This being China, the news has taken nearly two years to start trickling out, with details of the court case begun last week making it into the FT this morning. One of the chairmen of developer Canton Properties, Wang Sheng, is accused of taking loans out in the company’s name from state-and-HSBC-owned Bank of Communications, and keeping them for himself. The president of the bank who allowed the loans has been on the run since the investigation was started in late 2007, making the attempts of his recent fraudulent peers in the States look very weak indeed. It’s in his interest to keep running – China’s state news agency reports today that the state has just executed two major fraudsters.

They’re not the only ones committing everyone’s favourite white collar crime though – check out these bozos from this week’s press: 

- First up is Edward Okun, who has been sentenced this week for running a fraud in which he used money given to him to invest in banks as pocket money for nice things like the divorce from his old wife and jewelry for his new one. He also bought his chums shots of cognac for $1,008 each during a holiday in the Bahamas, about which the restaurant owners still laugh now. In the overkill that saw Madoff get 150 years in jail, Okun was recommended 400 years – in the end he got off lightly with just 100.

- “Magician Paul Daniels helped his son escape jail today after he admitted stealing £10,000 from the NHS” is the opening paragraph in a Sun story today, but as is the case so often with the tabloids, they ruthlessly pique your interest only to disappoint you a paragraph later. Rather than performing some kind of disappearing trick involving glittery capes and awkward banter, Daniels actually just pleaded with the court to let his son off a fraud conviction.

- Ruth Madoff now has to announce any expenditures over $100, which when you’ve been living in a Manhattan penthouse is usually most of them. This constant inconvenience is compounded by exactly the wrong sort of Vanity Fair feature she would want – an in-depth analysis of her history and character by Mark Seal, who has been profiling the Madoffs for the mag and who Ruth apparently hates. It’s all here – the rudeness, the loud voice, the botched surgery. The pre-feminist who books belly-dancers for office parties, the hot-tempered and foul-mouthed party pooper, the “robot” addicted to normality, the MILF, the “fucking social climber”, the woman who was “sort of artificial and frozen—her face, her home.” Ruth claims that many of the depictions of her are inaccurate, but even if you ignore them all the crucial spectre still hangs over her, and it does throughout the article – that she couldn’t have possibly been unaware of the fraud.

Fairfield Greenwich was a fund-of-funds business, or “feeder fund”, which means that they invested clients’ money across a range of different funds; they acted as a medium between investors and individual hedge funds, feeding money to those funds, and taking a commission for doing so. If you plot a line of “honest hard work”, with doctor, fireman, aid worker etc at one end, then feeder-fund manager is about as far down the other end as you can get.

Unfortunately for their investors, Fairfield Greenwich was investing their money with Madoff, who was giving Fairfield handsome rewards for providing him with the much needed capital to keep his Ponzi scheme paying out. Fairfield presumably didn’t care to investigate Madoff’s funds too deeply; the money was rolling in, and that’s what counted. Their website describes one range of investments as being ”selected and managed with the same level of care and professionalism as all FGG products”, which sounds a little hollow now. About half of its $14bn-worth of assets under management were in Madoff funds.

Regulators from the state of Massachusetts, where Fairfield Greenwich is based, weren’t impressed with them for channelling so much money to Madoff, and accused them of fraud, citing a lack of “fiduciary responsibility to their clients”. Fairfield responded: “Nothing more than 20-20 hindsight that supposes that anyone familiar with Madoff’s operations should have determined that it was a Ponzi scheme”, later saying “The complaint here was rushed into existence and is so filled with errors and factual distortions as to completely misstate the conduct of the companies that make up the Fairfield Greenwich Group”. There are also various other lawsuits being made against the group from individual investors, and last week they also contested a range of statements made about them in a TV documentary about the Madoff case.

