How Greed Started the Dominoes Falling: The Great American Economic Meltdown (Part 1 of 2)

When the American economy slowed in 2007 and home prices stagnated, a domino effect relentlessly began to play out. Unemployment rose, which further incapacitated homeowners without standby assets. Consumers couldn’t make credit card payments and became wary of going further over their heads financially. Automobile sales plummeted and businesses became strapped for cash. Those dependent on bank loans found lending institutions short of funds and reluctant to give up what little they had.

In the wake of the foundering economic conditions, the public realized that large businesses had rewarded their executives with what many regarded as obscene salaries and bonuses even while the companies’ balance sheets showed staggering losses. These multimillion-dollar bonus payouts were arranged by boards of directors that had been chosen by the very executives who “earned” the huge sums paid out to them (Friedrichs, 2009).

It didn’t take long before the American economic system collapse was matched by similar financial catastrophes in countries around the globe. In the fall of 2008, for instance, Iceland’s government declared bankruptcy; it no longer was able to meet its foreign debts. The krona, the national currency, had almost no value so the country couldn’t pay for the imports that are essential to existence on the isolated island (Wessel, 2009).

The U.S. federal government, first during the lame duck days near the end of the administration of George W. Bush and subsequently in the Barack Obama presidency, poured billions of dollars into banks and other financial giants in an attempt to revitalize commerce, or, at least, to keep matters from getting worse.

But many of the companies that received bailouts continued business as usual. And the media showcased in spectacular fashion the top executives’ greed as the embittered world watched on in disgust.

THE CORPORATE CULPRITS 

Bear Stearns
The first major meltdown scandal involved the collapse in March 2008 of New York-based Bear Stearns, a company founded in 1923 that had become the fifth-largest investment bank in the United States. Bear Stearns had never, until then, registered a quarterly loss. Ironically, Fortune magazine had recently honored it as the “Most Admired” securities firm based on employee talent, quality of risk management, and business innovations.

By 2008, Bear Stearns’ risk management team, while taking home spectacular paychecks, had run up a $1.5 billion company debt. “The holy grail of investment banking had become increasing short-term profits and short-term bonuses at the expense of long-term health of the firm and its shareholders,” wrote William Cohan in his 2009 book, “House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.” There was too much money to be made as the housing bubble continued to expand before it burst. Greed readily trumped prudence.

Prodded and aided by the federal government, Bear Stearns merged with JP Morgan Chase, which paid $10 for a share that once had sold at a high of $172.69 (Bamber and Spencer, 2009; Cohan, 2009; Kelly, 2009).

It didn’t escape the public, and most certainly not Bear Stearns’ shareholders, that company assets had been eviscerated by a magnificently compensated management team that had engaged in reckless and irresponsible behavior. One commentator, playing on the Wall Street theme of bulls and bears, noted that the five top executives of Bear Stearns paid themselves more than the entire roster of the Chicago Bulls. 

From a fraud perspective, perhaps the most telling observation was made by the son of Salim (Cy) Lewis, the onetime managing partner of Bear Stearns. Commenting on the firm’s culture, he told Cohan that “few came honest. None leave honest” (Cohan, 2009). For Ralph Cioffi and Matthew Tannin, the senior managers of the company’s hedge fund, their persistent lies to stockholders about the true condition of their holdings led to a criminal indictment on charges of security fraud, conspiracy, and wire fraud.

Cioffi also was charged with insider trading for taking $2 million of his own money out of a hedge fund without informing investors. For 18 months the pair had indicated in their monthly statement to investors that only 6 percent of their holdings were in subprime mortgages, when the true figure was 60 percent. Their trial is scheduled for late 2009.

Countrywide Financial
Companies kept falling. Countrywide Financial Corporation, the largest American mortgage lender that, at its height, financed one out of every five American home loans, had to be rescued with a $4 billion takeover (or, as some put it, a takeunder) purchase by the Bank of America in the summer of 2008. (See “Arcane Rules Failed Us in Securitization Mess” on page 28.)

For most of its existence, Countrywide, which was founded in 1969, occupied a sprawling Mediterranean-style headquarters at the foot of the Santa Monica Mountains in Calabasis, a city north of Los Angeles. The company’s stock had risen 23,000 percent between 1982 and 2003, largely by the resale on the secondary market of subprime mortgages (Bruck, 2009). This meant investors who had bought $1,000 worth of Countrywide stock in 1982 would, in 2003, own more than $230,000 worth of the company’s stock.

As Adam Michaelson, a Countrywide senior vice president, subsequently noted in his 2009 book, “The Foreclosure of America: The Inside Story of the Rise and Fall of Countrywide, Home Loans, the Mortgage Crisis, and the Default of the American Dream,” Countrywide’s “new system of loans and Refis [refinancing loans] awarded to anyone with a pulse was, in retrospect, long-term madness driven by short-term profit.” He described Countrywide as “a profit-hungry corporate beast.”

According to Michaelson, Countrywide’s stated mission was to “help all Americans achieve the dream of home ownership.” Unstated were two other elements of that maxim: “at a magnificent profit for us,” and, “without being concerned that they could readily lose their home ownership.”

Countrywide executives’ financial hanky-panky resulted in charges by the Securities and Exchange Commission and the Department of Justice in 2009. The most prominent of those cited was Angelo Mozilo, who had co-founded Countrywide and was its chief executive officer and chairman of the board. Mozilo, who had worked in his father’s butcher shop in the Bronx when he was 10 years old, often would tell audiences that his family had been unable to afford a home and that his goal at Countrywide was to see to it that other Americans could purchase houses. 

The Department of Justice charged Mozilo with insider trading and securities fraud for an alleged failure to disclose Countrywide’s lax lending standards in its annual report. Between 2005 and 2007, when Mozilo was, or should have been, well aware the company was going south, he sold company shares for a profit of $129 million. His combined salary, bonuses, and stock options between 2001 and 2006 came to $400 million. In a press release, the SEC portrayed Mozilo as a man who bet the chips of investors in his company on ever crazier schemes while quietly pocketing personal wealth.

The case against Mozilo was based in considerable measure on the discrepancy between his public statements about Countrywide’s health and the private messages he dispatched to insiders regarding the true condition of the subprime loans that were massacring the company’s profit and loss statements. According to the June 5 Baltimore Sun article, “Countrywide’s CEO Charged with Fraud,” by Scott Reckard and Jim Puzzanghera, one internal e-mail sent by Mozilo read, “In all my years in the business I have never seen a more toxic product.” In another he wrote, “Frankly, I consider that product line to be the poison of our time.” 

The case of Edward Jordan, a retired postal worker living in New York City, puts a human face on the predatory Countrywide tactics. Jordan was close to paying off his home when a broker told him he was paying altogether too much interest on his loan. She offered a 1 percent rate. Jordan refinanced his house, ending up with a fee of $20,000 for doing so. He soon found that the interest rate would quickly escalate to a high of 9.9 percent. Charles Morris, who discusses the Jordan case in his 2008 book, “The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crunch,” says bluntly: “On any construction of the deal, he was robbed by Countrywide.”

The FBI was investigating possible criminal charges based on a setup known as “FOA” – “Friends of Angelo.” Countrywide gave prominent politicians, including Sen. Christopher Dodd (D-Conn.), chair of the Senate Banking Committee, and Sen. Kent Conrad (D-N.D.), chair of the Senate Finance Committee, sweetheart loans that waived fees and carried low interest rates. Dodd, for instance, had gotten a mortgage on houses in Washington and in Connecticut, his home state, which was $75,000 less than it would have been under normal conditions.

According to an August 8 Washington Post article, “Ethics Committee Clears Dodd, Conrad,” by Zachary A. Goldfarb and Ben Pershing, the Senate Select Committee on Ethics on the previous day dismissed complaints against Dodd and Conrad that they used their positions of power to obtain special deals on home loans from lender Countrywide Financial.

After a yearlong investigation, according to the article, the committee told Dodd and Conrad that it found “no substantial credible evidence” that they had violated the Senate’s ethics rules. The committee found that the senators’ loans were processed through a special, controversial program, but that they didn’t appear to profit financially from it.

However, the committee criticized the senators, telling them they “should have exercised more vigilance in your dealings with Countrywide in order to avoid the appearance that you were receiving preferential treatment based on your status as Senator.”

The New York Post would learn that Mozilo and his co-defendants had hired a brigade of 19 lawyers to mount their defense and that, at least indirectly, American taxpayers would foot the estimated $50 million in attorneys’ fees. The newspaper reported in a June 10 article, “$50M Toxic Avenger: Bailed Out B of A Footing Mozilo’s Bills,” written by Paul Tharp and Matthew Scanlan, that the Bank of America, which received $45 billion in bailout money from the federal government, had agreed when taking over Countrywide that for six years it would be responsible for the legal expenses incurred by the company and its officers.

