Service of Whistleblowers

October 21st, 2010

Categories: Cheating, Deception, Tips, Whistleblowers

In “Whistle. Then Worry and Wait.” Edward Wyatt wrote a thorough and engrossing feature in The New York Times‘ Sunday Business Section [October 10], about Arthur F. Schlobohm IV, known as Ty, a Minneapolis resident who gave up his job as a trader at a brokerage firm some 18 months ago to become an FBI informant.

The target was an overtly suspicious Ponzi schemer, fund manager Trever G. Cook. He had been twice suspended by the National Futures Association and fined $25,000 for giving false information to open a trading account. This information about him came up in Schlobohm’s Google Searches. You can read all the other clues that alerted Schlobohm to Cook’s bad intentions in the article. Most were hiding in plain site.

Schlobohm found one of the most difficult parts of his undercover job was watching so many of his neighbors being taken in–and to the cleaners by–Cook until the Feds felt they had enough against him to put him behind bars. By the time this happened, almost $160 million had gone up in smoke leaving financially devastated people with little if any hope of seeing a cent of their investment.

Whistleblowers are extremely brave and essential to stop and eliminate corrupt businesses and business people. Risks and stress are tremendous and rewards few, although Wyatt noted that this summer, The Dodd-Frank act became law to strengthen whistleblower protections.

Trouble is, instead of being celebrated, some never again work in their specialties because nobody will hire them. And imagine what Schlobohn’s neighbors who got burned by Cook think even though they must have been told that he couldn’t warn them and desperately wanted to. It’s ironic that to bring an evil creep to justice you can’t alert the innocent targets.

At the time Wyatt wrote the article, it wasn’t clear whether Schlobohn, who as a teen ran tickets on the floor of the New York Stock Exchange, would win an award from the IRS. [He’s ineligible for benefits from the Dodd-Frank act.] But Schlobohn told Wyatt that he’d probably help fraud victims with it and, “If I were to receive some reward, I think that would be great. But that’s not why I did it.”

I wonder if Scholobohn will get back his or any job as a trader. What do you think of whistleblowers? Would you hire or be one? Do you think you’d get taken in by a Ponzi schemer?

9 Responses to “Service of Whistleblowers”

  1. Lucrezia Said:

    I hold a mixed view on whistleblowers. Overly zealous ones can get carried away by what they see as their mission and improperly identify people, who do not meet up to their standards, as crooks. It’s worthy of Schlobohm to catch a Ponzi scheme person, but was joining the FBI the only way to get at this person? I cringe at the idea of entrapment, which pulls many an innocent person into a net, and in answer to the question, no I wouldn’t hire one, don’t relish tattling, and very much doubt I would be taken in by a Ponzi scheme, not to speak of an FBI agent who would try to criminalize me in order to fatten his resume.

  2. Jeanne Byington Said:


    Before he shared his suspicions with the FBI, this whistleblower was pretty sure that he was looking at a huge crook who was taking advantage of innocent people. Given $160 million of other people’s money that’s up in smoke [that we know about], his nose for crime was right-on. He put his life on hold and took risks to do it. I admire him and would hire someone like him in a second. How else might he have brought such a sleaze to justice?

  3. Lucrezia Said:

    How should I know how to bring a Ponzi person to justice? But if I were in such a position, I would avoid the FBI since I don’t trust them. It’s good that the crook is caught, but there remains something about tattlers I don’t like. Even though I am not dishonest by nature, I would not want someone like that snooping about my business, and would not hire him. He makes a great watchdog, however, and I am sure he will be adopted by someone in need of that kind of service.

  4. Jeanne Byington Said:

    Whistle clean is what you are, Lucrezia, with no fear of anyone thinking you tried to scam them for a second or ever. I doubt that anyone would snoop around you and if they did, they’d be bored and come up empty handed.

  5. Hester Craddock Said:


    This is a tough subject.

    How can you run any enterprise well, if you don’t trust your employees and they don’t trust you or each other? On the other hand, the need to cheat has become endemic in our society. Thank god we do have whistleblowers.

    I once knew someone who made his living as a company spy. He was a shy, decent, mild mannered little man who was remarkably successful at rooting out corruption. For him, it was job; at least, that is what he said.

    True also: Snitches have never been popular, and whistleblowers seldom end up better off for their courageous actions.

    I believe a major part of the problem is the complexity of our legal system, which makes it extremely difficult to convict cheats and thieves. Therefore, I suggest the way to reduce the need for whistleblowers, is A) to upgrade the ethics of lawyers to the point where they all understand that their first duty is to Law, not to their pocketbooks or their clients, and B) let the pendulum swing back a little from the concept that you are innocent until proved guilty, towards you are guilty until proved innocent.


