We wanted to write a brief note on an “enlightening” topic that Bloomberg carried recently. Rarely do we get annoyed with Bloomberg, which usually reports the news, not shoves their view down a viewer’s throat (think CNBC or Fox). It burns us that the hometown of Covert Analytics would be given such a stigma on Bloomberg. However we would like to make several comments.

Background: Bloomberg sends Deirdre Bolton (we assume) to get an insider’s perspective on the local economy in Miami.

What happens: they interview the CEO of Bacardi (yes!!!!), an “expert” on the local real estate market, and … a legal expert on white collar crime to cover the occurrence of scam artists and corporate fraud in South Florida.  The video can be found here

Some immediate things to note on Bloomberg’s coverage:

1. They made some ridiculous errors. Madoff wasnt from Florida, he just owned a home in Palm Beach and had a membership at the ritzy Palm Beach Country Club.  So do all wealthy American tycoons from the Northeast. Also how do you cover the “ponzi schemers” in Florida and not make mention of the rampant healthcare or mortgage fraud!
   
2. Some of it is true sadly. Arthur Nadel was a case of the outgoing tide showing who has been swimming naked. Same with Scott Rothstein. Both were cases of “come  on …. really”? And before these two yokels came Allen Stanford, which was the most ridiculous investment proposition in the universe.  Not only did he claim amazing returns with no volatility, he did it claiming it was invested in US cash assets, and marketed it as a money market fund!
   
3. They missed a couple. There have been some other classic hedge fund con artists, such as KL Capital (http://miami.fbi.gov/dojpressrel/pressrel09/mm121109a.htm), and countless other Venezuelan / Panamian based companies that have a sure fire way to make 10-15% a month investing risk free in “currency markets”. Last but not least there was a few spectacular hedge fund blow ups such as John Devaney’s United Capital 100% decline in a few months, wiping out all investor’s equity.
   
4. A classic example of a “perpetrating media”. This portrayal of South Florida is a bit unfair, and this clearly perpetrates among the financial community that Miami is merely a place for Latin American private bankers to help launder their money into local ponzi schemes and soon-to-be imploding hedge funds.