to one filled with fiduciary responsibility, fraud, and what almost became one of wall street's greatest sure charades. little is known about the i want pact, but his book lays out in clear detail how it came about and how many investors were about to recoop some of their major losses. one review of this book points out how this story line might lend itself to a potential feature length film. in fact, pbs is preparing to air a special on ruthless to be aired nationally this summer. it is with great pleasure that i welcome mr. phil trupp to the podium. [applause]

>> hello, everybody. i want to first apologize for having to sit down. i'm falling apart a can't stand up, so i'm sitting down. i want to thank danny for that fantastic intrough. thank you very much. i appreciate that. i want to thank carolyn crosby who arranged this lovely chair and microphone, and also gene who was instrumental in bringing me to this tent and i would like to introduce you to a very interesting wall street event known as the auction rate scandal, auction rate security scandal. before there was madoff, the

mortgage fraud, before the 2008 meltdown, there was the auction rate security scandal. the auction rate security scandal was the biggest scandal, the biggest fraud that wall street had ever perpetuated up until that time. essentially, it was a money market fund, just like your ordinary money market fund you find at the bank or at your brokers, and it was sold as completely safe, no problem, good as treasury bonds, you'll love it. it takes you right to heaven until it didn't, and when it didn't, there was $336 billion in cash that was frozen overnight by every bank, brokerage, securities dealer in the western world bar none. they were all part of this. it was take the money and run,

and that's exactly what they did, and they were not about to give it back. there was no way. they just said, you know, we have a liquidity problem. we just can't afford to give back your moneys. there's $336 billion is 20% of what it takes to run the entire federal government for a year. that's how monstrous the scale of this happened to be, so having no assistance from the securities industry, the banking industry, all l geniuses of wall street cooked up this little scheme, there was nothing left for us to do but to find some other financially savvy people, mostly online. we got together, a small group of us, and i knew there couldn't have been more than a dozen total, and i call them my

economic commandos, and we decided to go after the banks, brokerages and everybody who dumped on us and took this money and get it back, and that is exactly what we did and that's what the book is about and exactly why it is named ruthless because the industry was every bit as ruthless as it could be in grabbing our money, and we were every bit as ruthless as we could be in regaining our money. i think i would tell you this, and this is in general, and it's kind of an old wall street saying that when wall street cuts itself, you bleed. remember that. you bleed when wall street cuts itself or if it stumbles and

falls, you will be the one who has to go and be refitted with a new prostates or whatever, and so we had to take it on in that regard. we had to take it on in every way we could. we had to confront congress, all the regulators. we did, they talked a lot, by the way, the regulators are very vocal. for instance, barney frank was helpful up to a point. he held hearings on our behalf, and it was great because we had the whole house financial services committee there and all of them had pinched brows and there were quite concerned and they asked penetrating questions, and in the end, they did nothing so later at an event which i attended with my wife, sandy, at which hillary clinton was the main speaker, i bumped

into barney frank, and i said congressman, what happened? you held these lovely hearings, and you made a lot of noise and raised a lot of people, me in particular, and yet nothing was done, and he said, oh, well, the largest picture got in the way. by that time the market melted down, everybody was losing money, the contributors were running for the hills, and we individual investors didn't really seem to account for a lot to the house financial services committee, and this includes both the democrats and the republicans. by the way, the republicans were just as outraged by this event as were the democrats. i found that, you know, for once in a blue moon we had comedy there in washington. everybody agreed this was a terrible thing and that they shouldn't have -- the financial industry shouldn't be stealing money, but, you know, that

happens every now and then, and nip who is homeless now will tell you that, and that's just too bad too, isn't it? let me tell you a few stories with some of the people we dealt with. we dealt with on an individual level with many, many victims. there was a woman, a physician, blind, who lived in miami, florida. she was a client of openheimer company and 75% of her life savings were in auction life securities. she called me in tears, and incidentally in addition to being blind, she was also invalid. she couldn't get out of bed, and she called asking for my help. i said i'd do everything i can. she told me her story, and we paid a great deal of attention to it.

she told me the representative of the company came to her with 300 pieces of legal paper for her to read and sign, difficult for her givens circumstances of her eyesight, and to sign confidentiality dpreements, and i -- agreements, and i thought at that time this is the perfect story to take to the "new york times". this is the, -- this is it. i had a great in at the "new york times" at that particular moment. i said, look, we can get the story in, but you have to put your name behind it. she said i don't dare. they said if i spoke out, put my name out, put my name behind it, i'd never get money back, okay? when you think of openheimer and see hands holding together here like this, this is right way to invest, just try to keep that

story in mind. openheimer was one of our most difficult people. another one, which you might be interested in, you maybe have bank accounts there for all i know. wells fargo is still giving us problems. a man from california called me up. he's in his 70s. he had worked his entire life to build a defense contracting company out there, and unfortunately contracted congestive heart failure, and turned over the company to his partners, and, of course, he was still in a position to benefit from the sale of the company, and the company was eventually sold, and there was his entire adult life handed to him with a check, okay? he took the check down to wells

fargo to his broker, handed it over, and the broker said, you know what? you workedded hard. you're a good guy. going to put you in auction rate security funds. that's the best there is. there's hot shots in it, institutions, we got everybody in it. three weeks later, the market froze. the man, the man's life was gone, okay? it was gone. he started selling furniture out of his house, okay? he started selling furniture out of his house. his wife said she has no more dreams, and that statement somehow or another stays with me to this day. i have no more dreams, no more dreams. if you have any dreams, don't ever take them to wall street, my friends. that's my advice to you.

