This sentence is false.

If “this sentence is false” is true, then the sentence is false, which is a contradiction.  Conversely, if “this sentence is false” is false, then the sentence is true, which is also a contradiction. The liar’s paradox has been around since the ancient Greeks; unfortunately, so have liars.

It wouldn’t be incorrect to say that lying is the root cause of the “Great Recession” that has cast such a dark shadow over the U.S. economy for the past several years.  Bernie Madoff lied.  So did Allen Stanford, Peter Lombardi, Nicholas Cosmo, James Nicholson, Joanne Schneider, Brian Smart, and many, many others.  Liars.  All of the aforementioned individuals were entrusted by normal people just like you and me, and these liars violated that trust for their own personal gain.

As a Maguire Center Public Service Intern, I kept asking myself the same question while I worked at the Securities and Exchange Commission:  Why don’t these defendants learn?  When confronted by government investigators, either tell the truth or don’t talk.  Seems simple enough, right?  WRONG.  I personally encountered no less than one liar each week I was at the SEC.  The concept of telling the truth seems to elude these ostensibly savvy financial managers and bankers.

Case in point – just recently, the SEC charged the owner of a New York-based investment advisory firm with defrauding investors while grossly exaggerating the amount of assets under his management, and announced that the defendant has pled guilty to criminal charges, which included charges that he lied to investigators.  This fraudster perpetuated a series of fraudulent schemes targeting individual investors and small businesses, and touted his firm’s assets under management to be as high as $3 billion.  He lied to investors, business owners, companies, mothers, fathers, siblings, grandparents, and more.  The fraudster paid zero returns to investors and illegally used their money to fund such personal expenses as his children’s private school tuition, air travel and hotels, department store purchases, and several thousand dollars in dental bills.

Dental bills?  Liar, Liar, Pants-on-Fire.

Ask any of these convicted fraudsters and they’ll tell you, once you start lying, it only gets worse.  I encountered two separate guilty pleas to making false statements to SEC examiners.  Andrew M. Calamari, Director of the SEC’s New York Regional Office, said it best, stating, “Our examination and enforcement staff aggressively pursue investment advisers who flout the registration provisions of the securities laws for their personal gain, especially those who attempt to cover up their misdeeds by flat-out lying to our examiners.”

This latest fraudster now faces allegations of violating Section 17(a) of the Securities Act, Section 10(b) of the Securities Exchange Act and Rule 10b-5, Section 207 of the Investment Advisers Act for filing a false Form ADV, and aiding and abetting his company’s improper registration in violation of Section 203A of the Advisers Act.  That laundry list of violations, and all because he couldn’t stop lying.  Telling the truth is a fundamental character trait that we must demand from those who are entrusted with the well-being of others.  By deciding that telling the truth is always the best way to deal with situations, we can all avoid misunderstandings, complications, and possible criminal consequences.

One of the most enriching aspects of working at the SEC was interacting with whistleblowers — people who go against the grain and tell the truth, even if it exposes them to ridicule and possible retaliation.  I quickly adhered to the school of thought at the SEC that a profound sense of morality is the only safeguard of democracy and the best defense of our social and economic rights.