![]() ![]() Today, in the wake of the financial crisis, only one firm, Bermuda-based Assured Guaranty Ltd., writes muni insurance. Back in 2005, 57% of new municipal bonds carried insurance that protected investors from losing principal and even interest in the event of a default. This long-standing problem should alarm the individual investors holding nearly $3 trillion in municipal debt, because increasingly they, not insurance companies, will be on the hook if bond issuers default. Sidebar: How To Protect Yourself When Buying Municipal Bonds While auditing in corporate America is far from perfect, the standards public companies must adhere to are stringent compared with what's required of local governments, whose sometimes shoddy accounting practices enable not only rogue embezzlers but also corrupt elected officials and those who would cook the books to hide fiscal mismanagement. The biggest embezzler overall, according to Marquet, is Peregrine Financial Group founder Russell Wasendorf Sr., who pleaded guilty last year to siphoning $215.5 million from customers' accounts over 20 years.)Ĭrundwell's crime was extraordinary, but Dixon's failure to heed its most famous resident's dictum to "Trust, but verify" is all too common among municipal governments. (Runner-up in the muni category: Harriette Walters, the real estate tax assessments manager for Washington, D.C., who, before her 2007 arrest, issued phony tax refunds to herself totaling $48 million over two decades. ![]() embezzlement of any kind, according to a tally kept by Christopher Marquet, a Boston-based security consultant. The 60-year-old Crundwell pleaded guilty to one count of wire fraud in November and now sits in federal prison while she appeals a 19?-year sentence for what ranks as the largest municipal embezzlement in U.S. In the six years before an FBI agent confronted her in April 2012, she pocketed $30 million-more than half the town's revenue. Local residents who saw Crundwell's stables and spending grow-she was the American Quarter Horse Association's top breeder-owner for eight consecutive years-naively assumed she was making money from show horses, which (as horse people know) more often generate tax writeoffs than profits. ![]()
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