How Fraud Became A Winning Strategy

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Ed Elson (1:01)

I'm Ed Elson.

This week, the golden age of fraud.

Before we begin though, this newsletter has been nominated for a Signal Award Please go vote for us at vote.signalaward.com.

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Two weeks ago, Premier League football club Manchester City was found guilty on 114 counts of financial fraud. According to the findings, the club had misrepresented its financial statements by roughly 900 million pounds with sham contracts, and it had been doing so since 2009

Now as a football fan, full disclosure, Chelsea, this news was an outrage because over the past 15 years, Manchester City won eight Premier League titles, making it the most successful English team of the modern era. But it's no longer clear if any of those trophies were valid. Simply put, the team's success was a function of its cheating.

Now this story isn't new. In fact, we've seen it many times before. Not just in football, but in business, on Wall Street, in Washington. It's the story of unbridled success only to later be revealed as the product of corruption. Manchester City is a 900 million pound metaphor for a disturbing trend that is growing in our society. As the legendary Jim Chanos once put it to me, we are living in the golden age of fraud. Wherever you look, winners are cheating their way to success, and more importantly, getting away with it. Let's start with sports.

This scandal is the second mass financial fraud story in less than a month. Just weeks ago, the NBA's Los Angeles Clippers were punished for fraud as well. The team's owner, Steve Ballmer, intentionally faked financial endorsements so that he could pay star players more than the league allowed. Ballmer isn't the first to play outside the rules. Earlier this year, Atlanta Hawks head of finance admitted to a $3.7 million fraud charge. And last year, a Miami investment firm that owned stakes in football clubs across Europe and South America was indicted for a $500 million fraud scheme. In sum, sports fraud is on the rise.

Now, if you think that's bad, go look at Wall Street. We've seen numerous fraud scandals in the past year, including First Brand's multi-billion dollar Ponzi scheme and Tricolor's billion dollar meltdown. Those two made the most headlines, but there were many more. In February, a mortgage lender called MFS collapsed after defrauding multiple banks out of a billion dollars. In September, the founder of Linkdo, a platform that sold shares in pre-IPO companies, was indicted for a $450 million fraud built on lying about the prices of those shares. And that's just the criminal cases. Investors filed 118 securities fraud lawsuits in the first half of 2026 alone, which puts this year on pace for the most since 2020 Silicon Valley is no saint either. Recent technology frauds include a Google engineer who used confidential search data to win $1.2 million on Polymarket, as well as the founder of tech startup Castle, who told investors her company had earned $66 million when it had actually lost $81 million. And don't forget about Nate either, the VC backed AI shopping app that raised more than $40 million in the promise of automated checkout, which turned out to be in reality hundreds of people in a call center in the Philippines. The Forbes 30 Under 30, which used to be a prestigious list for up and comers, has devolved into a who's who of fraudsters. From Sam Bankman Fried to Charlie Javis, many of tech's most legendary criminals have received the honor. I should also note that I myself made the list last year. I can't wait for prison. The fraud we see today should not surprise us, as our habits are informed by our leadership. How did 100 members of Congress beat the S&P last year? Are they incredible fund managers or do they know something that we don't? Congressional stock trading is one of America's greatest frauds. The good news is that our president wants to ban it. The bad news is he wants to make an exemption for himself.