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Lying for Money: How Legendary Frauds Reveal the Workings of Our World

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Financial crime seems horribly complicated but there are only so many ways you can con someone out of what's theirs. In fact, there are four. A veteran regulatory economist and market analyst, Dan Davies has years of experience picking the bones out of some of the most famous frauds of the modern age. Now he reveals the big picture that emerges from their labyrinths of Financial crime seems horribly complicated but there are only so many ways you can con someone out of what's theirs. In fact, there are four. A veteran regulatory economist and market analyst, Dan Davies has years of experience picking the bones out of some of the most famous frauds of the modern age. Now he reveals the big picture that emerges from their labyrinths of deceit.Along the way you'll find out how to fake a gold mine with a wedding ring, a file and a shotgun. You'll see how close Charles Ponzi, the king of pyramid schemes, came to acquiring his own private navy. You'll learn how fraud has shaped the entire development of the modern world economy. And you'll discover whether you have what it takes to be a white-collar criminal mastermind, if that's what you want. (Which you don't. You really, really don't.)


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Financial crime seems horribly complicated but there are only so many ways you can con someone out of what's theirs. In fact, there are four. A veteran regulatory economist and market analyst, Dan Davies has years of experience picking the bones out of some of the most famous frauds of the modern age. Now he reveals the big picture that emerges from their labyrinths of Financial crime seems horribly complicated but there are only so many ways you can con someone out of what's theirs. In fact, there are four. A veteran regulatory economist and market analyst, Dan Davies has years of experience picking the bones out of some of the most famous frauds of the modern age. Now he reveals the big picture that emerges from their labyrinths of deceit.Along the way you'll find out how to fake a gold mine with a wedding ring, a file and a shotgun. You'll see how close Charles Ponzi, the king of pyramid schemes, came to acquiring his own private navy. You'll learn how fraud has shaped the entire development of the modern world economy. And you'll discover whether you have what it takes to be a white-collar criminal mastermind, if that's what you want. (Which you don't. You really, really don't.)

30 review for Lying for Money: How Legendary Frauds Reveal the Workings of Our World

  1. 4 out of 5

    Zak

    Very interesting read on the various creative ways in which one could be scammed. Includes real examples of past scams such as the Great Salad Oil Swindle. A valuable resource for business owners, managers and investors alike, who are looking to avoid the pitfalls of investing in the wrong business or simply being defrauded by employees. There's a saying that goes something like, if it looks too good to be true, it probably is. This book goes a step further by advocating the more appropriate Very interesting read on the various creative ways in which one could be scammed. Includes real examples of past scams such as the Great Salad Oil Swindle. A valuable resource for business owners, managers and investors alike, who are looking to avoid the pitfalls of investing in the wrong business or simply being defrauded by employees. There's a saying that goes something like, if it looks too good to be true, it probably is. This book goes a step further by advocating the more appropriate "Trust, but verify." For the general reader, it's an interesting look into human inventiveness, though applied in furtherance of dishonest motives.

  2. 4 out of 5

    Jonny

    This book manages to be less than the sum of its parts, mainly because being excellent on Twitter doesnt always (usually?) convert into being a good book-length writer. The examples of historic frauds are excellent, and just the right balance of technical and interesting. But the book lacks an overall thesis, other than interesting things about frauds. I enjoyed it, but its difficult to know who to recommend it to other than people who enjoy reading detailed summaries of the key components of This book manages to be less than the sum of its parts, mainly because being excellent on Twitter doesn’t always (usually?) convert into being a good book-length writer. The examples of historic frauds are excellent, and just the right balance of technical and interesting. But the book lacks an overall thesis, other than interesting things about frauds. I enjoyed it, but it’s difficult to know who to recommend it to other than people who enjoy reading detailed summaries of the key components of financial crimes.