Fannie Mae and Freddie Mac
In September 2008, Fannie Mae (the colloquial term for the Federal National Mortgage Association) and Freddie Mac (standing for Federal Home Loan Mortgage Corporation), both in desperate financial condition, were placed under the conservatorship of the Federal Housing Finance Agency. The drastic change, tantamount to nationalization, was described as “one of the most sweeping government interventions in the private financial markets” in a Sept. 8, 2008, Washington Post article, “Treasury to Rescue Fannie and Freddie: Regulators Seek to Keep Firms’ Troubles from Setting Off Wave of Bank Failures” by Zachary Goldfarb, David Cho, and Binyamin Bloomberg.

Fannie Mae and Freddie Mac were nongovernmental agencies created during the Great Depression to assist low-income persons to secure housing by assuring that banks would have sufficient liquidity to provide them with loans. The two agencies, before their fall, either owned or had guaranteed $1.4 trillion worth of mortgages or 40 percent of the entire total in the United States (Christie, 2006; Wallison, 2001). Their shares had suffered a loss of $100 billion in 2008. The entities enjoyed federal backing and were known as GSEs (government-sponsored enterprises). They are the only companies among the Fortune 500 roster of the leading U.S. businesses that aren’t required to inform the public about any financial difficulty they might be experiencing.

Henry M. Paulson Jr., George W. Bush’s Treasury Department secretary, blamed the need for the takeover on a “flawed business model,” a euphemism for inept and irresponsible business management. The government rationale for the injection of taxpayer funds into the floundering credit agencies was that to allow them to fail would have repercussions more severe than the financial cost necessary to keep them afloat. White-collar crime scholars wondered if the same considerations might excuse the incompetence or shady activities of a Mafia boss or a small business owner supporting a large family.

Notable was the fact that two former chief executive officers of Fannie Mae had benefited from the good graces of Countrywide’s Friends of Angelo favoritism program. They, too, were under investigation by the FBI as of press time.

Lehman Brothers Holdings
Rescue operations stalled momentarily when Lehman Brothers went broke. Three brothers from Bavaria founded the company in the 1850s as a dry goods store and cotton trader in Montgomery, Ala. The company had moved to New York in 1868 and grew to be the country’s fourth-largest investment bank.

In 2007, in dire financial straits, it failed to find a buyer and the government allowed it to fail. Lehman Brothers had been fudging its balance sheet, inflating its asset position with accounting chicanery, and was short $650 billion, report Lawrence McDonald and Patrick Robinson, in their 2009 book, “A Colossal Failure of Common Sense: The Inside Story of the Collapse of Lehman Brothers.”

The casino capitalism of Lehman Brothers was aided and abetted by the rating agencies that gave top scores to the company’s toxic holdings. McDonald and Robinson have their own ideas about what was up with the rating agencies: “Maybe it was something spectacularly dishonest, like taking that colossal amount of fees in return for doing what Lehman and the rest wanted, giving those [bonds] an utterly undeserved rating,” they wrote.

While the disappearance of Lehman Brothers didn’t produce the catastrophic level of widespread financial disorder that seemingly would have occurred had Bear Stearns been allowed to go into bankruptcy, the government didn’t rescue the company, in part, because, for the moment, the feds and Wall Street had lost their appetite for bailing out distressed investment houses.

The other part of Lehman’s failure lay in an aspect of its culture. The company, led by Richard S. (Dick) Fuld Jr., was an insular entity that wasn’t closely connected with other Wall Street players.

Fuld operated his fiefdom as if he were engaged in a war with its competitors rather than an enterprise in which they could jointly become famously wealthy. He was dubbed the “gorilla” because he seemed to grunt rather than speak in full sentences and he told his underlings: “Every day is a battle. You’ve got to kill the enemy.” To make his point, he handed out plastic swords to staffers. For his own part, Fuld had taken home some $480 million during the six years before 2007 and owned six houses including a 20-room mansion in Greenwich, Conn.

The company’s downfall was the consequence of its reckless indulgence in subprime lending. Other factors for its collapse were its failure to finalize a buyout by two suitors, Barclay’s Bank of England and the Bank of America, both of whom backed off when a final takeover decision had to be made.

American International Group (AIG)
Next came AIG, the largest insurance company in the United States and the 18th-largest public company in the world. AIG had a colorful background. Cornelius Vander Starr, a young expatriate American, founded the company in Shanghai, China, in 1919. He correctly presumed he could make a fortune selling life insurance to the Chinese because advances in medicine and hygiene were allowing them to live longer. In 1939, with the Japanese targeting China, AIG relocated its headquarters to New York City (Shelp and Ehrbar, 2006).

