A former Texas bail bondsman who told investors he ran a $45 million hedge fund and installed a swimming pool at his office was sued by U.S. regulators for allegedly operating a Ponzi scheme.
Ok, just stop for a second. Let's deconstruct this one using Equity Private's Guidebook for Financial Fraud Analysis (1st Edition).
Purported Hedge Fund Manager (Section 2: Base score: -1):
1. Former (-1)
2. Texas (-3)
3. Bail Bondsman (Not in the guidebook, use Section 4.5(a)(c): "The analyst should use her discretion in assigning a Purported Hedge Fund Manager element score. For reference the element 'White Eyeshadow (male)' is ranked as a -6). (Use: -4)
Environmental Signs Of Affluence:
1. Swimming Pool at Office (No direct rule. Author likely did not anticipate such a development. Use Section 3.4 as a guide: Accoutrements of leisure in the place of business. Pool table: -2. Liquor cabinet: -4). (Use: -7)
Hmmmm ok. Continue....
Rod Cameron Stringer of Lamesa misappropriated millions of dollars from investors since 2001 while touting a stock-trading strategy he said had annual profits of as much as 61 percent, the Securities and Exchange Commission said in a statement today, announcing the suit at federal court in Lubbock, Texas.
Rates Of Return:
Purported Annual Rate of Return: 61% (Section 7.5(a)-(d): Select from the following sliding scale where returns are claimed for more than one year) (Use: -14, see below)
A judge froze the assets and appointed a receiver to recover investor funds, the agency said. The location of investor money "is presently unknown," the SEC said, noting some was used to finance a horse-racing partnership, buy a boat and build the pool at Stringer's office.
Social Climbing Behavior:
Socially Elevated Endeavors: (Section 15(g): Equestrian (Use: -5)
Unusual Firm or Owner Name: (Section 36: Examples provided: Vortex Capital Management, LLC, Tornado Partners, LLP, Mr. Nemo, Mr. Incognito, Mr. Shade E. Figur: Use: -5)
"Mr. Rod Stringer" (Use: -5)
Section 52: Impact of Scores:
-25 to -29: Very High Probability of Fraud (Consider notifying authorities outright).
-30 to -34: Very Very High Probability of Fraud (Notify Federal authorities immediately).
-35 to -39: Near Certainty of Fraud (Immediately solicit investment from Ken Lewis, seek referral fees).
Hedge Fund Run by Ex-Bondsman Is Ponzi Scam, SEC Says [Bloomberg]