Common Theme Ties Cases of Madoff, Siemens and 'Light' Cigarette Ads
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This is IN THE NEWS in VOA Special English.
An individual, a company and an industry were all in the news this week for reasons unrelated except for the idea of dishonesty.
The individual was seventy-year-old Bernard Madoff. The New York money manager is accused of cheating investors around the world. Officials say the losses, by his own estimate, were at least fifty billion dollars.
He is accused of a Ponzi scheme. Brad Garrett, a former federal agent, explains how it works.
BRAD GARRETT: "Taking in the money from new investors, and paying it out to the old investors as income. And, as long as you have new money coming in, it works well."
And it is illegal. Charles Ponzi was an Italian immigrant in the United States. He went to prison in the nineteen twenties after he cheated thousands of investors. He promised high returns in a short time.
Bernard Madoff (pronounced MAY-doff) provided small but continual profits for his investors. He was well known in Wall Street finance -- a former chairman of the NASDAQ Stock Market.
Officials say the operation collapsed when the economic downturn caused some investors to demand about seven billion dollars back.
The Securities and Exchange Commission is investigating why it did not take action against him until now. Accusations of wrongdoing had repeatedly been brought to its attention. Experts say possible victims, including international banks and movie maker Steven Spielberg, are not likely to get much back.
This week, the German engineering company Siemens pleaded guilty in Washington to violating the Foreign Corrupt Practices Act. That law makes it a crime for Americans and companies traded on United States markets to pay bribes in return for business. Investigators say Siemens paid one and a half billion dollars in bribes to government officials in Asia, Africa, Europe, the Middle East and Latin America.
Now, Siemens has agreed to pay a similar amount in fines and other punishments. Cases were brought by the Justice Department, the Securities and Exchange Commission and the Munich Public Prosecutor's Office. Eight hundred million dollars of the money will go to United States authorities -- a record for such a case.
Siemens cooperated extensively and admitted to acts like falsifying its records. But it did not plead guilty to bribery. That could have kept it from getting United States government contracts.
And finally, this week also brought a ruling that anti-tobacco activists in the United States called historic. The Supreme Court cleared the way for lawsuits against tobacco companies accused of dishonest advertising for so-called light cigarettes.
The case grew out of a lawsuit brought by three people in the state of Maine. They accused cigarette makers of hiding information that "light" or "low tar" cigarettes are just as dangerous as other cigarettes.
The companies argued that a federal law bars such claims under state law. The Supreme Court was divided five to four, but the justices decided that smokers may sue under state consumer-protection laws.
And that's IN THE NEWS in VOA Special English, written by Brianna Blake. I'm Steve Ember.