Maurice Raymond Greenberg, nicknamed Hank Greenberg after a well-known former Detroit Tigers home run slugger, subsequently ran AIG for 37 years, the longest term of any contemporary leader of a major corporation. In time, Greenberg’s personal holdings in AIG stock were worth more than $3 billion, which placed him 47th on the roster of the richest Americans.

One of Greenberg’s working maxims was: “All I want from life is an unfair advantage” (Shelp and Ehrbar, 2006). He was forced to resign as AIG’s chief executive officer in 2005 when the company admitted intentionally giving false information to regulators and misrepresenting earnings. The board of directors turned against Greenberg when it learned he planned to take the Fifth Amendment against self-incrimination when called to testify before a Congressional committee.

In August 2009, Greenberg and Howard Smith, AIG’s former chief financial officer, paid $15 million to the SEC to settle the charge that they had misstated the financial condition of the company. Had the truth been revealed, AIG would have failed to meet key earnings and growth targets. Greenberg didn’t admit guilt and insisted that had he been charged criminally for securities fraud, he would have fought the case rather than settled.

Earlier, four former executives of General Re, a reinsurance company, and one AIG executive, were convicted of inflating AIG’s reserves by $500 million through fraudulent dealings, thereby artificially boosting AIG’s stock price. Christian Milton, head of AIG’s reinsurance division, received a four-year prison sentence (Efrati and Pleven, 2009).

AIG had been deeply involved in the credit derivative market. Warren Buffet, the second richest man in America (Bill Gates of Microsoft is the richest), had called derivatives “weeds priced as flowers” and branded them as “financial weapons of mass destruction,” McDonald and Robinson wrote.

Derivatives – complex packaged deals – became the hottest items around because they paid hefty commissions thanks to their risky nature. Besides its exposure to derivative losses, AIG was found to have placed reinsurance funds with companies it misrepresented to regulators as independent, but they were really totally owned by AIG. In the fall of 2008, the government bailed AIG out of its dire liquidity crisis to the tune of $173 billion. The government now owns nearly 80 percent of the company, and the trustees appointed to oversee AIG have been named as the majority of the board of directors.

Two subsequent AIG acts came to epitomize the belief that huge organizations such as AIG exist in a world spectacularly different from the one inhabited by more ordinary people and entities.

The first was an eight-day company “outing” for favored employees that took place at the St. Regis Monarch Beach Resort in Dana Point, Calif., just five days after the company accepted a huge sum of taxpayer money. The total cost came to almost half a million dollars (excluding airfares to the site) and included $139,000 for hotel rooms (an ordinary St. Regis room is priced $425 a night plus tax; an ocean view room at $565), $147,301 on banquets, and $23,380 for spa treatments. The company’s carefully crafted response to revelations of the celebration is worth sharing. It read:

“This type of gathering is standard practice in the industry and was planned a year in advance of the Federal Reserve loan to AIG. We recognize, however, that even activities that have long been considered practice may be perceived negatively. As a result, we are reevaluating various aspects of our operations in the light of the new times in which we operate.”

The defense that something is acceptable because everybody in the industry does the same thing is much like a burglar saying that his thievery is fine because all the burglars he knows are engaged in the same activity. That this has been going on for a long time would seem to demonstrate added culpability rather than excusatory evidence. The statement about thinking twice before continuing the enormously expensive indulgence is grudging at best, as evidenced by the phrase “may be perceived,” rather than a flat-out admission that the spending orgy was inexcusable.

The second episode occurred when AIG spent $165 million in bonuses. The top payout to one person was $6.4 million while 73 employees received at least $1 million each. That action led to comments in Congress that AIG was like an Alice in Wonderland business, that its behavior was surreal and demonstrated unbridled greed, that the bonuses boggled the mind, and that they rewarded incompetence.

Merrill Lynch & Co.
The implosion of financial institutions began to assume a familiar pattern. On Dec. 5, 2008, shareholders of Merrill Lynch, a company founded in 1914, approved a buyout by the Bank of America, which had itself received bailout money from the federal government. Subsequently, it was learned that Merrill Lynch, apparently unbeknownst to Bank of America, had lost some $138 billion during the last three months of 2008. Not surprisingly, Bank of America had to return to the federal trough to get its hands on more taxpayer money.

