Tuesday, May 13, 2014
Bad Investment!
As regular readers know, every summer I spend some time up in the Boundary Waters, on and near "The Island." The closest town (which is 67 miles away) is Grand Marais (where I sometimes have had some issues).
I occasionally check in on that town, and found it hard not to be intrigued by one recent story in the local paper:
Michael Robert Drilling, 47, of Grand Marais pled guilty to one count of Securities fraud in U.S. District Court on Thursday, April 17. In his plea agreement, Drilling admitted to devising and executing a scheme to defraud his investment advisory clients. According to U.S. States Attorney Andrew Luger, Drilling used his company Financial Advisory Partners, LLC, to defraud several of his clients, stealing over $5.6 million of their investment funds.
According to Luger, from May 2009 to March 2014, Drilling convinced several of his clients, in Minnesota and throughout the United States, to entrust him with the management of their investment funds. Drilling told 13 of his clients he was placing their money in a larger pool of funds which could be managed more efficiently. Instead, Drilling diverted his clients’ funds for his own personal use....
Drilling worked as outfitting manager at Voyageur Canoe Outfitters...
According to Luger, from May 2009 to March 2014, Drilling convinced several of his clients, in Minnesota and throughout the United States, to entrust him with the management of their investment funds. Drilling told 13 of his clients he was placing their money in a larger pool of funds which could be managed more efficiently. Instead, Drilling diverted his clients’ funds for his own personal use....
Drilling worked as outfitting manager at Voyageur Canoe Outfitters...
The paper notes that he faces a maximum sentence of 5 years, which is a short stay compared to many of the people I deal with who are doing far more time for relatively minor narcotics crimes-- they certainly caused less than $5 million in damage!
I do wonder how a guy like this gets people to invest with him. Why does the "outfitting manager" as a canoe place seem like a good guy to trust with your nest egg? I suspect the answer to that is kind to the investors and harsh on Drilling-- that there is a lot that the investors didn't know.
Criminal law is all tragedy, and a crime like this offers a lot of tragedies stacked up like split logs.
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One of my grandfather’s favorite sayings was “Money is Devil’s Eye”…the lesson I took from that iteration was to always be wary of its allure.
Unfortunately despicable characters like Drilling are aplenty and they all exploit that very allure. Money or more of it allure is a foible equally unfortunate and surprisingly not all that rare (as it takes many different forms and motivations). Some of these characters have better credentials than others, but all it takes is a promise and whether they put it forward under vague “Financial Advisory Partners, LLC” or seemingly solid “Lehman Brothers” a big fat swindle is what that promise is. And what better a hook than the prospect of more comfort and more security off of one’s nest egg? Now, that I call criminal!
Unfortunately despicable characters like Drilling are aplenty and they all exploit that very allure. Money or more of it allure is a foible equally unfortunate and surprisingly not all that rare (as it takes many different forms and motivations). Some of these characters have better credentials than others, but all it takes is a promise and whether they put it forward under vague “Financial Advisory Partners, LLC” or seemingly solid “Lehman Brothers” a big fat swindle is what that promise is. And what better a hook than the prospect of more comfort and more security off of one’s nest egg? Now, that I call criminal!
In our town years ago a law student defrauded over 100 people of hundred of thousands of dollars, got probation from a federal judge, was neither kicked out of school, nor lost the confidence of the dean, who gave him a recommendation for admission to the bar. No question the guy did what he was charged with. He admitted it. What kind of people invest with such folks? People he gets to know and who fall under his spell. Gullibility has much in common with eternity: it never seems to end.
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