• Exploiting the social fabric of networks: a social capital analysis of historical financial frauds

      Manning, Paul; The University of Chester (Taylor & Francis, 2018-10-21)
      ABSTRACT The article will present two strategic cases of financial fraud that demonstrate the recurring reference points that conmen use to facilitate their white-collar crimes. The cases are constructed from the Ponzi and Madoff financial frauds, perpetrated by the most well swindlers of the twentieth and (so far) twenty-first centuries. The article will illustrate that their ‘modus operandi’ shared essential reference points, as it owed as much to their sophisticated socioeconomic insights and consequent exploitation of social capital processes, as it did to their sophisticated insights into criminal financial schemes and financial engineering. This article will demonstrate that social relations and the resources that inhere in these relations (social capital) can be negative. This contribution will add to an emerging field of analysis that considers deviant organizational behavior. For this article, the negatives of social capital will be described as its shadow aspect, which for financial fraud includes decision-making based on excessive in-group trust, as well as general credulity replacing due diligence. The article’s theoretical contribution will be to develop understanding of historical phenomenon, in this instance of financial fraud, with the application of the shadow side of the social capital concept.
    • Madoff’s Ponzi Investment Fraud: A Social Capital Analysis

      Manning, Paul; University of Chester (Emerald, 2017-05-08)
      Purpose: The social network analysis of criminal networks at both the ego and socio-centric level is well established. This purpose of this study is to expand this literature with a social capital analysis of a criminal network. The focus of the analysis will be the recent egregious investment fraud of Bernard L. Madoff Investment Securities (BLMIS). Design/methodology/approach: This research involves a case study of the BLMIS financial fraud. The article uses a social capital theoretical lens, with archival sources taken from the court records of Madoff v. NY to include victim impact statements and the defendant’s Plea Allocution. Findings: Financial crime literature can be expanded with a social capital analysis which facilitates a socio-economic analysis of ego-centric criminal networks. Research limitations/implications: Each financial crime is of its time; however, there are recurring socio-economic network characteristics that could be applied to develop an understanding of criminal networks. Practical implications: Any understanding of financial crime, including contemporary instances of criminal innovation, such as cyber-crime, can be enhanced with a social capital analysis of criminal networks. Originality/value: A social capital analysis of financial crime draws attention to “human factors” in criminal networks that are integral to this form of crime.