When President Barack Obama tapped Timothy Geithner to be the Treasury Secretary, it appeared that on paper it was a fine pick. Geithner was president of the New York Federal Reserve Bank and was the director of Policy Development and Review Department at the International Monetary Fund. The problems arose when it became public knowledge that he failed to pay taxes for the 2 years he worked at the International Monetary Fund. He owed roughly $35,000 of unpaid self-employment taxes. Many of the senators conducting the confirmation hearings claimed that it was an honest and innocent mistake. Geithner also revealed that he had employed a nanny that did not possess the proper work authorization papers. That was, of course, just another honest mistake. My problem with Geithner’s honest mistake is that although he “officially” knew in 2006 that he had failed to pay his taxes, it took until just after President Obama asked him to be Treasury Secretary for him to actually pay his back taxes.

Geithner is not the only well connected political figure that is able to bend the rule of law to suit his own wishes. Baltimore Mayor Sheila Dixon was recently indicted on 12 counts, included in the indictment were charges of theft, perjury, and fraud. She is accused of spending gift cards that were meant for needy families in Baltimore, and accepting thousands of dollars of gifts from developers. This is not the first time that Dixon has been the subject of a corruption scandal, but as with most politically powerful people, she has always been able to worm her way out of trouble. If past history is any indicator, Dixon will not lose support of the voting public and she will more than likely never see the inside of a jail cell.

Geithner and Dixon are but just 2 examples of politically powerful people that play by a different set of rules than the rest of us “common folk”. If you or I had failed to pay taxes for 2 years the IRS would have constantly hounded us until we were forced to pay the penalties and back taxes. It would not have been looked upon as an honest and innocent mistake. If anyone else but an elected official had used gift cards that were destined for the poor and needy, they would have been ostracized publicly and quickly thrown into jail. Why does someone who has fraudulently stolen billions of dollars in a Ponzi scheme, allowed to stay in his million-dollar home under house arrest? It is all in whom you know politically. When a politician is revealed to be corrupt, the voting public thinks nothing of it. In their minds it is just another politician being a politician, as long as they continue to send more money home to my district. It has gotten so bad in Washington that most political scandals are met with a circling of the wagons around all members of the political elite regardless of political party. My prediction is that Geithner will sail through the confirmation process and Dixon’s political career will be enhanced by this latest scandal. The cycle of corruption will continue until the public decides that they have had enough and actually holds the politicians accountable for their actions regardless of the political leanings.

If the roller coaster ride on Wall St. was not enough to give investors nightmares, the news of the Ponzi style scam of Bernard Madoff is sure to cause many a sleepless night. Madoff made a name for himself as an investment advisor to the ultra-rich, who promised and fulfilled double-digit returns in either a bear or a bull market. His con lasted for more than 4 decades before his historic $50 billion swindle came to an end. 

The scam is a relatively simple idea of taking money from investors and instead of legally investing the funds; he would pay returns to other investors, after keeping a portion for himself. The Ponzi scheme is named for Charles Ponzi, an Italian immigrant, who took millions of dollars from thousands of investors in 1920. His lie was based on buying and selling of international postal reply coupons. Basically, he promised to buy these coupons in foreign countries and redeem them here in the U.S. for a huge profit. In a matter of months he went from being broke to a millionaire before he was shutdown for mail fraud.

Madoff’s customers included some of most influential people in the country, as well as billion dollar hedge funds, and Sterling Securities, the owner of New York Mets. The fallout from this scandal will be long and painful for many financial institutions, charitable organizations, and corporations, but the question remains of how could Madoff had such a long run without ever bringing the scrutiny he deserved. Records have shown that several times over the past 40 plus years, questions arose as to how Madoff could consistently produce double-digit returns for his clients, even in down markets. The SEC chief has admitted that his agency did not properly perform their duties for at least the past decade.

President –elect Barack Obama’s magical victory tour through the transition process was sidetracked this week by the arrest of Illinois Governor Rod Blagojevich on charges of corruption. Blagojevich is accused of attempting to sell the now vacant Senate seat of the President-elect. He was caught on tape by FBI wiretaps discussing the potential for his personal and political profit off of the appointment of Obama’s replacement. The U.S. Attorney that is prosecuting this case is Patrick Fitzgerald, the same Patrick Fitzgerald of Scooter Libby fame.

 Fitzgerald, you may recall, investigated the Valeria Plame leak and found that Richard Armitage was the original source of the leak. Fitzgerald learned it was Armitage during the first few weeks of the investigation and continued to investigate until Libby was charged 2 years later with a process crime. Now that Fitzgerald is on the case of corruption in the Governor’s mansion, how far will he take the investigation? The complaint documents against Blagojevich mention convicted “slum lord” Tony Rezko more than 100 times. Rezko is rumored to be talking to Fitzgerald in order to shorten his prison sentence. Rezko was very well connected within Chicago politics and the heat is now on anyone who may have had dealings with the convicted felon. 

Obviously, President-elect Obama was asked what he knew about the scandal and his statements of shock, outrage, and innocence were to be expected. What was unexpected was his declaration that he had not spoken to the Governor concerning his replacement. On November 5, the day after Obama’s election victory, a Chicago news station reported that Obama’s first order of business was to meet with the Governor to discuss his replacement in the Senate. The news station is now claiming on their website that they have not verified that the meeting ever took place. Then on November 23 David Axelrod, Obama’s chief advisor, stated that he “knew” that Obama and the Governor had spoke to discuss the vacant Senate seat. After Blagojevich was arrested, Axelrod quickly claimed that he misspoke. The Huffington Post has a long article that has chronicled the news events related to the appointment of a replacement for Obama in the Senate. Several times over the past month, there have been reports of Obama advisors talking to Blagojevich about the Senate seat. I do not believe that Obama would be stupid enough to discuss any type of payment for an appointment to his Senate seat, but why did he so unequivocally state that neither he nor any of his staff had any idea of the scandal before the arrest?