The, one of the fatal flaws with unrestricted capitalism is the desire to get rich as 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 boring buffet. 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 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 there new technology could detect diseases earlier than any existing blood tests, 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 fried 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 freed the founder of f t x and the co founder of Alameda Research a year ago. Forbes rank to this 31 year old. As the 41st richest american and the 60, its rich as the person in the world with a net worth of some 26000000000. 00. Thats at the age of 31. 00. The conventional wisdom was that he had earned every dollar on his own sum 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 an 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 . Well, the 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 that 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 top 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 to even offered a 6000000000 dollar investment to rely on mosque 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 . Great. So again, its really easy to fool people in finance. And thats why you see so many of the fraud occur in finance. So lets say brain baby, brain made of never invested in anything in the scam period. Right. The running apache skiing had really prominent people, came to the c. C and explained in chapter and verse. Why this was ponzi scheme and the lawyers who dominate the cc, when we dont understand finance the type of thing. And everyone saying the price is 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 as 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, the decade earlier, but the whistle blowers were ignored. Invocation sam banking free. Right . Its nothing. Its a, its a nothing built on nothing. So the crypt apparently 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 with them 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 debit claim. Im making money. Great. And now this is the modern era where were seeing these incredibly crude, a sophisticated, broad serrano elizabeth holmes. Never produces a product. It gets valued at 7000000000. 00. And theres a whistle blower. His name is tyler wright schultz. Kind of a famous name in our, 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 serratos. Hey, its a complete scale and explains to him in detail. And his grandfather who loves him, chooses to believe, 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. Sandbank 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. The discard it has ripped up all these people waiting for it goes, wow, i really think of myself is cynical, but boy, you are really over the top describing this ponzi scheme. And again, there aint nothing there and hes so incompetent that even though he has free money to invest healthy, just put it in the vanguard. 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 the at a certain 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 the side college, the profession, and the law profession. And you got the use of the world doing these for pastors memos that purported that, oh, its not really torture. Unless you cause pain equivalent to the destruction of the human oregon. But 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 under jury, a 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 coined, you know, can you go and use big coined to buy your sandwich . Well, you, course not. You cant because its a 100000 times more expensive. Mm hm. For them to do a single transaction like that, then it is for visa to do it. And by the way, that happens to show up the way up the pollution perfect mass of the use of electrical generation. So these are con stories, but then they get to, you know, if youre going to live, right . And youve seen this all these abuses that weve talked about, whether theyre in finance, whether theyre and torturing people, etc. They are all based on the necessity of life. And theyve got to get some people, not every body, some people believe those lies and it is easy to hire. In essence, politicians be our firms. This is whats different when the c e. O is the truck decision, create this bass predatory network, and he can use the funds of the firm to rip off the firm. Thank you. Bill. Were speaking with bill black, a law 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 sam, bagman free. 2 the the the, [000 00 00;00] the the thumb, i think it weighs such seemed to move in a sweet google news. Im losing this. We thought because of the, some of those to buy some Blues Community sticker for they need to cook with magic a gamble unless youre willing to order these voided. Whats the key of know wouldnt be the one that you lay out to me. As soon as the silicone you define, you have to assume the point. Choose that you know his last name, post version cost or couldnt volume and feel us to us for next friday. So told me to go to see for you for the, for the last place. 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 then 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 s 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 the Police Control frauds do when they create their predatory networks. If theyre 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, a criminal prosecution gets created again. And by the way, in the savings alone debacle. As i said, we had over 1700 convictions of these a late. 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 talk to the top, the f b i person in this area. He believes that in the entire great financial crisis, the entire one from all the federal banking regulatory agencies, there were 6 criminal referrals. Just our Little Agency dealing with segments in 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. You know, so, you know, we had the eating fights. Famously, the 5 us senators and the speaker of the house that was all about political contributions. And it was, and this 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 show, remember i emphasize 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 c, c a includes many people who are there certain fold tasks they feel is protecting the crypto crowd, right . So thats the regulator component. And also their hope is to prevent the prosecution by getting iris hostile. So for example, the fcc of the house. This one is partisan, the House Republicans for 30 years who 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 can vic, to groups of people in america, ceos and prominent politicians on corruption charges. And this is corrupting our ability even our willingness, even our understanding because if theres no regulator, the facts dont come out. 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 what is the