Author Topic: Trump and the Fraud Triangle  (Read 880 times)

Read the Footnotes

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Trump and the Fraud Triangle
« on: October 04, 2019, 04:29:31 AM »
https://www.acfe.com/fraud-triangle.aspx

The ACFE's fraud triangle model requires three factors for an ordinary person to commit fraud:

Pressure,
Opportunity, and
Rationalization

The model can be used to try to prevent fraud, identify fraud risk, or explain fraud.

The model can be applied to Trump. If you apply it to the Ukraine scandal:

1. Pressure. There are contemporaneous reports that say Trump became concerned with polls indicating he would lose the election to Biden beginning in the spring of 2019. Reports from insiders say that he became obsessed with digging up dirt on Biden at that point. So it would seem he felt pressure because he faced losing the election. Trump is also under enormous pressure because he faces lawsuits and prosecutions as soon as he is no longer President.
2. Opportunity. The Trump administration has had trouble attracting qualified people and has suffered from enormous turnover. Those that remain in the administration are clearly willing to look the other way. Trump has the support his base which seems willing to overlook anything he does because they believe the other guys are even worse than Trump.
3. Rationalization. Trump constantly is saying things like "everybody does it", or "they're all crooks". To me Trump seems off the charts on his openers and low expectations regarding criminality and he would therefore be judged a very high risk for having a very low bar to rationalize criminality.

As a general rule, I would say that if you know anyone such as an investor who is constantly saying everyone is a crook or everyone is committing some crime, run away from them. Certainly do not invest with them. Their belief and statements that everyone does it may just be their justification for what they are doing.


Read the Footnotes

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Re: Trump and the Fraud Triangle
« Reply #1 on: October 04, 2019, 01:19:31 PM »
This is an interesting opinion piece from Marketwatch.com that says that Trump isn't losing his marbles, but is just not accustomed to oversight. The piece says that part of the issue is that we in the US have not been hard enough on white collar criminals, therefore Trump is more likely to think his behavior is normal or acceptable because he faced so few penalties for similar behavior before being elected.

That seems compatible with this thread and is a novel interpretation that I have not seen before just now.

https://www.marketwatch.com/story/the-real-reason-for-trumps-meltdowns-2019-10-04

Read the Footnotes

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Re: Trump and the Fraud Triangle
« Reply #2 on: October 07, 2019, 06:13:55 AM »
One of the legal theories that Trump could be pursued under is Honest Services Fraud. Honest Services Fraud is very similar to a CEO misappropriating the assets of a company and using them for their own benefit. It is amazing to me that investors who would never tolerate that behavior in a company they invest in will tolerate that in a politician that they support.

https://en.wikipedia.org/wiki/Honest_services_fraud

It reminds me of Madoff investors who believed that he was a crook, but these investors thought Madoff was their crook and Madoff would only be committing crimes for the benefit of them, his investors. As an aside it is worth noting that there are Madoff investors who still to this day believe Madoff was innocent and falsely accused.

Vish_ram

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Re: Trump and the Fraud Triangle
« Reply #3 on: October 07, 2019, 06:49:43 AM »
Trump's mafia like grip on his R senators is loosening. Once the polls show the inevitable, his support will collapse. T will resign. Pence will pardon him and his family.

He is thinking this is just like another Kavanaugh.

Read the Footnotes

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Re: Trump and the Fraud Triangle
« Reply #4 on: October 07, 2019, 07:05:27 AM »
Trump's mafia like grip on his R senators is loosening. Once the polls show the inevitable, his support will collapse. T will resign. Pence will pardon him and his family.

He is thinking this is just like another Kavanaugh.

Your narrative is close to the best possible outcome for the country in my estimation. There are several factors that make it less likely than I would hope. The first is cockroach theory. There's never just one cockroach. We have seen many impeachable offenses already, the problem is that there are likely many cockroaches yet to come and Trump's best chance to keep them hidden is to stay in power. Another complicating factor is that Trump faces a lot of criminal and civil risk which cannot be pardoned, so he will want to retain power for that reason too.

cwericb

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Re: Trump and the Fraud Triangle
« Reply #5 on: October 07, 2019, 07:54:02 AM »
Make America Great Again - Dump Trump in 2020

He could resign in exchange for a pardon, but he would still be open to State charges.

