As a number of recent stories show, Utah's reputation as a "fraud capital" of the country still seems to be holding up. Swindlers are getting caught, but not before many do serious financial damage.
An exception was the FBI-run "sting" that resulted this week in three people being indicted for penny stock fraud. Plea agreements reportedly are being worked out with seven others on various charges.It wasn't the only FBI success of the week. Agents cracked a massive futures security fraud case in Chicago. But while business scandals have happened often elsewhere, it's Utah that seems stuck with a bad reputation.
The federal achievement in Utah is welcome, particularly since the state continues to have problems investigating cases and keeping up with enforcement of stock fraud laws - mostly because of a lack of experienced investigators.
Some years ago, a governor's task force was established to help alter Utah's image as a fraud capital. A number of changes have been made. Laws against blind pools and shell companies were strengthened. But enforcement remains spotty and uncertain.
An audit of the Utah Securities Division last summer found that the agency had problems with high turnover of personnel, making it difficult to keep up a consistent, well-established operation.
John C. Baldwin, director of the division, acknowledged the problem, but said that "low pay" makes it hard to keep qualified staff working in a highly visible and often volatile area.
Baldwin's complaint was echoed this week by newly-elected Utah Attorney General Paul Van Dam, who said tight budgets keep his staff spread too thin.
As a result, the state doesn't have enough attorneys and investigators to adequately tackle the stock fraud problem. In fact, the attorney general's office currently has only one person assigned to stock fraud. In addition, low pay has caused more experienced people to leave for greener pastures.
Clearly, the lack of finances in these agencies is hurting Utah's efforts to deal with stock fraud. Better laws are no help if there is not enough enforcement to back them up.
White collar crime can be even more expensive than the other kind. Saving money by keeping staffs too small may only result in heavy losses in other ways. Utah can't afford that.