The mighty fall and take us with them

December 12, 11:20 PMScam ExaminerKarin Malchow

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What a week for high profile fraud and corruption arrests and sentencing.

December 9 Arrest:  Illinois governor Rod Blagojevich allegedly practiced Old School Chicago politics, including offering a U.S. Senate seat to the highest bidder.  (See the Lake County Examiner for a local account.)  He was caught speaking openly during taped conversations about what he should get out of deals.

December 11 Arrest:  Bernard Madoff, pillar of Wall Street, allegedly ran a $50 billion Ponzi scheme through his investment firm's hedge fund for years.  He confessed to employees, hoping to give them bonuses before the house of cards collapsed.  (See San Francisco Financial Fraud Examiner for details.)

December 12 Sentencing:  Stephen Parker Gardner of Peregrine Systems was sentenced to an 8 year and 7 months prison sentence for securities fraud occurring from 1999-2002, exaggerating revenue to inflate stock price.  Investor losses were estimated at $3 billion.

As CEO, Gardner netted $8.2 million in stock options in addition to annual bonuses.  The Feds seized $384,000 from his brokerage account and almost a million from the sale of one property.  Three more properties' sales proceeds will go to government coffers for now; the Judge addresses restitution in February.

Nominated Commerce Secretary Bill Richardson sat on the Peregrine Board 2001-2002; his wife's sister is married to Gardner.

Good week for FBI news releases.  Bad week for economic and political optimism.