Only later did it become known that right before the merger, Merrill had paid 170 executives a total of $3.6 billion in bonuses: all of these “rewards” were more than $1 million, despite the fact that the company had lost $28 billion during the year.

Critics were met with the response that such staggering sums were necessary to retain the best and the brightest. The critics wondered how bright a person needed to be to inflict losses of billions of dollars on a company.

Automobile Manufacturers
In 2009, the big three auto companies – Ford, Chrysler, and General Motors – had their turn to confront their massive losses. The American auto industry once led the world in sales, but in recent times it had been strikingly outpaced by foreign vehicles, particularly cars from Japan. When gas prices soared, the guzzlers like American-made SUVs took a heavy hit. When the overall economy went south, the big three had to come to Washington, hat in hand, begging for financial subsidies. They traveled to the Congressional hearings in pampered style aboard company jets – and created an uproar.

The reaction to the executives’ means of transportation is informative in regard to public opinion concerning the economic meltdown and white-collar crime. Almost all Americans have, at best, a limited understanding of the arcane economics of Wall Street and its financial affiliates, but they could understand and get excited about the yearly company bonuses some CEOs received that were higher than their own earnings over their entire working life. And they could appreciate that travel on a very expensive company-owned jet is a luxury that’s financed by stockholders and also by taxpayers because the planes are written off as corporate business expenditures.

Yet, despite obvious public antipathy and distaste directed at the automobile companies’ CEOs, executives with other corporations that had been propped up with huge sums of bailout funds continued to use company jets not only for business purposes but for vacation jaunts for themselves and their families.

Investigative reporters with The Wall Street Journal documented many flights on company planes by numerous executives to vacation spots in Europe, Mexico, the Caribbean, and the ski resorts in Aspen, Colo. The Regions Financial Corporation in Birmingham, Ala., for example, had received $3.5 billion in bailout money from the federal Treasury Department’s Troubled Asset Relief Program (TARP) on Nov. 14, 2008.   

Twelve days later, the day before Thanksgiving, two company jets flew from Birmingham, bound for the posh Greenbrier Resort in West Virginia where the company’s CEO and members of his family spent four nights over the holiday. The round-trip cost was estimated to be in the range of $17,000 (Drucker and Maremont, 2009).

STUDY OF MORAL MORASS 

These corporate scandals were not white-collar crimes, of course, because they violated no laws except perhaps a somewhat amorphous legal concept that corporate executives have a responsibility to act in the best interests of their shareholders. That the wrongdoer might not have intended injury often isn’t permitted as a defense in law when a reasonable person should have known that his or her self-serving actions had a strong likelihood of harming others.

It seems important that the study of white-collar crime focus not only on violations of the letter of the law, but also the acts by those in positions of power who, in their occupational roles, seriously harm others.

In part 2 of “The Great American Meltdown,” in the January/February issue, we’ll explore the real underbelly of corporate corruption and take a look at the Ponzi artists who did break the law in their quest for excess and power. Their tremendous greed harmed their clients, co-workers, communities and, in some cases, their countries.

Gilbert T. Geis, Ph.D., CFE, is President Emeritus of the ACFE. A pillar of the ACFE, he was one of the earliest advisors to Joseph T. Wells, CFE, CPA, founder and Chairman. An expert in white-collar crime, Geis is professor emeritus in the Department of Criminology, Law & Society at the University of California-Irvine.

REFERENCES
Bamber, Bill and Spencer, Andrew (2009). Bear Trap: The Fall of Bear Stearns and the Panic of 2008. New York: Brick Tower Press.

Bruck, Connie (2009, June 29). “Angelo’s Ashes: The Man Who Became the Face of the Financial Crisis.”  The New Yorker, 46-55.

Christie, James R. (Ed.). (2006).  Fannie Mae and Freddie Mac: Scandal in U.S. Housing. New York: Nova.

Cohan, William D. (2009). House of Cards: A Tale of Hubris and Wretched Excess on Wall Street.  New York: Doubleday.

Drucker, Jesse and Maremont, Mary (2009, June 19). “CEOs of Bailed-Out Banks Fly to Resorts on Firms’ Jets.” The Wall Street Journal, pp. A1, A12.

Efrati, Amir and Pleven, Liam (2009, August 7). “Greenberg to Pay $15 Million in SEC Case. Wall Street Journal,” p. C1, C3.

