Transcripts For RT 20240703

Quickly as possible while putting in the least amount of work possible. Its a practice that plays on the inherent reading is that most people have who wouldnt want to get rich quick, who doesnt see himself or herself as a corporate leader under the right circumstances. Doesnt fantasize about investing in facebook, google, microsoft for amazon on the very 1st day that those companies werent public who doesnt wish that he was born in buffalo, but that kind of intellectual laziness, trying to predict the next big thing rather than putting in the work will always come back to bite you. Im john curiosity. Welcome to the whistle blowers the. 2 2 2 2 2 2 2 get rich, quick schemes are common place in the United States with a blind trust in barely regulated capitalism. Everybody, regardless of economic background, education level, age or anything else, believes that they have the ability to become welfare. Then in their wildest dreams, if they just choose the right opportunity, we said see that with frequency here in the United States, just look at the scandal surrounding serratos. The runners as founders claims that they had revolutionize the way the blood tests were done. And that their new technology could detect diseases earlier than any existing blood test. Without any proof that the Technology Even existed. The company reached the valuation of tens of billions of dollars, only to collapse. All of the companys founders are now in prison. And even more recent examples include that of Crypto Currency Exchange f t x. And if its founder sam bagman free, how great would it be to be a billionaire in your twenties . And if youre not sam bagman freed, how great would it be to latch on to someone like him and make millions of dollars for an investment of a fraction of that amount. But thats not real life. The kind of strategy will always catch up to you. Bill black is an associate professor of economics and law at the university of missouri at kansas city where he teaches white collar crime, public finance, Anti Trust Law and economics, as well as latin american development. Hes a former executive director of the institute for fraud prevention. He has taught at the Lyndon B Johnson school of Public Affairs at the university of texas at austin as well as at santa clara university. Professor black was litigation director at the Federal Home Loan Bank board, Deputy Director of the savings and loan oversight body, the ssl, i see general counsel of the Federal Home Loan Bank of san francisco, and Senior Deputy chief council at the office of thrift supervision. Hes the author of a lot of books and his book, the best way to rob a bank is to own one, which was published in 2005 is considered to be a classic image on ro. Professor black, welcome to the show. Were very happy to have you. Thank you. Oh, its a, its an honor to actually meet you. I have to admit that i am fascinated by the case of sam bagman fried the founder of f t x and the co founder of Alameda Research a year ago. Forms rank to this 31 year old. As the 41st richest american and the 68th richest person in the world, with a net worth of some 26. 00 bill the in dollars thats at the age of 31. 00. The conventional wisdom was that he had earned every dollar on his own son called him a genius. And many analysts lauded his abilities in quantitative research. But it turns out that it was all just a fraud. Many banking and investment professionals were taken in by sam bank been freed, whos also known as s b. S. Many politicians were taken in by him too. So when didnt you realize that something was amiss . What was it that triggered your interest . Low salary was always too good to be true and the man was incapable of explaining anything in finance. So anything and everything he said demonstrated that it was in there was no there, there. This was a scam, and yes, its easy. Easy. Its not genius, its a dash of the on that part of these kind of criminals to get the financial people in the world to stay in your praises. Even though youre actually an arrogant more od a. S. B s, founded f t x, which was known as the crypto currency Derivatives Exchange in april, 2019. It began operating a month later, he immediately became a washington darling. He testified before congress about regulating the crypto currency industry. He attracted investments from long standing and completely legitimate wall street firms can even offer a 6000000000. 00 investment to alon musk. To help with this purchase of twitter, that investment was declined. A Major Investment Firm called Sequoia Capital even lauded s b f in a glowing profile, which it later had to take down. So i guess my question is pretty simple. How did he full so many people . Or was it their own greed that allowed them to be full credit . So again, its really easy to fool people in finance, and thats why you see so many of these frauds occur in finance. So lets say bring beta brain made of never invested in anything in the scam period. Right . The running apache skiing had really prominent people, came to the sea and explained in chapter and verse, why this was the ponzi scheme, and the lawyers who dominate the fcc when we dont understand finance the type of thing. And everyone sang the praises. Why did they sing the praises . Because most of them were paid to say the same. The praises and the others were purportedly getting really, really rich from singing the praises and f. Anybody told the cruise, the