As far as his cronies are concerned, loyalty with Trump only goes one way and he would dump them in a heartbeat if some sort of deal could be arranged to protect him from any future charges. Might be worth it to get rid of this train wreck of an administration.

However, his narcissism may not allow him to accept this.
Politicians and diapers must be changed often, and for the same reason. - Mark Twain

Read the Footnotes

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Re: Trump and the Fraud Triangle
« Reply #6 on: October 09, 2019, 01:15:52 PM »
An explanation for how we got to this point?

I briefly worked for a financial expert witness firm a while ago. I also worked on a side project for them revolving around a key insight that many people involved in a fraud didn't really know what they were getting in to when their involvement first started or didn't make a conscious decision to commit fraud.

There are the absolute psychopaths who know set out from the start to commit fraud and do so over and over again, but these fraudsters tend to ensnare a larger group of people who started out more innocently. Frequently there are a larger group of people who woke up one day to find themselves on a slippery slope. By the time they realize the mess they are in, they are faced with making painful decisions in the short run to get out of the fraud, or doubling down and just hoping for the best. Sadly a large portion will hope for the best. Plus by this time, it could be a career criminal psychopath could be telling them that they are equal parties to the fraud at this point and that there is evidence connecting them to the crimes. As soon as these naive types don't make the right choice that first time, they are likely in for the long run and they'll end up going down with the ship. That's a model for how people who might have been pretty average ethically can years later find themselves in very serious legal trouble.

I was just thinking about the situation with Trump and wondering how in the heck did the US get where we are. Thinking about Trump, it seems like this model could easily explain Trump's presidency. Trump seemingly had a bunch of ethical issues, which made him more vulnerable to getting in trouble. He probably thought he wouldn't be elected and made some bad short-term choices for that reason before he was even elected in part because he thought that the stakes were low. By the time he realizes he's on the slippery slope, he might have felt in over his head. Plus by that point, he might have been owned by Putin or numerous others. Trump is probably the last person to admit a mistake, so he would just keep doubling down, and who knows what all Trump might feel he needs to cover up at this point.

I am disappointed I did not try to apply this model before. It seems like a very simple and sad explanation, which might prove to be an accurate explanation.
« Last Edit: October 09, 2019, 01:18:44 PM by Read the Footnotes »

SharperDingaan

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Re: Trump and the Fraud Triangle
« Reply #7 on: October 10, 2019, 05:06:18 AM »
Trump is a liability that has outlived its usefulness; and the pendulum that got him elected, is now swinging the other way.
As is being similarly experienced by politicians (around the world) who took pages from his playbook.

Only question is how best to remove the liability.

Impeachment has advantages. Parties can claim they kicked da bum out, and see! - the legal system agrees with us! But more importantly, the quicker he goes into incarceration, the sooner and more effectively he can be 'contained'. No twitter access !!

Then how to nullify the Trump dirt that is out there?

Traditionally, an incumbent would go skydiving without a parachute; as to be effective, there has to be a warm body. Impeachment has the advantage that its legal, also comes with garbage disposal, and there is no possibility of the body inopportunely re-surfacing (Jimmy Hoffa). The pinata also lives for longer, so everyone gets the chance to put their knives in. Some folks have a very long line-up!

SD


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Re: Trump and the Fraud Triangle
« Reply #8 on: October 16, 2019, 04:38:33 PM »
Trump is a liability that has outlived its usefulness; and the pendulum that got him elected, is now swinging the other way.
Yes, but there are a lot of people who can't see the pendulum swinging. There are many factors at play. People couldn't see that Trump was going to be elected. Now many of those people who laughed at the blindness of others (primarily on the left) are now blind themselves and can't see the wave building. I predicted the rise of someone like Trump almost ten years in advance, so I wasn't surprised. I was prepared, and I made a lot of money in the markets as a result.

