Oh My Fraud

Two tales of corruption and deceit from the ancient world.


 

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Creators and Guests

Host
Caleb Newquist
Writer l Content at @GustoHQ | Co-host @ohmyfraud | Founding editor @going_concern | Former @CCDedu prof | @JeffSymphony board member | Trying to pay attention.

What is Oh My Fraud?

"Oh My Fraud" is a podcast where the true crime is shocking, gruesome, heinous, but with way fewer dead bodies.

Hosted by Caleb Newquist, each episode explores fraud cases from petty swindles to corporate conspiracies, examining the people involved, their motives, methods, and how they spent the loot before it all came to a spectacular, inevitable end.

There may be errors in spelling, grammar, and accuracy in this machine-generated transcript.

Caleb Newquist: [00:00:00] One of the earliest recorded frauds that is mentioned by many sources is the case of naked political corruption. The story begins on New Year's Eve in the year 192, when the Roman emperor Commodus was assassinated, thus creating quite an exciting start to the year 193, which later became known as the Year of Five Emperors. Commodus was succeeded by Pertinax, who made a name for himself as a military official, but later became a politician who may may have been part of the conspiracy to assassinate Commodus. When Pertinax became emperor, Rome's finances and military were a mess, thanks largely to Commodus, and so he wanted to install some reforms. One of these reforms was to pay a far more modest donativum to the Pretorian guard. Then Commodus had paid them. Now a donativum is a gift of money that the emperors would pay to soldiers for various reasons. Gifts? Really just gifts. Uh, upon their ascension, the Pretorian guard. If you're unfamiliar, was the imperial guard of the Roman army. They did various things for the Emperor, including protection, crowd control, and gathering military intelligence. So, as you might expect, this modest gift did not go over too well with the Pretorian guard. They demanded more, but they were still not satisfied with the new Emperor's follow up efforts. So 2 to 300 of the guard stormed the palace. And after what I imagined to be a very brief conversation, assassinated Pertinax. His reign was 87 days. What happened next? The Pretorian guard auctioned off the throne to the highest bidder, of course. The winning bid was made by Marcus Didius Julianus, who promptly became emperor. But word quickly got out about how he obtained the throne, and so Julianus was very unpopular. So unpopular, in fact, that three influential generals in the Roman army rebelled and claimed the throne for themselves. 66 days after he bought the throne, Julianus lost it when he was assassinated. It was one of the shortest reigns in the history of the Roman Empire.

Earmark CPE: [00:02:33] Are you an accountant with a continuing education requirement? You can earn free Nasba approved CPE for listening to this episode. Just visit earmarked app in your web browser. Take a short quiz and get your certificate.

Caleb Newquist: [00:02:53] Hello and welcome to Oh My Fraud, a true crime podcast where every story is a Greek dramedy. I'm Caleb Newquist. How's it going? Um, I wrote part of this introduction on a train from Vienna to Budapest, but obviously I'm not recording it. Uh, you know, this is a week over, a week later, and I'm at home in the studio recording it. So I hope you don't mind if there's this weird writing in the present for the future tense thing going on. Anyway, yes, I took a trip abroad, uh, which was very enjoyable, actually. I like Europe. Uh, went to Budapest, which is a wonderful city. Um, we actually didn't have enough time there, I would say. But we had some good food, uh, saw art, quite a bit of music, among many other things. We also had stops in Vienna and Prague, both beautiful cities. I think my favorite meal was in Prague, but my favorite food was actually the goulash in Budapest. So whatever. If you're not keeping your. No one's keeping score of this. But anyway, in any case, this is just what I'm thinking. Um. What else? Oh, the Vienna. If you're not familiar, Vienna has a coffeehouse culture that is very, very enjoyable. Um, I've basically been doing this, uh, stateside for the last 15 years, but, I mean, it's just, I don't know, it has. There's always laptops involved over here, so it's not nearly as fun or interesting.

Caleb Newquist: [00:04:17] Um, anyway, amazing architecture in all three cities, of course. Uh, we traveled by rail, which is very nice and enjoyable. Nice all around. Nice to get away. Anyway, uh, let's read a couple of reviews, shall we? Uh, these both come from the earmark app on the episode with Kim Sutherland of LexisNexis Risk Solutions. Rebecca gave that one five stars and writes, very helpful topic. Great. Listen, uh, glad you liked it, Rebecca. Uh, this was one of those episodes that we didn't really plan out, but kind of just fell into our laps. Some folks at LexisNexis got in touch, pitched us some ideas, and they made Kim available, so we were happy to have her. So glad you liked it. Uh, Jethro also gave this one five stars and writes. The course was interesting, but the test was bad. Okay. Thanks, Jethro. Um, I'll pass that along to the earmark, folks. They like knowing things when things you know aren't good, but they like knowing when things are good. But if it was a lousy test, then I hope you at least passed it. But for what it's worth, you can take it as many times as you need to. There's no limit on the number of times you can take it, as far as I know. So anyway, hopefully you still got the credit. Anyway, that reminds me, um, I probably should give a proper, uh, shout out to our friends and partners at earmark.

