Harry Markopolos on King World News | Part 2/3 — Transcript

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1. 0:00But now we're giving green light to the
2. 0:01CEOs and CFOs to sign off on a set of
3. 0:03cookbooks. I don't believe those bank
4. 0:05balance sheets one iota and the
5. 0:07government's greenlighted them and they
6. 0:09threatened Fazby and said mark tomarket
7. 0:11the banks don't have to do it any
8. 0:13longer.
9. 0:13And that just tells you that the
10. 0:15government's supporting the big lie and
11. 0:17it's sort of like the Japanese
12. 0:18experience and I think you need to reach
13. 0:20bottom quicker and I think you need to
14. 0:22take extreme measures and I don't think
15. 0:24you can protect the banks any longer. I
16. 0:26think the key is nationalization. I
17. 0:28certainly would trust our government
18. 0:29before I would trust these CEOs and the
19. 0:31board of directors of these institutions
20. 0:33that led us to this mess. So, you're
21. 0:35basically putting the culprits
22. 0:36responsible for the mess and you're
23. 0:37putting them in charge of the recovery
24. 0:39and I just, you know, that's why I elect
25. 0:41government officials. You know, I have a
26. 0:44choice. They answer to me. Who's who are
27. 0:46these who are these CEOs and boards of
28. 0:47directors answering to?
29. 0:49Well, this is the problem. And Charlie
30. 0:50Munger just wrote about this Buffett's
31. 0:51partner of a Bergkshire. Did you see
32. 0:52that where he talked about that we we
33. 0:54need to get these bank interests out of
34. 0:55government? I'm going to summarize, but
35. 0:57that but that in fact we needed to to to
36. 0:59have surgery, but that these people
37. 1:01didn't want surgery because they want
38. 1:02the system to continue as it is. So,
39. 1:05it's it's almost like some of these
40. 1:06people that are very bright, that are
41. 1:08old, that know they don't have anything
42. 1:09to lose. Cuz Charlie's getting up there.
43. 1:10He's 80some. And he's basically saying,
44. 1:12"Look, this is totally corrupt. This is
45. 1:13wrong."
46. 1:14Yes, it is wrong. There's no
47. 1:16accountability for these Wall Street
48. 1:17CEOs and their boards. They should be
49. 1:18put out of office. All the bonuses that
50. 1:20they've received for the past since
51. 1:22they've been there should be clawed
52. 1:23back. If we're clawing back the Matto
53. 1:25investors who are victims,
54. 1:27how can you not go after clawbacks for
55. 1:28the culprits who led us to this mess,
56. 1:31why should they be protected species
57. 1:32other than that they're the biggest
58. 1:33political donors and that each party,
59. 1:35the Republicans and the Democrats are
60. 1:37keeping them in power and bailing them
61. 1:39out. It's the old boys socialist club
62. 1:42from both parties. There's neither party
63. 1:43there acting in our best interest or
64. 1:45acting in the interest of the Wall
65. 1:46Street chieftains and not in the behalf
66. 1:48of the American public. Yet, we were the
67. 1:50ones paying their salaries. So, it's
68. 1:52time that they held themselves
69. 1:54accountable to us, the taxpayers. I have
70. 1:56three boys, my kids. Is it fair for them
71. 1:58and for your children to pay for this
72. 2:00mess?
73. 2:00Absolutely not.
74. 2:01Of course not.
75. 2:02No, this is morally wrong.
76. 2:03It is wrong. It's totally corrupt.
77. 2:05It's a generational transfer of of
78. 2:07liability to our children. Whose
79. 2:09generation failed?
