Bankers, Builders, Knaves, and Thieves: The $300 Million Scam at Esm

Investment manager Maggin here offers an expanded version of a 1986 Management Review article, recounting in devastating detail the collapse of ESM Government Securities Inc., a Florida brokerage firm, in the mid-'80s. The ESM scam involved crooked real estate developers financed by their own chain of deregulated Florida- and Ohio-based S&Ls; ESM's foundering, together with the discovery that auditors had been falsifying company records for seven years, forced Ohio's governor to declare a bank holiday to quiet the panic that resulted. Three of 11 ESM-related ``crooks'' have since died; the remainder are serving time. However, their fiasco was not a complete loss: the author credits the ESM affair with helping to bring about 1986 S&L regulatory legislation. Photos not seen by PW. (Dec.)