  6. Jeanne Byington Said:

    Wow, Hester, by your last sentence, you want to change the structure that holds up our legal system. Is this necessary?

    Perhaps if there were more people like the “little man” you knew who policed crooks and caught them before they did too much damage, the deterrent would be enough to tamp down the number of cheats and thieves. The result: Fewer lawyers and only the best would survive.

  7. J Said:

    I think some decent souls hire whistle blowers they feel confident about, which means they identify with the whistle blower after reviewing the whistle blower’s actions: the complaint wasn’t frivolous, the wrong was serious, the whistle blower doesn’t have a personality that is always looking for trouble, and so on.

    I was a whistle blower, a reluctant one at that, and it thrust me into abject poverty from a thriving career. Unfortunately, mine did not come under the heaviest of the legal protections out there and what was there was ineffective.

    Not all whistle blower claims are investigated or high prority. Some are even politically disfavored.

    It would be interesting if various industries made an effort to support whistle blowers by employing them.

    The only arena where I’ve seen anything like that is in grass roots, political activism circles. It is just emerging, but there is a global effort underway to create avenues at nonprofit/activist employers to hire activists who have been targeted by authorities, blown the whistle on civil and human rights abuses, or otherwise been traumatized. (for instance, traumatized by police brutality while engaging in civil disobedience).

    This seems light years away from Wall Street and the SEC, but many a whistle blower can identify with the need this particular community of activists is trying to address among themselves. Few whistle blowers are lauded as heros, supported by government investigatory agencies, by their congressmen, or by any local, state or federal government agency. Most are pursuing at best civil claims of retaliation by employers and attract little public attention or advocacy.

    I hope this movement in the activist community gains steam and spreads beyond this one societal niche.

  8. J Said:

    It might be worth noting that some corners of the government are completely without whistle blower protections, beyond bringing civil suit. Ironically, the federal courts are this way, the very courts that are tasked ultimately with enforcing the rights of whistle blowers.

    You’d think being exempt from so many federal laws that it upholds, the federal courts would voluntarily enact policies in the spirit of these laws for its own workplaces, but unfortunately, experience has shown that they do not.

    If a federal judicial employee is engaged in a pattern of misconduct there are few options for that employee’s coworkers or for people whose work causes them to frequent the court and be exposed to the misconduct. One can file a complaint about bad conduct to the judges that police themselves and have a record of policing themselves very badly or you can file a civil suit against the offending federal judicial employees, including judges. If it is a criminal matter, you can file a complaint to police or FBI.

    There are absolutely no administrative protocols, complaint offices, or procedures. There is no inspector general, no published whistle blower guidelines and procedures, no mechanisms that prevent retaliation, no requirement to investigate or even acknowledge a complaint.

    What there is, is only where executive branch agencies, with their elaborate and sophisticated whistle blower administrative policies and procedures, have jurisdiction over federal court matters, and those are very very few.

    Of the three branches of government, no branch has fewer protections or avenues for recourse than the judiciary.

    Many people are under the false impression that the federal district courts use the centralized human resources and court employee complaint procedures of the Administrative Office of the US Courts, but this office does not directly serve the federal district courts. Its published complaint procedures and protections don’t apply to the district courts’ employees.

    If you work for the federal courts or your work makes you a frequent visitor, unfortunately, you are likely to experience retaliation if you report misconduct except of the most clear cut criminal kind.

    One might think the courts would not need specific whistle blower protection laws, that they were of such a caliber as wise enforcers of the laws they would behave in accordance with the spirit of them in administering their own daily workplaces, but the sad fact is that a whistle blower in that environment is far more at risk as a whistle blower than anyone on Wall Street ever was.

    This makes the judges who run the courts appear to be hypocrites, but they don’t seem to mind it, surprisingly.

    There is nothing stopping the administrators of the district courts, who are the judges themselves, from adopting procedures, but they never do it, resist it vehemently and then further cry out in protest when members of Congress begin to muse, therefore, that perhaps the federal judiciary needs an inspector general, since it is unwilling to police itself.

    Rather sad all in all.

  9. Stefan Semchyshyn, MD Said:

    I have been raising my concern about most egregious medical practices by the medical establishments robbing innocent people of money, health and even life under a pretense of pracicing excellence all for profit. I can tell that so far I have seen only very few positive responces to whistle blowing. A naotable one is by Steven Bolson who caused a significan change in medical practice in Great Britton but had to leave and now practices in Australia. Whistle blowing does not pay and vast majorigy of would be whistleblowers chose not to get involved because of serious harm to themselves.

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