whole thing collapsed and you lost all your money. So nobody involved has much of incentive to tell the truth, and thats why was only a couple of whistle blowers that provided that unique benefit and should have led to it being shut down, you know, but decade earlier. But the whistle blowers were ignored. Invocation sam, bank and free. Right . Its nothing. Its a, its a nothing built on nothing. So the crypto currency is nothing. You know, its the old joke about the oakland. When you get there, theres no there there. And then you create an exchange of this. Nothing. Now, how do you suppose to make money on this . Well, you can only make money if you can create a bubble within crypto. But here comes to the moronic art in terms of sand bank vent, free combined with the arrogance. Right . So im not think about normal banker, you have to pay interest to get people to give you money, right . Its all deposits. And then you have brick and mortar expenses, running buildings and all them there types of things. The doors changes or nothing, right . Its, its just basically a software app. You have virtually no expenses and the size go, hey, i can be a bank or why just have an exchange. Why dont i take the money to invest . And ill have this mass of advantage over all other bankers. I get my money free. They have to pay in the way of deposits, and i got no brick and mortar expenses and they got very large, brick and mortar expenses. This is a, is a, ill make a ton of money. Its up there, more rugs, right . They know nothing about making real loans. Plus, theyre not interested in making real loans because the only non moronic part is, hey, i dont actually have to make money. I just have to claim my making money. Right. And now this is the modern era where were seeing these incredibly crude, a sophisticated braj serrano. Elizabeth holmes never produces a product that gets valued at 7000000000. 00. And theres a whistle blower. His name is tyler, right . Schultz kind of famous name and i are, you know, National Security route. Right. And so tyler goes to work and child, actually a biologist with substantial lab experience. And he comes and he tells his grandfather whos the, you know, a key board member at torontos. Hey, its a complete scale and explains to them in detail. And his grandfather who loves him, chooses to leave elizabeth holmes, who is a freshman. Thats her education, a freshman college. She took a year of college. She was actually in the air and tried to explain scientifically, this device because it was about them getting a device right. Made up, there was never a penny of profit earn, and he got 50000000000. 00 sand bank winfree had nothing burgers on top of nothing. Burgers and went on programs in which he was asked by bloomberg. How does this work . And he explained it was a black box. And then his explanation was a peer ponzi scheme. Youre going to hear the bloomberg reporters erupt into laughter. And by the way, thats the problem with the modern media. They dont erupt into outrage this because it has ripped up all these people. If it was a little before it goes, wow, i really think of myself is cynical, but boy, you are really over the top describing is ponzi scheme, and again, there aint nothing there and hes so incompetent that even though he has free money to invest, that was he just put it in the band guard. He wouldnt be a real billionaire to. Things began falling apart for f t x after only 3 and a half years in business. In november 2020 to finance ceo chang ping. Chow tweeted that his firm would sell its holdings of f t t, which was f t x is token. This kicked off a twitter storm between chang and s b f. That force the price of not just f t t, but all other crypto currencies down. And within days f t x had a cash prices, so in response financed announced that it would buy f t x. But the value of the token continued to crash. So finance dropped out and when they dropped out, they criticized f t. X is handling of investors money that lead to something akin to an Old Fashioned run on the back. And within 48 hours, sam bagman freed was no longer a billionaire. It turned out that f t x had loaned billions of dollars to alameda to cover its liabilities. And in the end, f t x, alameda, and get this 180 associated entities, all declared bankruptcy. How in the world could Something Like this happened . Was there no oversight, no regulation, and if there wasnt, then why not . Okay, so this has existed for centuries. The famous explanation of this earliest and time is boss yet a sort of protocol economist in france, centuries ago, when plunder becomes a way of life for men and society, they create a legal system that authorizes it and a moral code that glorifies it. So they hired folks in your case, they didnt just, you know, work on key politicians. They worked on low psychology profession and the law profession, and you got the use of the world doing these preposterous memos that purported that, oh, its not really torture unless you cause pain equivalent to the destruction of the human oregon. Like what is it that theres just a completely made up uh no legal basis, but the its obscene. Right . Its just absolutely obscene. And then youve got a cottage younger jury uh, industry of psychologists that want to torture. Right. They gonna call it non torture, but theyre going to market themselves as we will train you on these enhanced interrogation methods. Right. In the case of sam bakeman fried, you