  3. 5 out of 5

    Andrew Tollemache

    An extremely good book that delves into the various structures of corporate fraud, how they originate and the measures taken and not taken to prevent such frauds from happening. Davies also details the stories of historical frauds, some of which like Enron or the GFC are infamous others are far more obscure. Highly recommended for anyone who works in areas that confront these issues. Just basic things like asking yourself "If I was going to steal from my employer, how would I do it?" will give An extremely good book that delves into the various structures of corporate fraud, how they originate and the measures taken and not taken to prevent such frauds from happening. Davies also details the stories of historical frauds, some of which like Enron or the GFC are infamous others are far more obscure. Highly recommended for anyone who works in areas that confront these issues. Just basic things like asking yourself "If I was going to steal from my employer, how would I do it?" will give you tons of insight into areas in your company where more controls and robust processes are needed

  4. 4 out of 5

    Ken Muldrew

    There is a scene in the Rodney Dangerfield movie, Back To School, where a business professor is leading the class through an exercise of developing a budget for opening a new business. Dangerfield is aghast at the professors naiveté and, when prompted, explains the reality of doing business in the U.S. First of all you're going to have to grease the local politicians for the sudden zoning problems that always come up. Then there's the kickbacks to the carpenters, and if you plan on using any There is a scene in the Rodney Dangerfield movie, Back To School, where a business professor is leading the class through an exercise of developing a budget for opening a new business. Dangerfield is aghast at the professor’s naiveté and, when prompted, explains the reality of doing business in the U.S. “First of all you're going to have to grease the local politicians for the sudden zoning problems that always come up. Then there's the kickbacks to the carpenters, and if you plan on using any cement in this building I'm sure the teamsters would like to have a little chat with you, and that'll cost you. Oh and don't forget a little something for the building inspectors. Then there's long term costs such as waste disposal. I don't know if you're familiar with who runs that business but I assure you it's not the boyscouts.” Although it’s played for laughs, the subtext is actually very deep; we create ideal models of how the world works and use those models not just to understand the world, but also to interact with it. The models have to be based on ideal types because the complexity of the world would quickly overwhelm our ability to make sense of our perceived reality. But it is also critical that we understand where we have simplified and linearized our model so that we are not led astray by mistaking the map for the territory. Daniel Davies’ book, Lying For Money, though on the surface appears to be about financial fraud, is actually an exploration of the single most fundamental model that humans use to interact with the world: the model of the behavior of other humans. The trust networks that we form with people are the bedrock on which cooperative and interdependent relationships are founded, and this trust is entirely based on the way that we know and understand (through mental models) the people we interact with. Even before language, the ability to accurately model the behavior of another human, and perform counterfactual reasoning on that behavior in a variety of situations, is the fundamental innovation that set humans on the path to dominating the earth. These are very deep waters indeed, yet without any hint of academic pedantry or dense, sociological theory, Davies manages to illuminate the importance and fragility of human trust networks to an amazing degree. That he does it with such an enjoyable narrative structure along with wit and humour is a remarkable achievement. Davies is a regulatory economist who is also a connoisseur of financial fraud. In Lying For Money, he takes us on a tour of the various types of financial fraud, introduces us to some of the more flamboyant characters who have committed fraud, and guides us through an analysis of how these frauds work. The underlying theme of this tour is that trust between strangers, particularly through anonymous market transactions, is the basis of the modern industrial economy. When the systems and institutions that allow those transactions are set up, certain checks and balances are built in to provide confidence to the users who need to know that their trust will not be betrayed. The nut of the problem, though, is that to check everything means that nobody is actually trusted, and the effort that goes into all that checking cancels any benefit that would accrue from trust. So a decision must be made about which checks and balances will be implemented, thereby implying which checks and