Perhaps a lot of you readers do not know that I am the author of a 700+ page book on white collar crime. Prosecutors and law enforcement officers who read it get a big laugh out of it and love it.
One topic that I cover in the book is what is called in the underworld: “A Bankruptcy Bustout.” In a crime like this some organized crime person or group picks a company that has been in business for a long time, has a good name and lots of good credit. This company is also “past its prime” and in a slow decline. Needless to say, such a company can be purchased for a cheap price.
When such a company is located, “the bad guys” would move to take it over. Rarely would they pay cash for the company. They would use borrowed money and buy just enough of the shares to gain controlling interest in the company.
Once in charge the gangsters proceed to run up big debts using the company’s good credit. They buy large amounts of inventory on credit and see it “off the books” at discounted prices and claim that they sold the inventory on credit and never got paid.
At some point the company becomes overloaded with debt and cannot pay its creditors. A petition for bankruptcy is filed. In some cases “the bad guys” get by with this and are not detected. In other cases you have an alert and smart bankruptcy trustee who “smells a rat.” and calls in the FBI. When the agents see who is behind the broke company, they begin an intense examination of the books and the money flow. Eventually charges are filed and some of “the bad guys” end up in jail.
The Huffington Post took a close look at Mitt Romney and his operations with companies while he was at Bain Capital. A pattern similar to “A Bankruptcy Bustout” was observed. Romeny and the people at Bain Capital would buy a company with borrowed money, run up huge debts and bills and put the company into bankruptcy.
A concerned bankruptcy trustee looking carefully into a questionable bankruptcy would see a prominent Wall Street firm and the son of the former governor of Michigan and the former Secretary of Housing and Urban Development. With such prominent people involved, the FBI would not be called.
Here is the link to the Huffington Post article: