The Fall of the American Fraudster?Historians in the News
tags: fraud, con men, finance, financial history, Cryptocurrency, Sam Bankman-Fried
Without much notice, the American scene now boasts an array of professional scam artists meeting a richly deserved comeuppance. The tangle-haired crypto titan Sam Bankman-Fried has presided over an epic meltdown at his FTX empire; the trading platform had yielded him an estimated net worth of $15.6 billion, and that number now stands at a nice round zero, with Bankman-Fried facing a host of legal smackdowns in the offing. Elon Musk, lauded far and wide as the genius tech disrupter of the age, has run his latest acquisition, Twitter, straight into the ground, displaying rank ignorance, insatiable bro-hubris, and rudderless right-wing conspiracy-mongering in equal parts. Elizabeth Holmes, the founder of the phony blood-testing app, Theranos, is bound for prison for more than 11 years on fraud charges.
Meanwhile, a host of political hucksters, from snake oil doctor Mehmet Oz to election denier on autopilot Kari Lake to Peter Thiel action figure Blake Masters, were kicked to the curb in the 2022 midterms. (Though it must regretfully be noted that one of their rank, Ohio Senator-elect J.D. Vance, managed to scurry safely out of range of his own rendezvous with karma, thanks in no small part to the $30 million pumped into his flailing campaign by Mitch McConnell’s Senate super PAC.) And as a perfect grace note, nearly all of the most high-profile failed political frauds of the 2022 cycle were handpicked protégés of the greatest scammer in American public life, former president Donald Trump, who tried to head off a series of legal and political reckonings with his low-energy announcement of his 2024 run for the presidency.
It’s wise not to read too much into the present moment’s Fraudsterdämmerung; this is America, after all, the premier breeding ground of boodlers and mountebanks of all description, from John Jacob Astor, Henry Fricke, and Bernie Madoff on one hand, to Richard Nixon, Warren Harding, and James Buchanan on the other. Still, students of the close alignment of rampant scamming and financial entrepreneurship note that we could be on the verge of a new culture-wide reassessment of late-capitalist fraud.
“The instinct to geographic expansion and asset invention in capitalism tends to, historically, be accompanied by fraud,” says Ian Klaus, a senior fellow with the Chicago Council of Global Affairs and the author of Forging Capitalism: Rogues, Swindlers, Frauds, and the Rise of Modern Finance. “In this sense, fraud is an inseparable part of capitalism, especially at its frontiers, such as crypto now.” In some ways, the rise of mogul-driven digital capitalism has produced a convergence between financial fraud and the political variety, rendering the two increasingly difficult to distinguish. “What’s so strange right now is the way in which fraud has seen a parallel breakdown in the realm of business, where we normally see it, and the realm of politics,” says University of Georgia historian Stephen Mihm, author of A Nation of Counterfeiters: Capitalists, Conmen, and the Making of the United States. “I do think that much of the proliferation of scamming and hucksterism has flourished in an environment of extreme political polarization. The two things are linked insofar as people become wedded to a political wing over reality and facts, and will not consider an alternative view.”
This calls to mind other grifters in the right-wing house of election denialism, such as MyPillow CEO Mike Lindell and all-purpose agitprop hack Dinesh D’Souza. But Mihm also notes that an important augur of today’s great fraud shakeout was the pair of civil lawsuits targeting the deranged hard-right conspiracy merchant Alex Jones, who’s now facing more than $1 billion in penalties for promulgating the hateful lie that the massacre of schoolchildren and teachers at Sandy Hook elementary school was a false-flag operation perpetrated by “crisis actors” in thrall to the liberal agenda of the deep state. “He’s also representative of this extreme polarization, selling vitamins and survivalist gear, while he’s got people in his audience migrating to these really dark places,” Mihm says. “You know, it’s one thing to sell vitamin supplements, and it’s another thing to tell lies about dead children. That’s a line that hucksters historically haven’t crossed.”