balances will not be implemented. The knowledge of the latter, of the weaknesses in the system of checks and balances, is what fraudsters actually play on; greed, fear, and moral weakness figure prominently in the stories that are told when fraud is uncovered but they are only bystanders to the actual crime. It is actually much easier to commit fraud in a high trust society, because when trust can usually be depended upon, there is little need for excessive checks and balances. Unfortunately, a high trust society is not only attractive to people but it is also a highly productive society due to the substantial benefits that come from putting energy into productive pursuits rather than checks and balances. Davies calls this the “Canadian Paradox”, after the surprising ease and regularity with which frauds are perpetrated on regional Canadian stock exchanges. Davies lays out the basic mechanisms through which business is done in a capitalist economy as an introduction to his taxonomy of fraud. As in the opening quote from the movie, Back to School, the realities of business are not as tidy as the ideal. For example, the amount of credit extended between business to business exceeds the credit extended by banks by a factor of ten or more. This credit is meant to be short term, allowing a re-seller to make money before reimbursing his supplier, but the payment terms are negotiated based on whatever checks the supplier does on the credit-worthiness of the re-seller. Everyone has to do business to make money, so it is better to extend credit and keep business moving than refuse and go bust. It is the time delay between the extension of credit and repayment that provides an opportunity to commit fraud. Likewise, the various institutional forms of collateral, bankruptcy, credit control, insurance, and other financial devices have aspects where checks and balances are inconvenient or difficult to perform and these weaknesses are the points at which fraud can occur. Where Davies really shines in his analysis of various famous and obscure cases of fraud is with the insight that the successful fraud is not a mere theft where the thief spends their remaining days in hiding. Rather, it is the fraud where the defrauded party never even knows that they were targeted. The essence of a successful fraud is for the fraudsters to continue living among polite society, freely able to spend their ill-gotten gains. This is harder to do than you might think, because the rate at which money is taken can lead to all kinds of unintended consequences and, fraudsters too, have to rely on networks of trust. The many ways in which historical fraudsters have tried to manage their fraud, and especially the ways in which they have failed, provide enormously entertaining reading. Just as the blueprints for a lock are the best way to learn how to pick that lock, so too is the knowledge of how to manage a company the best way to know how to defraud a company. If you know the key indicators of whether the business is doing well or not, what qualities go into good performance indicators, how growth and compound interest will affect the business and how to tell if your indicators have been tampered with, then you have the blueprints for that business. Management is essentially an information processing job and the quality of management is highly dependent on the quality of the measurements that provide that information. Davies shows how economic institutions have arisen due to a process of mutual escalation, an “arms race”, between commerce and fraud. He goes beyond the “fraud triangle” of risk management systems (Need, Opportunity, & Rationalization) to arrive at his golden rule for detecting fraud: Anything that is growing unusually quickly needs to be checked out in a way that goes beyond whatever checks and balances are currently in place. This is purposely more of an heuristic than a rule because in an arms race, you don’t find out about your opponent’s latest innovation until it is too late. In commercial fraud you don’t even know who your opponent is until it’s too late, so you have to check your own business for signs that your checks and balances have been penetrated. At the end of the day, the high trust environment in which fraud is easy to perpetrate is a nice place to live. Humans have to trust each other to work together, and we take pleasure in trusting and being trusted. The price of that high trust environment is that some level of fraud is inevitable. Rather than destroy the benefits of the high trust society in pursuit of the eradication of fraud, it is far better to accept a level of fraud that we can live with and continue to adapt as new and more ingenious frauds are discovered. This is the overt message that Davies leaves us with, but along the way he has delivered valuable and unexpected insights into the trust networks that are the foundation of our society. The book is a pleasure to read for its surface meaning and more so for the subtext. A wonderful story that leaves the reader so much richer for having read it.

