands for secrecy, and lack of access to critically important information, such as the financial statements of the portfolio companies that they own. This failure of investors to protect their own interest is particularly troubling given that so many are fiduciaries.

We have another example of this sort of conduct that comes out of an important story in the Wall Street Journal yesterday. Private equity kingpin KKR made what amounted to an admission of guilt by rebating fees that the SEC had found were improperly charged, meaning stolen from the limited partners. We’ve obtained the document that was the foundation of the story and are embedding it at the end of this post. It’s a remarkable example of how cronyistic the relationships are between hapless, captured investors and the general partners who led them by the nose.

We are about to do some document forensic work, so put on your gumshoes!

Department of Education Sides Against Students to Feather Its Own Bed in For-Profit Corinthian Colleges Debacle

How the Department of Education abused students while earning fees in the denouement of for-profit serial fraudster Corinthian Colleges.

New Zealand’s Cathy Odgers and Fraud Stock HCI Hamilton: the Denouement

GXG Markets seem to agree with me about the apparent connection between Cathy Odgers’ Pacific Fiduciaries and an exceedingly obvious boiler room fraud, HCI Hamilton.

John Helmer: The Lure of Foreign Investment in Ukraine – Meet Jaanika Merilo

This is surreal. I suppose you could consider the choice of faceperson to be a form of truth in advertising.

Republicans Launch Another Wall Street Gimmie: HR 185, the “Tie Regulators in Knots” Act

The Republicans are not wasting any time in their ongoing campaign to make sure nothing stands in the way of Wall Street’s rapacious quest for more profits.

Google Further Crapifies Search, Exploiting Both Users and Advertisers

Is Google cooking its goose by optimizing search to maximize revenue extraction from advertisers?

“Summer” Rerun: So Where, Exactly, Did Lehman’s $130 Billion Go?

Dear readers,

We reinstituting a Naked Capitalism feature, the summer rerun. The last time we reprised an archival NC post (aside from a few more recent ones by Matt Stoller) was a July 9, 2009 post that we published again on December 29, 2011.

Interestingly, picking up again from 2009 serves as a reminder of issues that were hot in the aftermath of the crisis that were not addressed adequately, if at all. Here, we discuss the mystery of the magnitude of Lehman’s losses. We pointed out that they are so large and impossible to explain that there had to be accounting fraud, but the bankruptcy overseer had its own reasons not go to there.

Note that this post was published eights months before Anton Valukus released his report on the Lehman bankruptcy, which described the Repo 105 ruse that allowed Lehman to hide over $50 billion of dodgy assets at quarter end and thus not include them in its financial reports.

Big Investors Rebelling Against Private Equity Fees

In a remarkable and long-overdue change in attitude, institutional investors are starting to tell private equity titans that they think they don’t earn their outsized pay. And that’s before you get to all the grifting they’ve been exposed to be doing on top of that.

The Wall Street Journal described a confrontation at a conference in Paris, with a pension fund manager responsible overseeing private equity investments calling out the unjustifiable level of private equity fees.

Private Equity Firms Start ‘Fessing Up to Cheating

The Wall Street Journal describes how some private equity firms are attempting to clean up their act by admitting to dubious practices in revised regulatory filings with the SEC.

There’s a wee problem with this approach. Securities law is not like the Catholic Church, where confession and a promise not to sin again buys you redemption.

Private Equity Titan Blackstone Admits New Normal of Lousy Returns, Proposes Changes to Preserve Its Profits

Private equity continues to make headlines, and not in a good way, despite industry efforts to spin otherwise. The latest shoe to drop is that private equity firms are trying to rewrite some well-established fund terms to allow them to continue to rake in egregious profits even as the returns of most funds have underperformed the stock market.

Private Equity Consultants Flounder Over Question About Abusive “Evergreen Fees” at CalPERS Board Meeting

If you want to understand why private equity general partners have gotten away for so long with what the SEC has come perilously close to calling outright embezzlement, along with other serious compliance abuses, you need look no further than the last CalPERS board meeting to get a clue.