another publication by IMAGE asia

Lessons from the Jeffrey Epstein saga

Understanding the strong connection between arrogance and fraud

  Bangkok / Phuket Boat Lagoon

Living in Phuket or any ‘tropical’ quasi paradise-esque environment can be seductively deceiving, particularly in relation to the existence of potential or actual fraud. It can seem perfectly normal to a person of average or lesser means – or long standing elites – to encounter new elites who are living their lives in the upper trajectories of ‘capital-yield benefit’ or to use the simpler description: living off the interest of their self-generated or their family’s capital and interest. Unfortunately, as with the Jeffrey Epstein saga, there can be much more than meets the eye in many cases.

If you haven’t seen the Netflix documentary on Jeffrey Epstein, then I recommend it, not as a voyeuristic insight into the sick world that he wove with his elitist threads, but as a sharp reminder for us all that criminals don’t always wear hoodies (apologies to tech wannabe hoodie wearers) and rob banks with pistols, or shoplift for diapers for their children because they don’t have enough left over from their paltry pay cheque. From the high-profile Bernie Madoff ponzi scheme to the 1Malaysia Development Berhad scandal, there appears to be no shortage of expert elite fraudsters and victims living the so-called ‘high-life’ on other people’s money that they treat as their own. Politicians can also be some of the most prolific double dipping scammers but with plenty of impunity mixed into the apparent frequent deference misapplied to their ‘civil service’.

This is not intended to be a political commentary on the unacceptably large wealth gap, nor offer any armchair economic solutions to an age-old problem. The activities of elites can have positive and negative effects for an economy and society. The ‘feeding off-the-crumbs’ theory, or ‘trickle down’ effect, means that those who are the means of production or primarily responsible for giving up their labour, can service the capital-rich elites and perhaps improve their own economic wellbeing with some tax tinkering here and there and some minor social safety nets to allow some wealth redistribution. This is, for reasons of space, an exceptionally simplistic economic system summary and deliberately doesn’t explore varieties of capitalism or variations of socialism, because this article is about the gullible, the not-so gullible, and the veil of elitism that is a strong tool for substantial fraud.

I personally benefit, and so do my employees, their families and the Revenue Department, from the decisions of residents, nationals and foreign elites to invest into Thailand, move capital into properties, hotels and commercial enterprises. During such process there is a very small ‘rent’ or ‘fee extraction’ on a transaction which includes, in proportion to the capital being invested, a relatively very small legal fee. The market apparently values legal fees as small because it does not equate investor returns with persons and firms obtaining various legal qualifications, investing in a legal business, training and developing lawyers and reinvesting to elevate the performance of the firm for the benefit of service recipients. Instead, the market attributes more value on commissions of broker-agents creating deals, debt and equity providers to finance deals, and innovators who create non-profit making enterprises but with the promise of scaleability and exponentially large returns. Nevertheless, I still need this circle of monies to move and for it to connect to Thailand, as do many others.

I believe the market is irrational in undervaluing legal and other due diligence services, given the fact that the PwC 2020 global fraud report identified, in wide-ranging definition of fraud from 5,000 surveyed respondents, fraud and losses estimated at 42 billion USD; that is obviously going to be under the real figure. This belief is not merely borne out of self-interest. The irrationality of the ‘market’ is clear to see in the behaviour of investors in Phuket, Thailand, and elsewhere and the behaviour of those who openly transacted business with and associated with... Jeffrey Epstein.

It seems that a polished look, a classic chiselled jawbone structure, a hairline and hairstyle that is heavily invested in, an ostentatious display of wealth from private jets and yachts, some feigned ‘casual designer-wear’, multiple luxury home retreats, connections in the finance and business world who don’t appear to notice whether or not professional qualifications are genuine, is enough to allow a person such as Epstein to run a paedophile ring and burn through millions of USD of investor monies, whilst being treated with more deference and respect than the so called ‘average person on the street’ receives or would receive as an out of place attendant at a ‘high-society’ party. Oh, what a strange world we live in.