Caleb Newquist: [00:05:38] Lots of accountants if you're listening or getting your continuing professional education right now. So, gosh, if you're one of those people accountants that is, uh, and you need CPE to keep your CPA license active or your CMA license active or whatever hours, whatever license, credential, etc., etc. whatever you have, if you can get that stuff on earmark and you can get it by listening to this podcast, then geez, there's lots of podcasts or I'm sorry, there's lots of episodes you can listen to. Um, nearly 100 hours. So and that's way more than you should need. Um, so get get the earmark app and subscribe so you can listen to as many as you want and take the tests and get the credits. If you just want the free version. I think you can only listen to the last few episodes, so just know that you are limited in that regard. Um, hey, and if you're listening to the episodes anyway, why not just get some credits? Huh? Also, for what it's worth, we hear from plenty of people who listen to the episodes and aren't worried about the CPE at all. So if you're an accountant or an accountant, you know. Thanks for listening. And if you are an accountant and you want to get some credit. Get some credit. That's all I'm saying. But if you, you know, if you need like 50 hours, you know, you better get after it, man.

Caleb Newquist: [00:07:01] There's not a lot of time left. Also, um, if you're firm, company, conference event, live event, virtual event, any kind of event, holiday party. Perhaps if you need a virtual presentation or a live presentation on fraud or ethics, then that's something we could talk about. Email me at fraud at CPE. Com to get more information. Okay, that's enough business time for some fraud. By many accounts, the earliest recorded instance of a fraud is from around 360 BCE. It involves a sea merchant named Registrados. Now it's pretty hard to imagine life more than, I don't know, 2300 years ago, but it's safe to say that travel at that time would have been perilous, especially by sea. There's just something about large bodies of water today, really, that are kind of terrifying. You know, the water can just take you with such ease and indifference. It's just, I don't know. Turns your blood cold. So imagine that 2300 years ago. You know, the sea is not a joke today. And the sea certainly wouldn't have been a joke then. Especially traveling by sea. And so what I'm trying to say is, back then, 360 BCE, lots of ships sank. They sank all the time. They were kind of the mass shootings of their day. Maybe. Maybe that's no good. But anyway, the point is, because boats sank all the time there was this thing called Bottomry.

Caleb Newquist: [00:08:52] Okay. Bottomry allowed a sea merchant to borrow money and use the ship and the cargo as collateral. Okay, oftentimes to buy the cargo. Okay. But then, you know, the cargo itself could be used as collateral. The ship could be used as collateral. And when the ship got to the destination, sold the cargo, then the merchant can repay the loan with some interest and then keep whatever's left, right, right. But if the boat sinks, the lender doesn't get repaid. But, you know, at least the lender's not at the bottom of the sea. So this guy hedged. Stratus was supposed to set sail from Syracuse, which is on the island of Sicily, with a load of grain, to port in Athens, where it would be sold. Easy, right? But as these stories so often do hedgie I'm going to call him Hedgie now and again. Hedgie he had a different idea. He and another guy by the name of Xenohammus took out one of these Bottomry loans. Okay. Hedge Stratus had the ship and the grain and Xenohammus facilitated the loan. So the story goes. Hedge Xeno that got the money, and then they promptly send it back to the ancient city of Massalia. And their plan was to sink the ship. And then somehow, I think, get a new ship, find a new buyer for the grain, and then just keep all the money, keep the bottomry loan, keep the money from the sale of the grain, you know, minus a few expenses.

Caleb Newquist: [00:10:44] Okay. So they set sail L in 2 or 3 days into the voyage, had just decided it's time to get this party started. So he goes down into the hold. He starts cutting a hole in the bottom of the ship, and in an attempt to not attract attention, Xenophon stayed up on deck with the rest of the passengers, but soon it becomes evident that something is wrong. I have to imagine that cutting a hole in the bottom of a ship would be very loud in some way, and so people rush down to the bottom of the ship. They find Stratos cutting a hole in the bottom of the ship. So on the one hand, I think this would be a terrifying scene. A guy cutting a hole in the bottom of a ship that you're on. But on the other hand, it's also kind of hilarious. It kind of reminds me of a screwball comedy, right? You know, you you got this guy Registrados. Herostratus. He confidently. He's about to he's about to sneak down to the ship. Right. And he's giving everybody a lame excuse, something like, oh man, I'm real tired. So I think I'm gonna go turn in below deck, but I'll be down there resting. You know, nothing but resting. Definitely not trying to sink the ship with all of you on it. I'll be there resting.