80. 2:11Our generation failed. We didn't do our
81. 2:13jobs. None of us did. And it's time that
82. 2:15we should probably pay these debts. I
83. 2:16don't think it's fair to pass them on to
84. 2:18our children. when you look at the uh
85. 2:20the you bring up your children when you
86. 2:22look at the world going forward for them
87. 2:24and obviously I think somebody like you
88. 2:26is trying to make a difference as you
89. 2:27said you have money you don't need money
90. 2:29you you're where you need to be in life
91. 2:30it's a it's a reputational thing now so
92. 2:34what is this about are you crusading for
93. 2:35a better f future for your children or
94. 2:37what what what is this about anymore you
95. 2:39trying to help America here
96. 2:40I think setting an example for the young
97. 2:42people to let them know they have a
98. 2:44choice
99. 2:44okay
100. 2:44you can wear the orange jumpsuit you can
101. 2:46go along to get along and you can keep
102. 2:48your mouth mouth shut where you can say
103. 2:50something, stand for something, be
104. 2:52politically incorrect, be bold, be
105. 2:54blunt, be honest, be true to yourself,
106. 2:56be true to our nation's values, live to
107. 2:58our core values. That's what I'm going
108. 2:59to tell people when I teach those
109. 3:01college students when I appear on the
110. 3:02campuses. I tell them, you have a
111. 3:04choice. You can fight back. You can
112. 3:06fight financial fraud. There are ways to
113. 3:09do it. You can go to the press and
114. 3:10hopefully the press remains free and
115. 3:12independent and hopefully it finds a
116. 3:14sustainable business model. It needs to
117. 3:15stay in business. And right now, there's
118. 3:16some solveny issues in the press. But
119. 3:18the press can shed light where there's
120. 3:20darkness. And most frauds can't stand a
121. 3:22light at day. That's one thing you can
122. 3:24do. You can take it to the government.
123. 3:25There are programs where you can become
124. 3:26a whistleblower and get well
125. 3:27compensated. There are law firms you can
126. 3:29go to that will take these cases and
127. 3:31develop them and push them forward into
128. 3:33the legal system that can protect your
129. 3:35identities. There are different ways
130. 3:36that you can fight back. If you go, if
131. 3:39it's a management fraud by the CEO and
132. 3:41CFO and you report up, you're not going
133. 3:43to make it. you're going to be
134. 3:44eliminated. You're going to be cast out.
135. 3:47You're going to be blacklisted. And you
136. 3:48have too many brave whistleblowers going
137. 3:50forward. And they sac and they become
138. 3:53sacrificial lambs. And they risk it all.
139. 3:55And they cause tremendous economic
140. 3:57hardship for their families. A lot of
141. 3:59times these things end in divorce and
142. 4:01careers get shattered and you can't go
143. 4:04back into the industry. So there's got
144. 4:05to be a smarter way to go about it. And
145. 4:07the government has to start listening to
146. 4:08whistleblowers and treating them better.
147. 4:09And if they can do that, then maybe
148. 4:11everybody can make a difference because
149. 4:12those college ethics courses are beyond
150. 4:14worthless. They're a waste of time.
151. 4:15They're a waste of three credit hours,
152. 4:16right?
153. 4:17They at that age, you can't teach right
154. 4:18from wrong. They know it or they don't.
155. 4:20I think what you have to do is give them
156. 4:21the tools to fight back and show them
157. 4:22there's smart ways to go to the press.
158. 4:24There's dumb ways. There's smart ways to
159. 4:25report up once and you don't report up
160. 4:28past once. Because if you do, if you
161. 4:29report more than once, you're singling
162. 4:31yourself out as a malcontent or
163. 4:33disgruntled employee and they eliminate
164. 4:34you and they find an excuse to get rid
165. 4:35of you. Correct. or marginalize you and
166. 4:37you don't get promoted, you don't get
167. 4:38the bonuses, you're not considered a
168. 4:39team player and you get bypassed in your
169. 4:41career track, you get derailed. So, I
170. 4:43think that they need to give you tools
171. 4:45and too often academic institutions, all
172. 4:47they give you is theories that don't
173. 4:49work in practice. And I think they
174. 4:50started needing tools to put in your
175. 4:51toolbox to fight back because you got to
176. 4:54stand for something. There's nothing
177. 4:55worse than white collar fraud. An armed
178. 4:57robber can rob a bank and he may shoot a
179. 4:59couple people and it's bad for the
180. 5:00families where people get shot, but the
181. 5:02money can get recovered. It can be
182. 5:04replaced. There's insurance for it.