To be fair, they’re on pretty strong ground. If the America’s financial services regulators the SEC didn’t notice, then maybe they had no reason to suspect anything; Madoff did pay out $3bn to Fairfield funds over 18 years. They’re also arguing that Madoff gave them false data about his investments. But Jeffrey Tucker, one of the firm’s founders, knew that Madoff’s accountancy firm was just one man, despite also saying that the accountants were responsible for hundreds of clients. Fairfield were too blinded by the returns – $100m a year in fees – to bother questioning curveballs like this too deeply.

The scandal dragged the Fairfield Greenwich brand into the mud, hence the sell-off. It’s an ignominious end for 78-year-old founder Walter Noel, whose identikit socialite family looks like the product of a eugenics program sponsored by Piz Buin. Noels daughters are regulars on the New York rich kid scene, and they sound like a delightful bunch – known as the “Aspirina sisters” because of the headaches they gave female classmates after constantly stealing their boyfriends, four of them slept with the same guy one after another, while one of them dated an Italian mafioso while still in her teens. They’ve also been banned from their country club. Read the whole story of the family, including their annoying yapping on tennis courts and “tone-deaf” socialising amid the breaking scandal, in this typically epic and stately Vanity Fair piece; and read a pre-scandal VF piece on them here. The other founder, Jeffrey Tucker, is also hurting from the scandal – he and Noel have had to sell their private jet, and he’s had to sell off his horse farm.

While we hope the rumours that Noel has Alzheimer’s are false, this is a company that we’re not sad to see the back of. Hopefully feeder funds, with their extra level of opacity, will become a thing of the past in the wake of the Madoff scandal and the financial crisis in general.

“Waterboarding” is a euphemistic term that allows a violent form of torture to sound merely like your gran describing surfing. It involves restraining someone with their head lower than their feet, and pouring water over their sack-covered face – the result is your nose and mouth fill with water and you feel like you’re drowning; Time ran a feature this week on the long-term psychological damage caused by the technique. It’s also emerged in the last couple of days that the CIA used the technique 266 times on two Al-Qaeda prisoners, which won’t please the anti-Guantanamo Obama; two officials in the human rights bit of the Justice Department under George Bush say that leaked memos prove there was no “torture”. This one will run and run.

Anyway, to understand the bewilderment and horror of interrogation by your off-the-leash enemies, or maybe just to have something to high-five people about, Playboy journalist Mike Guy signed up for some waterboarding action this week. He reckons he can do at least 15 seconds. He does about 5. Lame:

More hardcore is Christopher Hitchens, who goes back for more after his first go, though not without psychological cost: “I have since woken up trying to push the bedcovers off my face, and if I do anything that makes me short of breath I find myself clawing at the air with a horrible sensation of smothering and claustrophobia…if waterboarding does not constitute torture, then there is no such thing as torture.” We’re unsure what’s worse – the waterboarding, or the terrible trip-hop they seem to have piped into the torture room:

But the hardest of them all is Kaj Larsen, who back in 2007 not only dons the regulation orange Guantanamo boiler suit and shackles, but gets waterboarded over and over for 24 minutes. “That sucked”, was his conclusion after the session ended:

We’re now just waiting for the Jackass or Dirty Sanchez brigades to try it out for some ill-advised political special…

Friehling is accused of aiding Madoff by conducting “audits” that probably just involved flicking through sheets at high speed and saying “this looks fine”, before heading for lunchtime cocktails. He then didn’t even file the findings of the “pretend” audits. All this doesn’t exactly reflect well on the SEC, the regulators who didn’t spot Madoff’s fraud – if his accountant isn’t even filing audits that were made up in the first place, from an office in a tiny New York town rather than a city-base firm, you might have expected some sort of red flag to come up, but no.

Friehling, whose son recently and rather pathetically covered Fox News’s car in water, had accounts with Madoff reportedly worth $14m. If he pleads not guilty, it means he’s saying that he innocently deposited $14m with Madoff despite having access to his books – so it’s a choice between being guilty or the stupidest person ever. Rock – Friehling – hard place.

