See what else we're reading by subscribing to our GoogleReader feed, or following us on Twitter.

Quotable

As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal. When I began the Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by, I realized that my arrest and this day would inevitably come."
— Bernard L. Madoff, pleading guilty to 11 felony charges (full transcript)

D.C. Technology Office Raided » A D.C. government official and a business executive were arrested yesterday on bribery charges after FBI agents raided the city's Office of the Chief Technology Officer. Until recently, the technology office was headed by Obama appointee Vivek Kundra, who has since taken a leave of absence, according to a White House official. — Washington Post, AP

White House Ethics? 'Mr. No' Knows » In an administration filled with nervous new employees who are still learning the rules, Norm Eisen plays a key role ensuring that the Obama administration lives up to its own standards and adheres to its own rules. — Washington Post

Waters, Tied to Bank, Helped Seek Funds » Top federal regulators say they were taken aback when they learned that Rep. Maxine Waters (D-Calif.), who helped arrange a meeting with bank executives and regulators last year, had family financial ties to a bank whose chief executive used the opportunity to ask for up to $50 million in special bailout funds. — New York Times

Scandal Erupts Over 'Fight Club' for Disabled » Texas authorities on Thursday began arresting six state workers accused of forcing mentally disabled Corpus Christi State School residents into "fight club"-style brawls, as advocates came to the Capitol to protest the state's handling of the scandal. — Dallas Morning News

Medicare Fraud Detailed » Fraud and abuse helped boost Medicare spending on home health services 44 percent over five years as some providers exaggerated patients' medical conditions and others billed for unnecessary services or care they did not provide, the Government Accountability Office reports. — USA Today

After the jump...

BEST OF THE REST

When Bernard L. Madoff is sentenced in connection with the massive Ponzi scheme he orchestrated, which he pleaded guilty to today, the 70-year-old former financier will join a growing list of aging white-collar criminals who can expect to spend much or all of their remaining days in federal prison.

There's Bernard Ebbers, former chief executive of WorldCom Inc., who was convicted in 2005 of security fraud and conspiracy charges after his firm misstated some $11 billion worth of accounts.

Ebbers, who was once dubbed the "Telecom Cowboy" for his flamboyant, Western-themed style, stayed out of prison until he lost an appeal in September 2006. The Canadian-born Ebbers, 67, is now incarcerated at the federal prison in Oakdale, La., where he is serving a 25-year sentence. He isn't due to be released until July 2028.

Likewise, John Rigas, the former chief executive and founder of Adelphia Communication Corp., once one of the nation's largest cable companies, was convicted in 2004 on several charges, including securities and bank fraud.

Rigas, 84, the son of Greek immigrants, was sentenced to 12 years and is now imprisoned at the federal facility in Butner, N.C. He is scheduled to be released in January 2018. (His son, Timothy J. Rigas, the firm's former chief financial officer, was convicted of the same charges and was sentenced to 17 years in prison. Rigas, 52, was also indicted on tax evasion charges in 2008.)

And Jeffrey Skilling, the ex-chief executive of Enron Corp., was originally charged in 2004 with 35 counts of fraud, insider trading and other crimes after the Houston-based energy firm collapsed. His case went to trial, where he was found guilty of 19 felonies.

In countless interviews, ex-NBA point guard and Detroit mayoral candidate Dave Bing claimed to have graduated from Syracuse University in 1966 and received a master's in business administration from what was then called the General Motors Institute in Flint, Mich.

In reality, the Detroit Free Press found, Bing never earned an MBA from what is now called Kettering University.

"I felt I had an MBA for the work I had done in the industry I was in," he told The Associated Press. (In an interview with WWJ Newsradio 950 in Detroit, Bing said the Free Press was "trying to make something out of nothing." But Bing then listened to an NBA promotional video in which he said: "I got an MBA from the General Motors Institute," After listening to it, he said that the claim was "not correct.")

The Free Press also found that the 6-foot-3 former Detroit Pistons star was one course shy from graduation at Syracuse after receiving an "incomplete" in a course in 1966 because he had not turned in a paper (Bing claimed he turned in the paper and never heard anything about it). Bing had to write another paper to fulfill the requirement and received his diploma in 1995, almost 30 years after he had left school.

He repeated the same refrain when asked about the Syracuse degree.

"I never heard another thing on graduation or a degree until '95," Bing said. "I wasn't overly concerned about my degree. I felt I had done all I was supposed to do."

Bing, the 65-year-old founder and chairman of the Bing Group, a steel manufacturing operation and auto supplier in Detroit, is trying to fill the seat of former Detroit Mayor Kwame Kilpatrick, who was forced to resign and spent four months in jail after admitting he lied under oath about an affair with his ex-chief of staff.

See what else we're reading by subscribing to our GoogleReader feed, or following us on Twitter.

Quotable

Madoff's Day in Court » As Bernard Madoff prepares to plead guilty to 11 felony charges related to his role in a massive Ponzi scheme, at least 50 of his victims are expected to be in court, awaiting a chance to speak after the disgraced financier enters his plea. — USA Today

Cuomo: Merrill 'Misleading' on Bonuses » New York Attorney General Andrew Cuomo is accusing Merrill Lynch of misleading Congress last November when it described plans to issue bonuses at year end, saying the financial firm actually had decided to expedite the payouts. Cuomo also blasted Bank of America with interfering in the Merril bonus investigation. — Reuters, ABC

A Surge in Fraud Prosecutions » Across the country, attorneys general have begun indicting dozens of loan processors, mortgage brokers and bank officers. Last week alone, there were guilty pleas in Minnesota, Delaware, North Carolina and Connecticut and sentences in Florida and Vermont — all stemming from home loan scams. — New York Times

Tribune's Zell Questioned in Blago Probe » Tribune Co. Chairman Sam Zell hired well-known defense lawyer Anton Valukas and was interviewed in January by federal prosecutors as a "potential witness" in the criminal investigation of former Illinois Gov. Rod R. Blagojevich, the company acknowledged Wednesday. — L.A. Times

Inside Murtha's 'Earmark Factory' » Over the course of the past decade, Rep. John P. Murtha has earmarked millions of dollars for the Electro-Optics Center at Penn State University — money that has, in turn, gone to clients of the PMA Group, the Murtha-linked lobbying shop that was raided in November as part of a federal criminal probe. — Politico

After the jump...

