Ponzi Commutation

Anything Goes

The President’s anything goes bio needs no recapitulation. But a recent commutation of the prison sentence of a Ponzi schemer who extracted $1.6 billion from investors is hard to fathom. The conviction was the culmination of a six-week jury trial before a Trump appointed judge. New investments were used to fund distributions. Performance of the investments was inflated. A pay back guarantee was false. People are still out most of what they invested. The felon was a hands-on operator. The puzzle lodged in the President’s commutation is that there is no quid pro quo.

The growing use of private equity (the vehicle deployed in this scheme) and crypto currency are two manifestations of the market’s seeming indifference to risk in pursuit of return and avoidance of regulatory constraints. The administration has dismissed cases brought by the SEC against crypto firms as well. Maybe it’s a return to “buyer beware” in a free for all market.

If nothing else the commutation adds weight to the growing buyer’s remorse of the cohort of independents who elected him thinking he would shake up the status quo. At least they were right about that but not in the way they hoped.