Simon English: Just not cricket, but the fraudsters will always be back for another innings

Outlook The following words by JK Galbraith should be read by every aggrieved Allen Stanford investor (the words after that are less essential, being mine). "To the economist, embezzlement is the most interesting of crimes. Alone among the various forms of larceny, it has a time parameter. Weeks, months or years may elapse between the commission of the crime and its discovery. This is a period incidentally when the embezzler has his gain, and the man who has been embezzled oddly feels no loss. There is a net increase in psychic welfare. At any given time, there exists an inventory of undiscovered embezzlement in, or more precisely not in, the country's banks and businesses.

"This inventory – perhaps it should be called the bezzle – varies in size with the business cycle. In good times, people are relaxed, trusting, and money is plentiful. And even though money is plentiful, there are always many people who need more. Under these circumstances, the rate of embezzlement grows. The rate of discovery falls off, and the bezzle increases sharply. In a depression all this is reversed. Audits are penetrating and meticulous. Commercial morality is enormously improved. The bezzle shrinks."

Stanford, the billionaire playboy fraudster (insert other clichés here) is beginning a probable life sentence after being found guilty of running a $7bn (£4.4bn) Ponzi scheme – like Bernie Madoff, but with a fine moustache and a supposed interest in cricket that seemed unusual for a Texan.

Stanford has supposedly been beaten by another inmate while awaiting trial, and is now suffering from amnesia. The English Cricket Board chairman Giles Clarke must be praying that everyone else is too.

The ECB's deal with Stanford to stage Twenty20 cricket matches looked extraordinary back then. Who was this guy? Neither Mr Clarke nor anyone else at the supposedly staid Lord's bothered to ask. He was rich. End of questions.

It's not just the cricket authorities that were wowed by Stanford's rented helicopters. His already wealthy investors believed that they were getting something no one else could. A cunning scheme. An unregulated offshore fund outside of the reach of those beastly governments they so firmly despise until they decide they need compensation.

They were in a certificate of deposit, a supposedly risk-free investment that also generated spectacular returns. The court found that Stanford offered "improbable and unsubstantiated high interest rates". Behind every successful fraudster are bunch of investors, in this case, already very rich people who felt entitled to more than mere mortals can attain.

Greedy folk, in other words. Like Montgomery Burns, the miserly industrialist from the Simpsons, they will live forever and better than anyone else. This doesn't make these investors notably stupid, just human. Just much less smart than circumstances have conspired to trick them into believing. Sitting ducks for Stanford and Madoff.

If there is a lesson here, it may only be this: fraudsters are different from the rest of us. They panic later. This is normal life: my overdraft is beginning to look dicey, his payday loans are clearly problematic and your mortgage is just killing you.

For Stanford such worries occur, if ever, many years down the line.

After every major fraud case, there's an assumption that this disaster must not be allowed to happen again. There's a push for the sort of fresh regulation very rich people always fight against (until they lose, when they'd like it put in place retrospectively). And lawmakers put on stern faces.

All that will really happen is that there will be a pause, then another boom, then another Stanford and another Madoff. Perhaps in league.

The bezzle has gone away but temporarily. It will be back.

Suggested Topics
Start your day with The Independent, sign up for daily news emails
ebooks
ebooksAn introduction to the ground rules of British democracy
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs Money & Business

Recruitment Genius: Sales Assistant / Buyer

£15000 - £17000 per annum: Recruitment Genius: This company offers a range of ...

Recruitment Genius: Customer Service Advisor

£15000 - £16000 per annum: Recruitment Genius: Customer Service Advisors are r...

SThree: Trainee Recruitment Consultant

£20000 - £25000 per annum + OTE £45K: SThree: SThree were established in 1986....

Recruitment Genius: Compliance Manager

£40000 - £60000 per annum: Recruitment Genius: A Compliance Manager is require...

Day In a Page

Is this the future of flying: battery-powered planes made of plastic, and without flight decks?

Is this the future of flying?

Battery-powered planes made of plastic, and without flight decks
Isis are barbarians – but the Caliphate is a dream at the heart of all Muslim traditions

Isis are barbarians

but the Caliphate is an ancient Muslim ideal
The Brink's-Mat curse strikes again: three tons of stolen gold that brought only grief

Curse of Brink's Mat strikes again

Death of John 'Goldfinger' Palmer the latest killing related to 1983 heist
Greece debt crisis: 'The ministers talk to us about miracles' – why Greeks are cynical ahead of the bailout referendum

'The ministers talk to us about miracles'

Why Greeks are cynical ahead of the bailout referendum
Call of the wild: How science is learning to decode the way animals communicate

Call of the wild

How science is learning to decode the way animals communicate
Greece debt crisis: What happened to democracy when it’s a case of 'Vote Yes or else'?

'The economic collapse has happened. What is at risk now is democracy...'

If it doesn’t work in Europe, how is it supposed to work in India or the Middle East, asks Robert Fisk
The science of swearing: What lies behind the use of four-letter words?

The science of swearing

What lies behind the use of four-letter words?
The Real Stories of Migrant Britain: Clive fled from Zimbabwe - now it won't have him back

The Real Stories of Migrant Britain

Clive fled from Zimbabwe - now it won’t have him back
Africa on the menu: Three foodie friends want to popularise dishes from the continent

Africa on the menu

Three foodie friends want to popularise dishes from the hot new continent
Donna Karan is stepping down after 30 years - so who will fill the DKNY creator's boots?

Who will fill Donna Karan's boots?

The designer is stepping down as Chief Designer of DKNY after 30 years. Alexander Fury looks back at the career of 'America's Chanel'
10 best statement lightbulbs

10 best statement lightbulbs

Dare to bare with some out-of-the-ordinary illumination
Wimbledon 2015: Heather Watson - 'I had Serena's poster on my wall – now I'm playing her'

Heather Watson: 'I had Serena's poster on my wall – now I'm playing her'

Briton pumped up for dream meeting with world No 1
Wimbledon 2015: Nick Bollettieri - It's time for big John Isner to produce the goods to go with his thumping serve

Nick Bollettieri's Wimbledon Files

It's time for big John Isner to produce the goods to go with his thumping serve
Dustin Brown: Who is the tennis player who knocked Rafael Nadal out of Wimbeldon 2015?

Dustin Brown

Who is the German player that knocked Nadal out of Wimbeldon 2015?
Ashes 2015: Damien Martyn - 'England are fired up again, just like in 2005...'

Damien Martyn: 'England are fired up again, just like in 2005...'

Australian veteran of that Ashes series, believes the hosts' may become unstoppable if they win the first Test