BEST OF THE REST

Rule 10a-1. The arcane "uptick rule."

Created in 1938, toward the end of the Great Depression, and abolished in July 2007 by the federal Securities and Exchange Commission, the rule regulated short-selling on Wall Street by only allowing traders to make "short-sales" following a higher bid on a stock price.

For example, if a company's stock was trading at $30 per share and a trader thought the stock price would fall, he could borrow shares but not actually sell them until the stock price ticked higher, to $30.01, for example. (The trader would hope to be able to buy the shares back when the price fell and thus make money on the spread.)

In theory, the rule helped stop "bear raids" on stocks, when traders would gang together on particular stocks and force their prices down. But the SEC said the rule did not appear "necessary to prevent manipulation," according to a 2007 New York Times interview with Muriel Siebert, the former state banking superintendent of New York.

Without the rule, some observers argued that short-sellers were able to unfairly thrive in the market in 2008. And that, in turn, allegedly contributed to the market meltdown.

"The rule was designed as a guardrail that slowed down the short-selling process, preventing shorts from driving the price of a stock at a faster clip," TheStreet.com opined.

As the stock market plunged in late 2008, critics questioned the SEC's decision to get rid of the uptick rule.

See what else we're reading by subscribing to our GoogleReader feed, or following us on Twitter.

Madoff Expected To Plead Guilty » Facing life in prison for operating a vast Ponzi scheme, Bernard L. Madoff (Post coverage) is expected to plead guilty on Thursday. Meanwhile, prosecutors are still looking into whether Madoff's subordinates helped swindle clients across the globe out of $65 billion over the least two decades. — Washington Post, New York Times, Bloomberg

Somali Americans Recruited by Extremists » Senior U.S. counterterrorism officials are stepping up warnings that Islamist extremists in Somalia are radicalizing Americans to their cause, citing their recruitment of the first U.S. citizen suicide bomber and their potential role in the disappearance of more than a dozen Somali American youths. — Washington Post

Impartiality Questioned, Intelligence Pick Pulls Out » Charles W. Freeman Jr. withdrew yesterday from his appointment as chairman of the National Intelligence Council after questions about his impartiality were raised among members of Congress and with White House officials. — Washington Post

How to Get Rid Of All That Orbiting Space Junk? » Many aerospace engineers are worried about thousands of pieces of useless equipment circling Earth. Bits of spent rocket boosters, old exploded satellites and tools dropped by space-walking astronauts are just some of the trash racing along in the near-vacuum of space. The volume of man-made space debris has grown so large that scientists say garbage now poses a bigger safety threat to the U.S. space shuttle than an accident on liftoff or landing. — Wall Street Journal

With banks teetering on the brink of failure and Ponzi schemes seemingly being exposed every week, it's easy to forget that a few years ago the biggest financial scandal around involved backdating stock options.

A reminder came this week when the latest in a line of executives was charged with manipulating his options. KB Home chief executive Bruce Karatz was indicted for allegedly orchestrating the backdating of stock options from 1999 to 2006, which made his options worth an extra $1.63 to $4.56 per share.

Illegal stock-option backdating occurs when companies manipulate the dates they award stock options to executives, so the executives can earn the highest possible profit on their shares.

Post business columnist Steven Pearlstein has called such accounting "yet another game played by corporate executives at dozens of companies to pick the shareholders' pockets. And it's the latest evidence of how executive compensation has become a cancer, eating away at the souls of even the most successful American corporations."

In 2006, The Wall Street Journal first reported the use of stock-option backdating at many companies. By the end of that year, backdating was identified at 160 companies (most were resolved without any charges). More than 50 executives were fired or resigned in the scandal's wake.

Three years later, the SEC has charged more than two dozen executives with wrongdoing. Among the most notable cases:

• Former UnitedHealth chief executive William W. McGuire quit his post in 2006 and settled a lawsuit brought by the Securities and Exchange Commission for $468 million.
• Former Brocade Communications Systems chief Gregory L. Reyes was convicted in 2007 on 10 securities fraud charges and sentenced in January 2008 to 21 months in prison.
• Ex-Apple chief financial officer Fred D. Anderson and general counsel Nancy R. Heinen were charged in April 2007 with securities fraud. Heinen was accused of knowingly concealing backdated stock options granted to company executives. Anderson was charged with failing "to take steps to ensure that Apple's financial statements were correct." Both settled with federal regulators.
• Ex-Comverse Technology head Jacob "Kobi" Alexander was charged by federal prosecutors in 2006 with various types of fraud. The Israeli-born Alexander eventually fled to Namibia, which has no extradition policy with the United States. He was later arrested and still faces extradition hearings.
• McAfee's former legal counsel, Kent Roberts, was indicted on fraud charges in February 2007 related to the scandal. In July 2007, former Brooks Automation president Robert Therrien was charged with income tax evasion. Both men are fighting the charges.