got all these clowns saying, oh, this is new, this is innovative and you go, well, what is this . So for example, the most famous of the crypto currencies. Do you see big klein, you know, can you go and use bit coined to buy your sandwich . Well, you, course not. You cant because its a 100000 times more expensive. You for them to do a single transaction like that, that is for visa to do it. And by the way, that happens to show up the way up the pollution mass of the use of electrical generation. So these are con stories, but then they get so you know, if youre going to live, right . And youve seen this, these abuses that weve talked about, whether theyre in finance, whether theyre in torturing people, etc. They are all based on the necessity of why and they got to give some people, not everybody, some people believe those lies and it is easy to hire. In essence politicians the, our firms. This is whats different when the c e. O is the truck decision, create this bass, predatory network any can use the funds of the firm to rip off the firm . Thank you. Bill. Were speaking with bill black, a lot, professor and banking whistleblower about the scandal that f t x. The crypto currency Trading House that was very recently the darling of wall street and official washington only to implode under the weight of its own apparent corruption. Stay tune. When we come back, well talk about what to expect in the trial of f t x founder san basement for the. 2 the media has basically been totally on the side of buying and the administration where they say that, well, if i should take 2 crane and theyre going to take the baltic states, theyre gonna take all the, all of which is ridiculous. And this is what the American Public is here, a lot of report, and i think has spelled out very clearly why russia intervened. And a lot of it makes perfect sense. The the, they are probably her, my little sister store. Okay. The model girl that i got you, no problem seem to them out of and those are things arguments us out in the drive i showed my brother through. He was sudden to help people for a lo so now i never look at searches as being saved. Well, i guess i lost my list. How some of the travel police, itd be gang chicago is like, can you get a photo of that police, you lose the, theres another crime. Say another. This could have been a doctor, or nurse could have been the next president. Ok, keep losing people out here. The welcome back to the whistle blowers. Im john kerry onto were speaking with professor bill black about the scandal at the crypto currency Trading House f t x. Good to have you with this bill . Bill sam, thank been freed, was arrested in the bahamas on december 12th 2022. The day before he was scheduled to testify on capitol hill and he was extradited to the United States. He was charged with wire fraud conspiracy to commit wire fraud securities fraud. Conspiracy to commit securities, fraud, and money laundering. He currently faces up to 115 years in prison. To make matters worse for s b s, his fiance and his best friend who had both been executives at f t x. Have agreed to testify against him at trial. Youve had a lot of experience in these kinds of criminal prosecutions. How does this play out . Does this be a, have any reason at all to be optimistic . No. And thats why, oh, its not just to, im, i think at this point its at least by of the all the entire senior leadership, other than sam bank been free as but guilty to multiple felonies. And they had them dead to rights really be the surprising thing is that they were expedited because there where they were doing business was chosen because the country is normally very unwilling to expedite s b f got himself in even more trouble in early 2023 when he was charged with 4 additional criminal charges, focused on what the Justice Department called more than 300. 00 illegal political donations. Can you explain that to us who received these donations and where the donations ever returned . So this was very common in the savings and lo debacle. As i explained, this is what these control frauds do when they create their predatory network, sit there from the private sector, theyre going to make sure that they have a Public Sector component thats going to demand things be done. Right . And youve seen this in your own like where the Justice Department said no, we should not prosecute him. And then the Obama Administration comes in and people have been lobbied and such and boom, approval, prosecution gets created again. And by the way, in the savings alone debacle, as i said, we had over 1700 convictions of visual leads. How many in the great financial crisis which use the same fraud mechanism . 0. Well, that doesnt happen accidentally. We created this occurred criminal referral system. And they live in, they did it, we talked to the top epi, i person in this area, and he believes that in the entire great financial crisis, the entire one from all the federal re, banking regulatory agencies. There were 6 criminal referrals. Just our Little Agency dealing with savings and loans made over 30000 criminal referrals. So why is it super valuable to have politicians in your pocket . Because they dont want to go to prison. Yeah. You know, so, you know, we had the dating fights. Famously, the 5 us senators and to speak, or the house that was all about political contributions. And it was, and theres a key thing for people to understand whenever your politics are, it is both parties that this is done to. Right. So there was some publicity about sam bagman free gave overwhelmingly the democrats. Yeah, its true, but is confederates gave overwhelming liter above a certain make sure that everybody got a taste and it showed remember i emphasize. 