Caleb Newquist: [00:12:07] And while he's doing this, Xenohammus is like looking at him like. You idiot, you're making it so obvious. Like making the cutting gesture at him. And then he finally shuts up and he walks slowly backward and then dashes down to the hold when he's out of sight. And there, you know, he's working quickly and confidently starting to cut this hole in a ship. And and it's going to sink the ship, no problem. Meanwhile, Xenohammus is doing his very best to create a diversion, but it's not working because, as I imagine it anyway, no one else on the ship likes him, and yet he continues to distract people with bad stories or fake coughing every time there's a loud noise from down below. But eventually people hear the racket, and then there's a large group of them that go down there and find out what's going on, and they and they find Registrados, and he's cursing and he's furiously like cutting the hole in the floor. Then he notices this wall of people standing in the doorway with their arms crossed, staring at him. And so he freezes, and he sees Xenohammus at the back of the group, his eyes wide. He's shrugging and he's grimacing. It's like, you know, like I couldn't stop him, man. And then he tries to explain himself, and then, of course, you know, to kind of pick up the official account from the Greek order, uh, Demosthenes, uh, he took flight Plight and was hotly pursued by the others.

Caleb Newquist: [00:13:46] And I picture this as one of those Keystone Cops chase scenes with Yakety Sax playing behind it. If you don't know what Yakety Sax is, just look it up and then you'll be like, oh yeah, that's that's what I picture. Anyway, this chase concluded, when Hedge Stratus flung himself into the sea. Demosthenes writes, quote, thus miserable as he was, he met a miserable end as he deserved, suffering the fate which he purposed to bring about for others. All right. So with his coconspirator sleeping with the fishes, synonymous for whatever reason, continues to try carrying out this fraud, which I have to say, that would take some guts. You know, if you if you watch your coconspirator Conspirator get busted and then throw himself into the into the water. And then you. But then. But then the first thought in your head is like. I got this. I can I can still do this. That's that's kind of crazy. Anyway, so how did he try to do that? And apparently he just asked the people sailing the ship to sink it, because his argument was that all hope was lost. They just might as well let the old girl go down. And, you know, just everybody will take their chances with the open sea, you know. But according to Demosthenes account, there was an agent for the cargo in this case, a guy named Protus.

Caleb Newquist: [00:15:29] And in the text, he's referred to as the Supercargo or in, you know, in a, in a reference in the in the text, he's referred to as a supercargo. I don't know, maybe there's some weird translation, uh, from ancient Greek, and it's like a portmanteau for superintendent and cargo. I don't know. I don't know. Whatever the case, Protus was this guy in charge of making sure that the cargo grain got to where it was going, and he didn't want the ship to sink. He wanted the ship to continue sailing. Uh, not, you know, not sink the ship and get to Athens. Uh, which is where he was from and where the grain was supposed to go. That was his job. And I have to assume that whoever else was on the ship didn't want to sink the ship. And I'm sure the people sailing the boat had been in difficult circumstances before and perfectly capable of figuring this out. And so they did that, and they dragged the ship to shore at, uh cephallenia. Okay. So they're in Cephallenia, which is an island in the Greek islands. Um, Um Xeno, Xeno and Protoss. They both try to make their case about what's supposed to happen next. And as I just mentioned, Protoss thinks that they should continue on to Athens. But then Xenohammus is like, no, you can't go to Athens. We have to go back to Massalia.

Caleb Newquist: [00:16:58] Uh, this was a Greek colony at the time, and it's in modern day Marseille, in the south of France. Um, so I might just say Marseille. Maybe I'll say Marsala. Whatever. Xeno says we have to go back to there. We have to go back there because that's where Stratus is from. That's where I'm from. And I helped get a loan from lenders who are also from there, which just as a point of clarification, that's not where they originated, but somehow Massalia, this is all. This is all playing into it. This is this is Xenophon's rationale, okay. His counterargument to Protus okay. But the magistrates in Cephallenia, they said, nah, go on to Athens. And so rather than cut his losses and get the hell out of there, Xenophon continues on to Athens, where he then files lawsuits claiming that the grain, the cargo is his. It is in the course of these legal proceedings, yes. Lawsuits in ancient Greece, where Demosthenes exposes the conspiracy between Xenophon and Magistratus and thus the fraud case closed. But actually, no, we don't actually know what happened. You see, when Demosthenes gave this account, he wrote it on behalf of his uncle. Daemon or daemon, spelled like demon. I think it's supposed to sound like demon. I don't know. You know how these names are. It's hard. Anyway, this oration that he wrote is only about 32 paragraphs long. And at that point, what it says the original document was, quote unquote mutilated, and what was left, quote, yielded no satisfactory sense.

