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Salt Lake City Weekly Forbes: Salt Lake is Scam Central

By Ben Fulton

FEBRUARY 23, 1999:  They love you in success. They love you even more in failure. That's a reference, of course, to the press.

Just count Salt Lake City's lumps since the advent of the Olympic bribery scandal. After the release last week of the ethics-panel report, the Toronto Sun wrote about IOC officials wooed by "fistfuls of cash." The Los Angeles Times has christened Utah's capital "America's most beleaguered town at the moment."

The most damning words, though, were reserved for the tony pages of Forbes, the same business publication that used to flog Utah for past financial shenanigans.

"Were you surprised that Salt Lake City got tangled up in an Olympics bribery scandal?" the article's subhead read. "If you know much about financial scams, you might have expected it."

The one-page article went on to mention several current fraud cases making paths through federal and appeals court, as well as Utah's "penny stock" fraud heyday in the early '80s. For factual backup, Forbes unveiled some numbers: Complaints to the Utah Division of Securities have increased fourfold during the last four years, and criminal convictions have multiplied by eight.

Naturally, the article couldn't resist mentioning Salt Lake City Mayor Deedee Corradini's dubious role as an early backer of Bonneville Pacific, the fraudulent alternative-energy company that resulted in the state's largest bankruptcy case, not to mention $180 million in settlements.

SEC district administrator Kenneth Israel: "Our plates are full."
photo: Fred Hayes
"Next time you get a call pitching a sure thing, ask, before hanging up, where the caller is from," Forbes contributor William P. Barrett writes. "If it's Salt Lake City, you can chuckle to yourself before cradling the phone."

That's a cheap shot, say many who worked in the trenches of Utah financial fraud during the '80s. Times have changed, and state regulators and prosecutors have cracked down. In fact, they say Salt Lake City is no longer the capital of "penny stock" fraud, or risky stock shares sold for under a dollar. The bulk of that now comes from the East Coast: New York, New Jersey and Florida, for the most part.

But Kenneth Israel, district administrator for the U.S. Securities & Exchange Commission, believes the article was a fair assessment. More than most, he would know about the climate of white-collar crime in Utah. And he does: His office, which examines registered securities transactions and enforces securities law, is quite busy at the moment.

"Our plates are full," Israel said. "I don't think there's much of a connection between the two [bribery scandal and financial fraud], but I thought it was an interesting juxtaposition."

S. Anthony Taggart, head of the Utah Division of Securities, was more disappointed in the article. "It would have been timely 15 years ago," Taggart said. "Now it's like comparing apples and oranges. The scope of the problem is much different."

Forbes got the numbers right, but interpreted them wrong. Convictions are up because his staff is working harder at clamping down on fraud. "We're a more effective agency," Taggart said.

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