by Donald L. Maggin ‧ RELEASE DATE: Dec. 1, 1989
A rough-and-ready reckoning on the ESM scandal that--among other outcomes--triggered Ohio's first bank holiday since the Depression. An investment manager whose writing skills are at best serviceable, Maggin recounts how the principals of a small Florida-based firm, wheeling and dealing in the then-unregulated market for US Government securities during the early 1980's, engineered a massive deception whose monetary toll aggregated $300 million. The secret of ESM's spurious success centered on obtaining physical possession of its customers' certificates as collateral against their trades. With help from a crooked auditor, the complicity of a couple of mismanaged institutions, and the naivet‚ of municipal clients, insiders were able to use these borrowed assets to speculate, compensate themselves more than handsomely, and paper over the staggering losses that were incurred. While the game was up by March of 1985, aftershocks from ESM's bankruptcy rippled through the financial community and other venues for several years. Before the sensational case had run its course, Ohio's second-largest savings bank, plus 68 smaller institutions (whose deposits were not federally insured), closed their doors for varying periods, and confidence in capital markets throughout the world suffered a severe setback. The human cost was high as well. Two men touched by the rip-off committed suicide; another eight are behind bars, while a former ambassador to Switzerland is appealing a fraud conviction and defending himself against additional criminal charges as well as civil suits. Thanks to the efforts of some resourceful individuals in the private and public sectors, substantial recoveries have been made and substantive reforms initiated. Satisfactory answers to the question of how the ESM scare went undetected for so long, however, remain harder to come by. Drawing on what appears to be a wealth of knowledgeable sources, Maggin offers a comprehensive and comprehensible, if occasionally awkward, account of a significant commercial conspiracy and its socioeconomic implications. The text has photos (not seen).
Pub Date: Dec. 1, 1989
ISBN: N/A
Page Count: -
Publisher: Contemporary
Review Posted Online: N/A
Kirkus Reviews Issue: Nov. 15, 1989
Categories: NONFICTION
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