Why Are Famous Crooks Going Upscale?
Sam Bankman-Fried, founder of FTX, went to the elite Crystal Springs Uplands private school and then MIT; his parents are Stanford professors. His FTX colleague Caroline Ellison went to Stanford; her parents are MIT professors. Elizabeth Holmes, who went to prison for the Theranos fraud this past May, is descended from the Fleischmann Yeast fortune, went to the private St John's School in Houston and then to Stanford, although she dropped out there. Her father is a high-level federal bureaucrat.
Contrast this with Jeffrey Epstein, one of the most famous crooks of the 2000s and 2010s, who went to New York public schools but was only briefly enrolled in undergraduate programs after that and never earned a four-year degree. He was able to convince MIT and Harvard that he was a major donor without apparently donating very much, and he associated himself with their brands, but that was part of his non-profit swindle, and unlike the more recent perps, he never earned an Ivy degree or even matriculated at an Ivy school.
But the farther back we go, the lower the social level of even white-collar scammers. The earliest modern Ponzi schemes I'm familiar with start with Goldstein Samuelson from the 1970s. Harold Goldstein went to prison for the fraud in 1973 (there never was a Samuelson); thereafer, he accumulated an extensive criminal history punctuated by mental disorder. His educational backgound is unknown.
Equity Funding collapsed in 1973 for creating 60,000 bogus life insurance policies that it sold to reinsurance companies for a fee. It was founded by Stanley Goldblum, who pled guilty and went to prison in 1973. He never completed college.
Ivan Boesdky pled guilty to insider trading in 1986 and cooperated with the SEC. He received a prison sentence of 3-1⁄2 years and was fined US$100 million. He attended courses at Wayne State University, Eastern Michigan University and the University of Michigan but never received an undergraduate degree. Despite this, he was admitted to Detroit College of Law (now Michigan State University College of Law) and graduated during 1965.
Michael Milken was indicted in March 1989 on 98 counts of racketeering and fraud, including allegations that he'd conspired with Ivan Boesky. In 1990, he pled guilty to six counts of securities and tax violations. However, critics of the government's conduct charge that it indicted Milken's brother Lowell to pressure Milken to settle, a tactic some legal scholars condemn as unethical. Over the years, Milken successfully had his sentence reduced and eventally received a full pardon from Donald Trump in 2020.
Milken is a somewhat anomalous figure in this group, as he received a BA from UC Berkeley summa cum laude and an MBA from Wharton. In addition to the fines he's paid, according to Forbes, Milken has given away between 5-10% of his fortune.
Among the figures in the scandals of the early 2000s, the Enron executives Kenneth Lay and Jeffrey Skilling are probably closest to Sam Bankman-Fried and Caroline Ellison. Lay had degrees from the University of Missouri and the University of Houston, but this wasn't an Ivy-level pedigree. Jeffrey Skilling went to Southern Methodist University and had a Harvard MBA. Nevertheless, these men appoear to have been prosperous middle class, not gentry like Bankman-Fried and Ellison.
Bernard Ebbers, CEO of WorldCom,
briefly attended the University of Alberta and Calvin College before enrolling at Mississippi College on a basketball scholarship. Between schools, he worked as a milkman and bouncer. An injury before his senior season prevented him from playing his final year and he was instead assigned to coach the junior varsity team. In 1967, he received a Bachelor's degree in physical education, with an academic minor in secondary education, from Mississippi College.
On August 27, 2003, Attorney General of Oklahoma Drew Edmondson filed a 15-count indictment against Ebbers. . . . On March 15, 2005, Ebbers was found guilty of all charges.
Dennis Kozlowski, former CEO of Tyco International, was
convicted in 2005 of crimes related to his receipt of $81 million in unauthorized bonuses, the purchase of art for $14.725 million and the payment by Tyco of a $20 million investment banking fee to Frank Walsh, a former Tyco director.
He attended Seton Hall University.In December 2008, Bernard Madoff confided to one of his sons that he had been running a Ponzi scheme and pled guilty in March 2009.
Madoff graduated from Far Rockaway High School in 1956.
Madoff attended the University of Alabama for one year, where he became a brother of the Tau Chapter of the Sigma Alpha Mu fraternity, then transferred to and graduated from Hofstra University in 1960 with a Bachelor of Arts in political science. Madoff briefly attended Brooklyn Law School, but left after his first year.
What I can conclude from all these figures is that at best, up to Theranos and FTX, the famous white-collar perps were middle class from at best middle-class families. They went mostly to middle-class universities from public schools, but not all graduated. Michael Milken was the biggest exception, a high-achieving kid from a solid Jewish middle-class family, while at the beginning of the timeline, figures like Harold Goldstein and Stanley Goldblum had more shadowy backgrounds. Up to Jeffrey Epstein's arrest and puzzling death, all these figures came from a range between sketchy and just prosperous middle class.Now all of a sudden, from Theranos to FTX, we're seeing perpetrators from the gentry and upper classes with family pedigrees, Ivy faculty parents, prep schools, Ivy degrees, and awards for being child prodigy overachievers that put even Michael Milken to shame. What's going on here? I'm still working on it, but I'll discuss this more tomorrow.