Caleb Newquist: [00:18:56] So the point is, we don't ultimately know what happened. I mean, we know what happened to Hedges Stratus. He's a fish food buffet at the bottom of the Mediterranean Sea. But what about Xenophanes? Did he end up free to live out his days? Or did they make him drink hemlock? Because apparently that was how they did it back then? Anyway, I don't know. But in the search for an answer, I came across this old paper in the Michigan Law Review from 1925, written by John M Zane. And this guy Zane thinks that a lot of people have kind of the key parts of this story. Mostly wrong. Okay. He starts out by explaining that the guy buying the grain, this Uncle Damon, he's a rich guy who lends out money. He lends money to protest, to buy the grain in Syracuse and to bring it back to Athens. Protus gets to Syracuse, procures the grain from Magistratus, who purportedly owns it. Right? Little does Protus know. At the same time, he had mortgaged the grain to this unwitting Xenophilus, and he planned to keep that money. Okay, so reading Zane's account, much of the story is more or less the same. They set sail. Justus tries to scuttle the ship, is found out, tries to escape by jumping into the sea.

Caleb Newquist: [00:20:25] He drowns and Zeno is like, well, we got to go back to Marseille because that's where he was from. That's where the money came from. That's where I'm from. And produce is like, no fucking way we're going to Athens, because the guy who I bought the grain for is in Athens, and he convinces the guy sailing the ship to go to Athens because he promises him a reward. Something from what I gather Xenophon didn't do. So long story short, they get to Athens. Zeno sues Protos and Damon. And that's why Demosthenes wrote this speech for his uncle. Again, Damon, that supposedly exposes Zeno as this coconspirator with Stratos. Right? Big fraud. Okay, but this is the point where Zane, the Michigan Law Review writer guy, he says that nothing in the argument actually makes any sense. He says that xenon had nothing to gain from the scheme as everybody understands it. He procured the loan to Magistratus, but he didn't have the money and there was no obvious way for him to get it. So how was he going to get access to the money that had just Stratus was going to make off with? Also, Zane argues that xenon had no legit claim to the cargo, so it's not like he could go and sell it somewhere, even if he'd wanted to, if that was supposedly part of the plan. In this guy Zane's view, xenon was deceived by Stratus, just like protos was, and his desire to return the ship to Massalia, aka Marseille.

Caleb Newquist: [00:22:07] This made sense because that's where he was from and he wanted to legitimately collect the insurance. Not technically insurance, but proto insurance. Let's call it on cargo. He believed he owned so he could repay his lender friends, right? Anyway, as I said earlier, this is where the story is incredibly unsatisfying because we just don't know what happened. Zane again, Michigan Law review guy. He believes that Damon produce likely lost because Athens juries were populist and they wouldn't be sympathetic to some rich guy's plight. But scholars acknowledge that it isn't clear, and many believe that Xenophon was, you know, realized the ruse at some point and then tried to take advantage of all the things going on in the chaos and confusion. And, you know, that doesn't really put him in the best of lights. But what we do know is that in ancient times and in modern law, if you create a fraudulent contract, it's not a legal contract. So it doesn't really matter what Xenophon thought he was party to a fraudulent contract. Whatever happened. This is one case of fraud where the resolution has been lost to history. So what did we learn? Um, these stories were new to me. Um, so, I guess, you know, the obvious lesson is fraud is old. It was always safe to assume that no fraud had been happening for as long as people had been around.

Caleb Newquist: [00:23:55] But it was it was definitely fun to dig up a couple of these old stories to show, you know, things just haven't changed all that much. And it reminds me of something John Wiles said in our conversation from a while ago now. But he said, you know, just to paraphrase something, he said, uh, there's no new frauds, just new fraudsters. Okay, that's it for this episode. And remember, you cannot have any weak links in your conspiracy. Don't think that you can just let some hack create a half assed aversion for you. Expect that you're going to pull things off. Not gonna work. Okay. You're gonna create a diversion. It's got to be legit. I don't know how you do it. There's a lot of ways to do it, but, you know, get somebody good. If you have questions, comments, or suggestions for stories, drop me a line at Omai. Fraud at earmark CPE com o my fraud is created, written, produced and hosted by me Caleb Newquist. Zach Frank is my co producer, audio engineer, music supervisor. Laura Hobbs designed our logo. Rate review and subscribe to the show wherever you listen to podcasts. If you listen, on your mark. As I mentioned at the top of the show, get some CPE by listening on your mark. Okay. Okay. Join us next time for more Abra swindlers and scams from stories that will make you say oh my fraud.