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Fraud*
According to the Collins English Dictionary 10th Edition fraud can be defined as: "deceit, trickery, sharp practice, or breach of confidence, perpetrated for profit or to gain some unfair or dishonest advantage".[1] In the broadest sense, a fraud is an intentional deception made for personal gain or to damage another individual; the related adjective is fraudulent. The specific legal definition varies by legal jurisdiction. Fraud is a crime, and also a civil law violation. Defrauding people or entities of money or valuables is a common purpose of fraud, but there have also been fraudulent "discoveries", e.g. in science, to gain prestige rather than immediate monetary gain
*As defined in Wikipedia

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Sunday, August 19, 2012

Robber Baron, Goldman Sachs


You have to admire the creative imagination of Goldman Sachs:  first, Goldman is ordered by FINRA to pay $20.7 million to scammed Bayou investors because of the firm's execution and clearing of trades for Bayou that were really a Ponzi scheme.  Then, the bank turns around and claims, because it paid the award, it is now one of Bayou's creditors and as such should receive $20.7 million in compensation along with other creditors.

How is that for being, at the same time, both the perpetrator and the victim of a fraud!

Goldman, Still Playing in Bayou's Mud
By Gretchen Morgenson -The New York Times
. . . .
Goldman had executed and cleared trades for Bayou, and there were questions about how well Goldman supervised the account. On July 30, Goldman paid $20.7 million to roughly 200 Bayou investors in the United States. Those investors, unsecured creditors in a separate Bayou bankruptcy case, were awarded that amount by a securities arbitration panel in June 2010. 

It was one of the few bright spots of the Bayou story, but it didn’t last. The same day Goldman paid the investors, the firm filed its own creditor’s claim for the same amount — $20.7 million — in the Bayou bankruptcy. Goldman contended that paying the award had made it, too, a Bayou creditor. If the court agrees, the investors who won their arbitration case — also unsecured creditors of Bayou — will be out of luck. 

Ross B. Intelisano, a partner at Rich, Intelisano & Katz in New York who represented the Bayou investors, said they would fight Goldman’s latest filing. 

I asked Goldman last week about the bankruptcy court filing. Michael DuVally, a spokesman, said Goldman never controlled the money at issue in the arbitration. 

“Our claim is consistent with bankruptcy law,” he said in a statement. “The arbitration panel, which was not ruling on wrongdoing, determined that money the Bayou funds deposited with us while insolvent needed to be returned to the estate to distribute to creditors. With the ruling, we became a creditor entitled to compensation along with the other victims of the fraud.” 

Read the full article here 

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