On This Day In Finance: June 24 - Fraud, Fraud And (You Guessed It) More Fraud

By Peter Cherewyk | June 24, 2009 AAA
On This Day In Finance: June 24 - Fraud, Fraud And (You Guessed It) More Fraud

On June 24, 1985, R. Foster Winans, A former Wall Street Journal reporter, was found guilty of leaking insider information. Using his post at the newspaper Winans would pass on information from the "Heard on the Street" columns to brokers, who invested according to the tips. He earned a total of $35,000 for the leaks over a five-month period. The reporter was sentenced to 18 months in jail and a $5,00 fine, and was quoted as saying "The judges decision was a fair decision."

Winans, the author of over 30 books, was also quoted as saying "The only reason to invest in the market is because you think you know something others don't." (Find out how to protect yourself and your loved ones from financial fraudsters, read Stop Scams In Their Tracks.)

Crazy Eddie

On June 24, 1992, Eddie Antar, the CEO of Crazy Eddie Inc., was arrested after being convicted of falsifying financial statements. Over a two year period, between 1985 to 1987 the incorrect statements propped up the stock price long enough for Eddie Antar to make $60 million. Antar fled the U.S. to Israel, where he was caught. When he returned, he faced a Securities and Exchange Commission (SEC) civil judgment of $72 million.

"Maverick" Madoff
On June 22, 2009, the SEC charged Cohmad Securities and four others for their involvement in the $50 billion ponzi scheme headed by Bernie Madoff. Madoff has stated that he acted alone, but it seems his word doesn't hold as much clout as it once did.

The ponzi scheme basically depends on getting new clients. New cash collected from the clients is used to fake investment earnings. To gather these new investors, a team of marketers is needed, and this is what the charges were based upon. The "feeder funds" were allegedly channeling unsuspecting investors into the Madoff scheme. (Learn more in our Investment Scams Tutorial.)

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