The year was 1987. Although I was only 2 years old at the time, I remember it like it was yesterday. It was the first time (of many) I heard Gordon Gecko speak. I didn’t only hear Gordon, I listened to him. I hung onto his every word. He said, “Greed – for lack of a better word – is good.” This line still resonates with me today.
(Just look at Bud Fox now)
Generally, when I read about greedy goons (see Madoff, Bernie) that waste away their friend’s and families’ funds in an attempt to live a lavished life, I get extremely angry. Tonight however, I’m in stitches.
CNBC was airing a show called American Greed – which takes a deep look into “The Scams, The Schemes, The Broken Dream Some People Will Do Anything for Money.” Tonight’s episode (which probably originally aired around 2009) told a story about Al Parish.
Al Parish was an Economics Professor at Charleston Southern University. He was known for being a very goofy and outgoing guy – which is not typical of the traditional economist. With this in mind – he actually portrayed himself as a Superhero of sorts.
You can’t really expect a self-proclaimed Superhero to constrain himself to simply teaching Economics. So Al, the Economan, created some investment pools where he would collect money from family and friends and press his luck in the markets. While Al was full of economic knowledge and a very advanced mathematician, he was by no means an investment expert (which he actually appeared on local TV claiming to be). The non-expert quickly gained praise after his first year investments yielded near 40%.
Early on – he was only managing money for 10-12 people. Soon after seeing the success, Charleston Southern (his employer) decided to invest 10 Million dollars with their Popular Professor. This was roughly 1/3 of their endowment fund.
Things Get Weird
People close to the situation noticed that Al Parish was no longer acting like himself. What used to be a simple guy has turned into a royal. He had multiple homes & cars (which is normal for a greedy guy, no?) but most amazingly:
- He spent $1.2 million on pens
- He purchased a giant stone rabbit for $35,000 which sat in his front yard
- He spent a fortune on gnomes and paintings of clowns
Things Get Even Weirder
Once people started to question the sustainability of 30% annual returns – they found that Al Parish was using new deposits to pay anyone who wanted to cash out. But – at 30% – who on Earth would want to cash out?
When Al Parish realized that the SEC and Federal Investigators were on to his Ponzi Scheme, he did the unthinkable. Instead of admitting to his mistakes, he checked himself into the hospital – claiming he had amnesia.
“They tell me I’m Al Parish, but I don’t know,” he would tell them.
So who do you think is more insane? A coked-up Charlie Sheen or the forgetful finance guru?