  5. 5 out of 5

    Xavier Shay

    Well written, funny, informative. > If you want to be like Canada, you more or less have to accept that youre going to be the kind of place where people assume that a guy in a suit is probably honest. > This state of affairs is actually quite uncommon in the criminal justice system. Most trials only have a couple of liars in the witness box, and the question is a simple one of whether the accused did it or not. In a fraud trial, rather than denying responsibility for the actions involved, Well written, funny, informative. > If you want to be like Canada, you more or less have to accept that you’re going to be the kind of place where people assume that a guy in a suit is probably honest. > This state of affairs is actually quite uncommon in the criminal justice system. Most trials only have a couple of liars in the witness box, and the question is a simple one of whether the accused did it or not. In a fraud trial, rather than denying responsibility for the actions involved, the defendant is often insisting that no crime was committed at all, that there is an innocent interpretation for everything. > At the time of writing, if you want to convert a ludicrously false story about the internet into enough money to buy a yacht, private venture capital is probably the way to do it. But public markets have some advantages too. > He liked the finer things in life – private jets, luxury hotels and politicians – and spent lots of money buying all of them.

  6. 4 out of 5

    Andrew Clarke

    Decent overview of a bunch of common scams. Id prefer more detail on the stories. One chapter was very in the clouds and I skimmed it. A few stories needed to be edited and rewritten, the flow and explanation were off. I really loved Bad Blood, Liars Poker, Black Edge, Red Notice, and other similar financial crime books (morbid curiosity and hopefully a warning of what people to avoid as I work in the finance/tech industry). This was in a similar vein but didnt quite scratch the itch. Probably Decent overview of a bunch of common scams. I’d prefer more detail on the stories. One chapter was very in the clouds and I skimmed it. A few stories needed to be edited and rewritten, the flow and explanation were off. I really loved Bad Blood, Liars Poker, Black Edge, Red Notice, and other similar financial crime books (morbid curiosity and hopefully a warning of what people to avoid as I work in the finance/tech industry). This was in a similar vein but didn’t quite scratch the itch. Probably needed more drama and characters to match those titles.

  7. 4 out of 5

    Terry Clague

    Terrific, entertaining history of financial scam and accounting fraud from a hugely insightful author, who's able to leverage expertise to get around what seems to be (to paraphrase Bill Shankly) a simple game made complicated by charlatans (to confuse juries). Highly recommended, not least for the (largely male) names of the constellation of con-men who feature in the case studies, including Jordan Belfort ('simpering, sniggering' inspiration for the dull flick, Wolf of Wall Street), Dapper Dan Terrific, entertaining history of financial scam and accounting fraud from a hugely insightful author, who's able to leverage expertise to get around what seems to be (to paraphrase Bill Shankly) a simple game made complicated by charlatans (to confuse juries). Highly recommended, not least for the (largely male) names of the constellation of con-men who feature in the case studies, including Jordan Belfort ('simpering, sniggering' inspiration for the dull flick, Wolf of Wall Street), Dapper Dan Coakley (Charles Ponzi's attorney), Timo De Angelis (the 'Salad Oil King'), Dan Marino ('Chief Operating Officer' of Bayou Capital, who created a fake auditing firm to rubber stamp billions of bullshit investment dollars in a prequel to the Bernard Madoff scheme - which itself scaled a "ratio of nonsense to theft" of "well above 99%"), and Leslie Payne (accountant to the Krays', who "makes a good teacher for an introductory course in commercial fraud" despite his advice to Reggie - against recording specific details of criminal income in expensive ledgers - being ignored).

  8. 5 out of 5

    Justas Šaltinis

    "A "Brazilian" straddle consists of as many options as you can write at 14,500 and a plane ticket to Brazil". "In ancient societies, defaulting debtors could be stripped of citizenship and sold as slaves for the benefit if their creditors." "Participants in illegal drug markets have the attractive property that they cannot report you to the police without raising lots of awkward questions about themselves." "The 1844 Companies Act introduced a requirement to present shareholders with an annual "A "Brazilian" straddle consists of as many options as you can write at 14,500 and a plane ticket to Brazil". "In ancient societies, defaulting debtors could be stripped of citizenship and sold as slaves for the benefit if their creditors." "Participants in illegal drug markets have the attractive property that they cannot report you to the police without raising lots of awkward questions about themselves." "The 1844 Companies Act introduced a requirement to present shareholders with an annual report and even to have it audited, but did not set out any standards for what that might involve - a company was considered to have been "audited" if another businessman had spent half an hour looking over its books on the way to one of his other appointments." "It's a sad fact, that if you want to find frauds, your best asset is the list of existing fraudsters".