Friedrichs, David O. (2009). “Exorbitant CEO Compensation: Just Reward or Grand Theft?” Crime, Law and Social Change, 51, 45-72,

Goldfarb, Zachary A., Cho, David and Bloomberg, Binyamin (2008, Sept. 8). “Treasury to Rescue Fannie and Freddie: Regulators Seek to Keep Firms’ Troubles from Setting Off Wave of Bank Failures.” Washington Post,  p. A1.

Goldfarb, Zachary A., and Pershing, Ben (2009, Aug. 8). “Ethics Committee Clears Dodd, Conrad.” Washington Post.

Kelly, Kate (2009). Street Fighters: The Last 72 Hours of Bear Stearns, the Toughest Firm on Wall Street. New York: Portfolio.

McDonald, Lawrence G. and Robinson, Patrick (2009). A Colossal Failure of Common Sense: The Inside Story of the Collapse of Brothers. New York: Crown.

Michaelson, Adam (2009). The Foreclosure of America: The Inside Story of the Rise and Fall of Countrywide, Home Loans, the Mortgage Crisis, and the Default of the American Dream. New York: Berkley Books.

Morris, Charles R. (2008). The Two Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crunch. (Rev. ed.). New York: Public Affairs.

Reckard, E. Scott and Puzzanghera, Jim (2009, June 5).“Countrywide’s CEO Charged with Fraud.” Baltimore Sun, p. 15A.

Shelp, Ronald and Ehrbar, Al (2009). Fallen Giant: The Amazing Story of Hank Greenberg and the History of AIG. Hoboken, N.J.: John Wiley.

Tharp, Paul and Scanlan, Matthew (2009, June 10).  “$50M Toxic Avenger: Bailed-Out B of A Footing Mozilo’s Legal Bills.” New York Post, p. 34.

Wallison, Peterl J. (Ed.) (2001). Serving Two Masters, Yet Out of Control: Fannie Mae and Freddie Mac. Washington, D.C.: AEI Press.

Wessel, David (2009). In Fed We Trust: Ben Bernanke’s War on the Great Panic. New York: Crown.

Gil Geis: ‘There’s Simply No One Like Him’ 

By Joseph T. Wells, CFE, CPA

I knew Gilbert Geis before we were formally introduced by the late Dr. Donald R. Cressey (the “father” of the ACFE) in 1986. Like so many others, I had met Dr. Geis only through his writings, but thanks to Don’s retirement party, that was about to change.

There were at least 100 people in the hotel ballroom that night. It was hard to get Don’s attention – what with the crowd around him. Yet I knew Gil Geis was there, and I was anxious to meet this man who had already exerted significant influence on my thinking about important sociological issues. And having already read “On White-Collar Crime,” one of the famed criminologist’s seminal works, I learned that since his childhood, Gil had kept track of every single book he had read. I found that fact fascinating and wondered why I never thought of doing the same thing.

My persistence that evening with Don Cressey finally paid off. When the crowd around Don momentarily subsided, I waded in. “Don,” I said, “I really want to meet Gil Geis.” He smiled and motioned over my shoulder. “Well, you won’t have to wait long,” Don said. “He is right behind you.”

I thrust my hand in Gil’s, introduced myself, and proceeded to fawn over him like he was a rock star. It was clear that Gil didn’t have a clue who I was. He was nonetheless extremely gracious to the stranger in front of him.

But on the eve of Don’s retirement party, neither Gil nor I could have possibly fathomed that in only a few years, I would become the founder and Chairman of the largest anti-fraud association in the world or that Gil Geis would hold high office in the ACFE.

From 1988, when the Association of Certified Fraud Examiners was organized, its membership has grown to nearly 50,000 in 125 countries. In 1992, when our rolls were less than 5,000, I asked Gil to serve as President of the Association and he graciously accepted. He significantly influenced our growth and served as our intellectual thought leader for nearly a decade. I still value Gil’s counsel in his role as the ACFE’s President Emeritus.

I have only one regret about my affiliation with Gil: I didn’t meet him sooner. He is immensely stimulating. At a time in life when most men would be looking back on their accomplishments, Gil is anxiously looking forward to the next challenge. With his quick wit and razor-sharp mind, he can both educate and entertain – often in the same sentence. But so it is with this man, the preeminent Dr. Gil Geis. There’s simply no one like him.

Joseph T. Wells, CFE, CPA, is founder and Chairman of the ACFE. A longer version of this article appears as the forward in the 2001 book, “Contemporary Issues in Crime & Criminal Justice: Essays in Honor of Gilbert Geis,” edited by Henry N. Pontell and David Shichor, published by Prentice Hall. 

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