But while Friehling is the only person other than Madoff to be charged over the scandal, people are starting to wonder who else might be involved. His quick confession, and assertions that his sons were working on the legit side of the business and that he employed staff that were underqualified so as to avoid suspicion, seem to be trying to prevent anyone else getting implicated. Now his family are retrenching – Ruth Madoff’s official main residence is now this Floridian mansion, in an effort to legally protect it from creditors. She and Peter Madoff, Bernie’s bro, originally applied for the homestead exemption that protects their properties in this way back in 2006, just as the SEC was beginning their investigation of the firm. Ruth also reapplied for the homestead exemption just two months before Bernie’s arrest. Looks like they knew something was up. There’s also debate about exactly when Peter was told about the scheme by Bernie – if it was the day before Bernie told his sons, why didn’t he tell anyone?

Other potential arrestees include Madoff’s “chief financial officer” Frank DiPascali; Alvin Delaire and Marcia Cohn, executives at Madoff’s brokerage firm Cohmad that channelled funds from investors; Robert Jaffe, the head of Madoff’s Boston brokerage firm, who has already nearly got smacked in the chops over the scandal, and probably would have been were it not for the intervention of Donald Trump (bizarre, I know); and Enrica Pitz, the controller of Madoff Investment Securities who signed off a number of Madoff’s cheques. 

Madoff fans can slake their thirst for the scandal at great length in a predictably excellent Vanity Fair piece from this month. Highlights include sugar grand-daddy Norman Levy wooing his broke paramour with $100,000 to invest with Madoff – it’s the gift that keeps on giving! Or not. The aforementioned recipient, Carmen Dell’Orifece, paints Madoff as a sweet humble Queens boy who looked after his friends. ”Madoff in a silly paper hat, his calves showing, lounging on a divan…’This was their idea of fun’”, she says. “Bernie knew about piracy, because he was an oceangoing person”, she says at one point – we also learn he likes Neil Diamond and Diet Coke. This contrasts with what people who dealt with him on a professional basis have to say: obsessive-compulsive, “not someone you would want to have a beer with”.

There’s a bit about the extended Madoff clan, including the daughter-in-law who appeared in a bikini for a fly-fishing mag. And there’s a great description of the sickening panic that set in with investors, culminating in a crazed charity ball – “She said it was like the Titanic going down – people screaming and yelling. She had never seen such emotion…Everybody was drunk – people that don’t drink – like their lives were over.”

Joseph Stiglitz, writing in the November issue of Vanity Fair

“Let me venture an analogy from biology: a patient arrives at a hospital in serious condition,” writes the winner of the 2001 Nobel Prize for Economics. “Now, it may be that the patient has simply fallen victim to one of those debilitating ailments that go around from time to time and can be cured by a massive dose of antibiotics. In this case we have a macro problem with a macro solution. But it could instead be that the patient is suffering from a decade of serious abuse—smoking, drinking, overeating, lack of exercise, a fondness for crystal meth—and that it has not only taken a catastrophic toll but also left him open to opportunistic infections of every kind. In other words, a buildup of micro problems has led to a macro problem, and no cure is possible without addressing the underlying issues. The American economy today is a patient of the second kind.”

The “underlying causes” here being the dependence on foreign oil, the use of ethanol/corn for biofuels production that drives up grain and food prices, a disincentivised tax system that rewards only the very rich, the unnecessarily rapid foreclosures that create vacant, devalued housing, and the lax approach to regulation that allowed Wall Street to create harmful loans and ‘innovative’ products that were so complex that even their creators couldn’t fully comprehend them.

The solution? Stiglitz says the American government has to invest heavily in infrastructure, technology and education to increase incomes, and stimulate employment and growth. And that means more taxes, with the rich finally paying a fair whack.

Unfortunately though, America remains a nation with a populace who would generally prefer eat raw cactus than tolerate higher income tax, and that’s not going to change anytime soon; while Stiglitz is optimistic the situation can turn itself around in time, the basic assumption underpinning his confidence is that the Republicans will (i) come to understand that their entire economic ideology is based on a trick, or (ii) never achieve any position of governance again. Odds?