183. 5:06White collar criminals are far far more
184. 5:08dangerous. And what they do is they can
185. 5:10they put millions of Americans out of
186. 5:11work right now.
187. 5:13When you say white collar criminals, are
188. 5:14we talking about the bankers? Are we
189. 5:16talking about the
190. 5:16talking about the CEOs, the bankers, the
191. 5:18sea level suite, the CFO, the CEO, the
192. 5:20general counsel, the chief medical
193. 5:22officer, the chief investment officer,
194. 5:24the board of directors not doing their
195. 5:26jobs. Those people, millions of
196. 5:28Americans out of work, our ver our
197. 5:30nation on the verge of financial
198. 5:31collapse.
199. 5:32Yes,
200. 5:33we may make it. We may not. We may pull
201. 5:35through. We may be the next Argentina.
202. 5:36We may just be the next Japan. Or we may
203. 5:38be something that we can't forecast
204. 5:40right now. We don't know where this
205. 5:41thing is going to end up. All we know is
206. 5:43that white collar crime got us here.
207. 5:45Who's punishing? We don't have enough
208. 5:47prosecutors at the Department of
209. 5:48Justice. We don't have enough
210. 5:49parillegals at the Department of
211. 5:50Justice. We don't have enough legal
212. 5:51secretaries. We don't have enough FBI
213. 5:52devoted to white collar fraud.
214. 5:54We were worried about uh foreign
215. 5:56terrorists. And instead, it was the
216. 5:58domestic ones that were the CEOs of our
217. 5:59largest financial institutions that bid
218. 6:01us in. It wasn't it wasn't Muslims
219. 6:04coming from overseas that did us in. It
220. 6:06was our own people that did us in at the
221. 6:08highest levels of society. And you you
222. 6:10need to tighten up on the white collar
223. 6:12laws and make the penalties more severe.
224. 6:13But that's the most insignificant thing
225. 6:15you can do is make the penalties more
226. 6:16longer prison sentences. The best thing
227. 6:18you can do is increase the risk of
228. 6:21detection. put more resources into white
229. 6:23collar fraud because if you raise the
230. 6:25risk the risks and you make them equal
231. 6:27to the rewards for stealing and you make
232. 6:29it a balanced equation because right now
233. 6:31the riskreward equation favors doing the
234. 6:33doing the crime and doing the time.
235. 6:35You've got to make the risk of detection
236. 6:37so high that they don't do it anymore
237. 6:39and right now we don't have enough
238. 6:40resources committed to white collar
239. 6:42fraud. The Department of Justice needs a
240. 6:45lot more resources. They got good people
241. 6:46there. They just don't have enough of
242. 6:47them.
243. 6:48Let me take you, if you don't mind, to a
244. 6:50since this is not over, but the the the
245. 6:53terror part for you. But let's take you
246. 6:55to a dark place for a minute. You're
247. 6:57you're you're trying to stop this scam,
248. 6:59this this Ponzi scheme, and and you're
249. 7:02you're working and you're trying to do
250. 7:03the right thing. It's and expose this,
251. 7:05but but meanwhile,
252. 7:07the reality is that you that your life
253. 7:10is threatened, that it that it threatens
254. 7:13the safety of your family, that that
255. 7:15you're putting everybody in danger.
256. 7:19What was that like? What's it like
257. 7:21living through that? Help give the
258. 7:23listeners what are you feeling at that
259. 7:25time? Cuz you you were in the military.
260. 7:27I mean, it's this had to be horrible
261. 7:28because it's not you now. It's your it's
262. 7:30your family. It's it's
263. 7:33when fear is your constant companion,
264. 7:35you tend to embrace it. And what I've
265. 7:37discovered in both finance and in the
266. 7:40military is whenever you become fearful
267. 7:43and you account for all the risk, then
268. 7:46you've discounted the worst that can
269. 7:47happen and you're going to have a better
270. 7:49result than what you planned for. So I'd
271. 7:51say that if you overprepare yourself to
272. 7:53deal with the risk more often than not,
273. 7:55you're going to have a better result.