  9. 5 out of 5

    Ben

    I don't really understand the money world. Much less the difference between fraud and honest work. This book helped contextualize and explain how the money world works, and how certain areas of it are exploited by frauds to 'steal' money. I feel like I have a better understanding into an area I had previously had very little understanding of. It was also fairly accessible, and engaging for the most part. I would recommend it. Cheers.

  10. 4 out of 5

    Brishen

    Really excellent book, already bought a second copy for a gift. While the descriptions of different frauds were entertaining, it is the parts of the book that talk about how certain systems are susceptible that makes it stellar. Some really strong insight here that have had me thinking in entirely new ways about the subject - excellent!

  11. 4 out of 5

    Marc

    Zips along at a fair old pace and never quite delivers on the promise of an analysis of how the economy works, but more than worth it for the descriptions of various frauds, the humourous writing style (not a given in this subject) and the footnotes. If you liked "Bad Blood" but want more variety, this is a good choice.

  12. 4 out of 5

    Irene

    I thought this book might be on the dry, technical side, but it had me laughing out loud at some of the escapades. Apparently the most important attribute needed for committing financial fraud is balls of steel. This book is a riot. Highly recommended.

  13. 4 out of 5

    Richard

    This is an excellent book. It is both full of great stories about historic frauds, and also offers a very satisfying and nontechnical theoretical account of how fraud works, and how/when you might expect to see it. (Disclosure: I know the author, but it really is very good)

  14. 4 out of 5

    José

    Very interesting overview of some famous frauds while at the same time shades some light into the blindspots of economic activity, which in turn are pretty much just human's faults at work. If you are into this kind of topic, reading this book is probably time well spent.

  15. 4 out of 5

    Quixote

    Great read. Fun stories of crooks and have been a longtime fan of the author's analytical style and humour on the internet for a while -and enjoyed that here a lot.

  16. 4 out of 5

    Warren Gossett

    Simple lies about money and business arrangements become complicated with unexpected results. Do some cheaters win? Perhaps, but the odds are against you.

  17. 5 out of 5

    Laura Spira

    A pleasant romp through some recent examples of fraud, some entertaining footnotes, but not as good as the classic "Fraud in the City" by Rowan Bosworth-Davies.

  18. 4 out of 5

    Heather

    A book that shows that fraud is nothing new, some have a tinge of legality but are still fraudulent. As they say, crime, or in this case, fraud, however you frame it, doesn't pay.

  19. 5 out of 5

    Feroz Hameed

    This is a fascinating book on the different types of fruad and how it is conducted. A must read for a layman and people in financial industry.

  20. 5 out of 5

    Taras

    Exciting and entertaining read. Good if you are working in one of the industries subject of the book (finances, legal, consulting and accounting services and capital-intensive businesses). It will help you develop a healthy level of scepticism on how things work in such industries. However, what I did not like were the parts of the book where the author goes away from describing the anecdotal cases and starts making some broad, far-reaching philosophical and theoretical conclusions about the Exciting and entertaining read. Good if you are working in one of the industries subject of the book (finances, legal, consulting and accounting services and capital-intensive businesses). It will help you develop a healthy level of scepticism on how things work in such industries. However, what I did not like were the parts of the book where the author goes away from describing the anecdotal cases and starts making some broad, far-reaching philosophical and theoretical conclusions about the nature of frauds and their role in society and economics. The book is not of that calibre to be taken as a major opus on economics. I would have preferred to read more about the mechanics of frauds themselves. Some of the major scandals of the XXs century are either not mentioned at all or simply undercovered.

  21. 5 out of 5

    Manuel Ramírez

  22. 5 out of 5

    Arush Sarwar

  23. 4 out of 5

    Raza

  24. 5 out of 5

    Richie T.

  25. 5 out of 5

    Danyal Bawany

  26. 5 out of 5

    Officer

  27. 4 out of 5

    Ifeanyi Nwabueze

  28. 5 out of 5

    G J

  29. 5 out of 5

    Kristjan Velbri

  30. 4 out of 5

    Matthew Edwards

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