Investor Fraud Cases Just Keep Getting Discovered

Today's news that the SEC has filed fraud charges against Florida hedge fund manager Arthur Nadel is just the latest of fund frauds to be unveiled. Similar frauds have been unveiled in Pennsylvania, Indiana, and Texas in recent weeks.

The latest reported frauds are small compared to the Madoff fraud, but no less troublesome.

Regretfully, I am expecting many more of these frauds to be uncovered over the next six months. It is now clear that the underbelly of society was very active at taking advantage of the stock market euphoria that went on in recent years. Most of these type frauds should become self evident within like six months as investors seek to draw down investments due to their needs, and/or become more suspicious based on the publicity around these frauds.

But, here is what is really scary. These frauds were being perpetrated at a time when the economy supported legitimate business activity.

I am convinced that the dysfunctional economy will create a whole new wave of frauds.

Well intentioned, relatively honest people will find themselves with their backs to the wall...and some of these, will unfortunately choose the fraud route.

Just another of the sad societal effects of the economic meltdown.