5 eyes that there in the shadow, financial sector. Well folks that the cc and the Commodity Futures Trading Commission have many folks and been pushing to get some regulation. But 2 things are happening. Uh, 3 things are happening. One, theyre making the same basement afraid. So the world are using these political contributions to make sure that the leadership of the cc includes many people who are their central tasks they feel is protecting the crypto crowd. Right . So thats the regulator component. And also their hope is to prevent the prosecutions by getting iris hostile. So for example, the fcc of the house. This one is partisan. The House Republicans for 30 years waged a war to make sure the fcc doesnt have enough resources to deal with modern up in Technology Type stuff. So they go after them in that regard. But the, the 3rd thing is the judiciary. And theres been a lot of emphasis on the, the trump a point hes there shouldnt be. But the biggest thing is in many ways i understand why inversion is an incredibly important issue. But for every abortion decision, there are 20 decisions on business and almost all of them go in the same direction to make it much, much, much more difficult to consider. 2 groups of people in america ceos and prominent politicians and corruption charges. And this is corrupting our ability, even our willingness, even our understanding because if theres no regulator, the facts dont come out and all you get is this modern stuff for the business shows that are yahoo ish. I dont, im not trying to pick on yahoo, but you know that thats the is the kind of the phrase, right . Yeah. Who is the big Business People . Wonderful. They must be doing isnt. And yet more trouble followed sam sam bank than free. He was finally jailed on august 11th because he was attempting to tamper with witnesses repeatedly contacting people who are likely to testify against him, even after being warned about doing so by the judge. So now he sits in a terrible prison in brooklyn, new york awaiting trial, which is scheduled to begin on october. Second. This is all very news worthy stuff. And we know that sam bagman fried is not the only crooked money man out there. So why is it so when usual, why is it so rare for a billionaire money person to be prosecuted . Why dont we see more price occasions like this . This is really important selection bias. Dont assume that the be the tiny number of these folks you see prosecuted, represent the universe of the people doing this down, right . The people that do it through more sophisticated beings, accounting. Last by top tier audit firms and by the Credit Rating agencies. So in look, great financial crisis, the toxic waste in jargon cdls that shouldnt have gotten even a single c rating, which means basically youre bankrupt every single time, i dont mean almost every single time every single time. Got a triple a rate, which is a top rate Credit Rating in the world of evelyn to 0 risk of default. Right . It pays and in sophisticated folks are still using those tactics and we dont see them at all. Only really dynamic regulators working with the best f, b i, agents and prosecutors to deal with those folks and that, and that needs to come as a president ial emphasis. Eventually, none of those things are happening, as you can see. And you have all the politicians which and then its not all, but its, you know, hundreds of them have taken this money from the thieves. Are they going to be eager to hold your and in a savings alone debacle. Henry b gonzalez who held the key hearings they tried, even though he had seen yardi, they being the democrats in this case to prevent him from becoming chairman of the agency because they knew he might actually investigate the broad and embarrassed thanks so much for being with us bill, we appreciate you taking the time indian entrepreneur shift not or ask rhetorically, what happens to a private company that comes out with a Quarterly Report and an annual report. It gives transparency. It talks of basic issues of governance and transactions with related parties. Thats the opposite of what happened, did f t x and the comparison brings us back to the basics. True honesty and transparency. Always try and sometimes it takes time. Sometimes investors lose their money, but the truth always comes out. Just asks them bank vent free. Thanks for joining us for another episode of the whistle blowers, im john to reaku and well see you next time. 2 2 2 2 2 2 the acceptance, and im going to plan with you whatever you do. You do not watch my new show. Seriously. Why watch something thats so different. Whitelisted opinions that he wont get anywhere else. Welcome to please, or do the have the state department to see i a weapons bankers, multi 1000000000 dollar corporations. Choose your facts for you. Go ahead. Change and whatever you do. Dont want marshall to stay main street because im probably going to make you comfortable. My show is called stretching time, but again, you probably dont wanna watch it because it might just change the way and say the thumb, i think it was so simple. Whos moving . I swear. Theres google news, im losing this. 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