When I see someone driving a brand-new sports car or overpriced and acutely high taxed Benz, discussing their ski holidays, private jet charters and flouting their wealth, I don’t feel envious. I don’t feel that such persons don’t deserve their wealth if they have earned it. I don’t feel they should be forced to transfer their wealth to me either. However, what I do feel, very strongly, is an initial sense of extreme caution and a well-placed sense of deep mistrust – until proven otherwise over time. I feel even more mistrust when a person overly promotes their polished ‘rags to riches’ story, writes a book on how to satisfy the constantly proven-to-be misguided instant gratification ‘get rich quick’ techniques, and suddenly becomes an expert ‘real estate developer’ when they would struggle to construct a good-looking house from a 3-7 year old Lego kit, even if they do have some very nice 3D renderings and a digital ‘tour’ of a property that hasn’t been built yet and might be funded on a bet relating to deposit payments.

The Epstein saga should have a direct effect on the level of caution our minds apply when we encounter ostentatious wealth, anyone using pumped up arrogance as a veil of credibility, and perhaps encourage us to take longer to understand the real nature of a person, and not just the names that appear on their bio, that they drop into conversations or invite to parties to provide illusions of grandeur. Just as the human mind may not by nature be criminal at birth, but may develop criminal tendencies and cross the line to commit criminal acts, a fraudster may also not previously have committed misdemeanours. Once they have ‘gotten away with it’, they may become emboldened by the lack of detection and apparent ease to repetitively commit the fraud, such as siphoning funds from a sinking or common area fund to participate in a gambling ring.

The critical make-or-break crossroads for victims of frauds and other misdemeanours, is how they deal with it and try to address the problem. In the Epstein case, the victims of his sexual abuse cannot be analysed in this way, they surely would all react in different ways to such abuse and escape criticism for any erroneous reaction. In relation to financial abuse, victims of fraud who then go on to pass on the burden of their losses to others who might try to assist them, may be characterised in due course of ‘deserving their loss in the first place’. When questioned, some very famous fraudsters, including Jordan Belfort, the penny stocks master depicted in the movie, The Wolf of Wall Street, appear to believe that their victims deserved to lose because of their greed and stupidity, which was ripe for exploitation, although Belfort subsequently expressed remorse citing drug addiction as a main cause of his behaviour.

In Phuket’s seductive tropical island landscape, being gullible, immersing in a ‘faux-elitism’, participating in investment ponzi schemes which mathematically will inevitably fail, trying to pass on losses of fraud to others in bad faith, reneging on promises and commitments even when being exploited by others, is a surefire recipe for ultimate failure. Amazingly in times of economic stress, some appear to be financially immune to the pressure in wages, inflation and rising debt levels. In such times, and in light of the Epstein scandal, those that aren’t immune need to look for those that appear to be, and treat this as a warning to be vigilant, to use our minds to watch out, wherever we are, which at this point in time happens to be for me and a few hundred thousand others, in Phuket.

By Desmond Hughes, Senior Partner of Hughes Krupica.
Hughes Krupica is a law firm which specialises in Real Estate; Construction; Hospitality; Corporate; Commercial; Tech; Dispute Resolution; and Litigation, operating from Phuket, servicing clients in relation to their business activities in Thailand and in other regions of Asia.

 Contact info:

Hughes Krupica Consulting

Hughes Krupica Consulting Co. Ltd
23/123-5 Moo 2 Kohkaew Plaza
The Phuket Boat Lagoon
T. Kohkaew Amphoe Muang
Phuket 83000 Thailand
Tel: (0) 76 608 468

Hughes Krupica Consulting (Bangkok) Co. Ltd
29/41 Soi Ladprao 22
Ladprao Road
Chankasem, Chatuchak
Bangkok 10900 Thailand
Tel: (0) 20 771 518

[email protected]