274. 7:57And that certainly was the case for me,
275. 7:58but it could have ended tragically. It
276. 8:00changed my life. I there were many
277. 8:02things I didn't do. There were some
278. 8:04things that I did do. I don't want to go
279. 8:05into individual security protocols that
280. 8:07I adopted. I adopted many uh many were
281. 8:10from my military background. Others uh
282. 8:13were in taken in conjunction with law
283. 8:14enforcement. I don't want to get into
284. 8:16those. I'm very private about those. I
285. 8:18don't let anybody film or record in my
286. 8:20home or see see the physical layout or
287. 8:22see what my security measures are. I'm
288. 8:24very private about that. I feel greatly
289. 8:26relieved. Uh now,
290. 8:28let's talk about that. Now it's over.
291. 8:30You said the story broke and you knew,
292. 8:32okay, finally it's over and you needed
293. 8:33to have some cameras. I think to get you
294. 8:35into some certain places cuz you weren't
295. 8:36totally comfortable. But what was that
296. 8:39moment like? The story broke. Now you're
297. 8:41going, I don't I probably don't have to
298. 8:43worry about dying anymore. I probably
299. 8:44don't have to worry about my family
300. 8:45anymore. What's that feeling like?
301. 8:48It was a tremendous sense of elation
302. 8:50followed by the realization that my life
303. 8:52might be safe because Mattaf was in
304. 8:53custody and he couldn't send anybody to
305. 8:55come after me any longer. I would say
306. 8:58that then I had feared for my family
307. 8:59safety from the SEC because I had
308. 9:01documents in my house that I needed to
309. 9:03get to the press and I needed to get
310. 9:05online to the through the to the public
311. 9:07worldwide. And once that had taken place
312. 9:10and once those documents were online, I
313. 9:13felt that I would be finally safe
314. 9:15because once Matt off was in custody, I
315. 9:17only had one opponent remaining and that
316. 9:18was the SEC. Though they couldn't kill
317. 9:20me, but they could certainly raid my
318. 9:22house, put my my family at risk once
319. 9:24again and I had those documents. So, I
320. 9:27wanted to secure those documents and
321. 9:29safeguard them and make them public,
322. 9:30which I f I had done. It took me a few
323. 9:32days to get all those.
324. 9:33But you're in a race during those few
325. 9:34days. I'm not sleeping. You're not
326. 9:37sleeping and you're going, I've got to
327. 9:38get this on the web and then it's over
328. 9:40for me. Let's talk about Barney Frank
329. 9:42for a minute cuz you you said basically
330. 9:44at some point that you went to him for
331. 9:46help.
332. 9:46His staff was great. Barney Frank was uh
333. 9:49I would say he went above and beyond the
334. 9:50call. His staff certainly did. I don't
335. 9:52I'll mention the names in the book, of
336. 9:53course. I'd say his staff did some
337. 9:55wonderful things on my behalf. I'd say
338. 9:57Chairman Konjorski did the same. Uh they
339. 9:59certainly made it clear to the SEC that,
340. 10:02you know, there would be no retaliation
341. 10:03against me or any SEC staffers that
342. 10:05helped me during this investigation. He
343. 10:07and his staff uh took care of me and
344. 10:09they took care of the people that needed
345. 10:10to be protected within the SEC that were
346. 10:12helping me. I had two individuals
347. 10:14helping me on the case from the Boston
348. 10:16regional office. I met with Mary Shapiro
349. 10:17on March 10th and I said that these two
350. 10:19individuals went above and beyond the
351. 10:21call of duty. uh they took great career
352. 10:22risk to bring this case forward and I
353. 10:24said I don't know what your highest
354. 10:26awards are but whatever they are once
355. 10:28the inspector general's report is
356. 10:29released this summer you should
357. 10:30certainly consider these two men for
358. 10:32those those awards because they
359. 10:34certainly deserve Those