As is being similarly experienced by politicians (around the world) who took pages from his playbook.
Yes. There was a wave around the world. Those with more exposure to international news sources are more likely to recognize that than many of the people who have a more limited flow of information.

Only question is how best to remove the liability.
There is pressure on Trump from so many different directions right now it is hard to count all of them.

Impeachment has advantages. Parties can claim they kicked da bum out, and see! - the legal system agrees with us! But more importantly, the quicker he goes into incarceration, the sooner and more effectively he can be 'contained'.
Impeachment in the US is a political process and there are many scenarios in which Trump could leave office without incarceration in future. The fact that he does risk incarceration is part of what makes this so dangerous. Trump wants to stay in office at all costs because of what awaits him as soon as he is no longer President.

No twitter access !!
It wouldn't surprise me if today's Twitter announcement ends up being the first of several small changes. If they are going to do anything, they will likely use "salami tactics" and make many small changes over time to avoid backlash from a major announcement.

Then how to nullify the Trump dirt that is out there?
That is a major under-appreciated problem that is hard to quantify. He has been playing that game for decades, so who knows what he has. Those Republican Senators who plan to retire, and there are quite a few, they don't have nearly as much to lose.

Traditionally, an incumbent would go skydiving without a parachute; as to be effective, there has to be a warm body. Impeachment has the advantage that its legal, also comes with garbage disposal, and there is no possibility of the body inopportunely re-surfacing (Jimmy Hoffa). The pinata also lives for longer, so everyone gets the chance to put their knives in. Some folks have a very long line-up!

The problem for the Republican congressmen with impeachment is timing and the fact that they could end up losing control of the Senate if they do not act quickly enough. It sounds like McConnell may know this and want a speedy trial, one way or another. If Trump is going down, McConnell may want to do it quickly and unanimously to limit the damage to the Senate. It's not clear if Trump is just bluffing to protect his ego and to delay at this point, or if he is dumber than he seems with respect to the way a Senate trial could play out for him. I suspect he knows.

Impeachment is definitely NOT riskless for Trump. It is almost certain that the House will vote to impeach if they get the chance. If sent to the Senate, Trump will likely not be able to prevent a trial. There are enough retiring Republican Senators who are not Trump fans that it is all but certain Trump will not get a majority to vote for dismissal. If the a trial is begun and is at all professional and lawyerly, it will be almost impossible for Trump to prevail. The Senate would be given only two choices 1) make a mockery of the Senate by allowing Trump and Co. to get away with behaving the way Giuliani has been behaving, or 2) conduct a proper trial, which Trump would have no chance of surviving.

Support for the Clinton and Nixon impeachments were only only 19% when they began. Nixon resigned with only 57% support for impeachment, because the Republican congressional leadership told him it was over. Support for impeachment AND REMOVAL of Trump is at 52% today according to Gallup. It is also a real risk that if the Republican congressional leadership goes to Trump (as they did to Nixon) and they tell him to resign, that we don't know what Trump will do.

Nixon ended up resigning within days of support for removal reaching 52%. Nixon's job approval was lower than Trump's, but there is a risk for Trump that his job approval rating is about to take a nose dive.

(https://www.pewresearch.org/fact-tank/2019/09/25/how-the-watergate-crisis-eroded-public-support-for-richard-nixon/)
« Last Edit: October 16, 2019, 04:55:58 PM by Read the Footnotes »

Read the Footnotes

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Re: Trump and the Fraud Triangle
« Reply #9 on: October 16, 2019, 06:12:09 PM »
The ProPublica has made some progress investigating Trump fraud related to tax fraud and lending fraud. As has been rumored for a long time, there is evidence that there is a gap between the more flattering numbers given to banks and the IRS numbers which showed less taxable income. If I reported this set of facts without revealing the company, how many people would think I was talking about a Chinese stock fraud from a year ago?

https://www.propublica.org/article/trump-inc-podcast-never-before-seen-trump-tax-documents-show-major-inconsistencies

There are simultaneously court cases progressing related to these issues. This may be a preview of what will be found if prosecutors get access to tax documents and/or banking documents.