i'm very happy to answer questions about this. i can go on and tell you all kinds of horror stories, but i don't want to depress you on a beautiful afternoon, but the point is wall street, i guess, is pretty much a product meech. one of the ways you can tell it's a product machine by all the homeless out there. bond traders that i knew at citi bank told me well in advance of the mortgage scandal exactly how they were going to pull it off. they were going to stack securities a certain way, and then they were going to bet against these securities. that's what goldman sachs did. you may be familiar with that scam in which they sold mortgage-backed securities to their clients, bid against them, and made absolute forchips, but to cover it up, there was a portion of the mortgage-backed

securities they were bullish on and then the regulators said they lost a little bit too, and that was let go. the auction rate security scandal ticked off the bigger melt down to hit in 2008 and took everybody down because it proved once and for all to wall street that, you know what? you can get away with murder. you can take peach's cash -- people's cash. you can tell them this is cash. just as good as treasury bonds or better because it pays more interest. the minute somebody tells you you are # going to get more interest, that's the moment you want to pull back. that's one of the lessons we learned from this. a little more interest, more risk, more danger, little more lying going down the pipe there. pull back, pull back. the product machine continues to turn out similar products. i still get calls. i've gotten a call recently from

people living in tent communities in hawaii, okay? in lovely hawaii on the north shore, of course, because they are all brokings because their brokers told them auction rate securities were the way to go, and the way they went were into tents on the north show of honolulu. again, this is essentially the story. i could tell you many, many more. i'm still getting calls. i got a call the other day from a guy in israel who said to me naively after i'd help him quite a lot, and he's lost a million dollars in auction rate money. he said, hey, phil, do you think you can talk to your friends at the "new york times" and have them write an editorial about me and my hard luck. i don't think so. i think that's a bridge too far, so there's only suture --

so much we could do. autoof the $336 million outstanding, our group of financial commandos and roughnecks, we got back $#200 billion. i don't make a dime obviously. i got my money back, and i got money back for a lot of other people, $200 billion worth, but there's still $100 billion underchallenged remaining out there, so i remain in the fight and say to the financial industry, you guys out there, hello, raymond james, we're still out there, and we're still kicking, and oh, by the way, raymond james is another one that told us the other day they had "mar tore yows -- meritorious reasons for not redeeming the auction security funds to the tune of a billion

dollars to its clients." it's so sad when you see them putting up billboards and buying stadiums in florida. it must be a tough life, ray james, but we're still out there. keep that in mind. what more can i tell you? well, we're still out there. we are still fighting. we continue to fight. i hope this serves as a warning to those of you who have come. i hope i don't sound like i'm bragging or whatever. it's been a rough fight over three years. we continue at it. if anybody needs our help, you can reach us. we are here, and i'm happy to take any questions you may have. yes, sir? >> why suspect there any -- [inaudible] >> that's a good question, and that's a question everybody asks. i would -- i would say last

week's "rolling stone" had a wonderful article who asked the very same questions. why? because wall street contributes a great deal to both parties, and mob wants to bite the hand that feeds them. the justice department, however, did make a kind of a show in that it went out and rounded up about 32 little crooks for a total of $8 billion, total, out of these little guys, and made a big to-do about it, but that's nothing. we are talking about maybe trillions of dollars scammed and continually scammed every day from up vesters, but congress won't touch them. they have already -- wall street has already learned how to overturn the dodd-frank regulations and working around it very clever ri, so that's one of the reasons. keep that in mind when you go to

the voting booth. they love you. they love you until they got your money. anybody else got any questions? yes, sir. >> go up to the microphone. >> with your grass roots movement, what do you think was your biggest single event that created a turning point where you got your money back from the investment companies? >> well, i think that the -- i think the turning point came when we began to let -- we went political essentially. we started -- excuse me -- we started to let states attorney general know around election time that we were going to start grass roots movements, hunger strikes, and all that sort of thing if they didn't take action because the states attorney general really are the pivot points, the guys like elliot who

get in there and take these guys to task, and former attorney general cuomo did a wonderful job in helping us get money back because he was up for election, so we put pressure on him that way. anybody else? yes, sir. >> i've got two questions. first one is about diversification. i haven't heard you say anything about that. were any of the people you spoke to, the stories you encountered, were they diversified with investments? i'm not an expert, but i read about that in the "washington post" or "money" magazine and it's one of the top rules of investing is to diversify. for the people who encountered financial ruin, would that have been a way to lessen the impact to them if they were more

diversified? that's the first question. second question is your thoughts on the consumer protection agencies and recent regulations. do you think that has us headed in the right direction to protect consumers from wall street? >> thank you. those are very good questions. yes, with rare exception, the investors were diversified, and yes, diversification is a good thing if you keep your eye on it. there's another point to be made here about diversification and portfolio management and how you handle your money. if you're not keeping your eye on it, if you are trusting somebody else, you are going to be in deep, deep water. if you don't do your own homework -- please, do your own homework. the people who are primarily effected by the auction rate security problem were the most

conservative investors you could think of. they were seniors. they were people in retirement or about to retire and who were told that the auction rate securities money market fund was the safest place you could possibly be. ..iversified. and when they, that cash that they thought they had, that money you have in your pocket, that money you have down in the bank, okay? when you walk down to your bank and they say, no, you can't have your money, you better have something else to cash in. and this was a, this only compounded their misery because suddenly they're selling their stocks in order to get along. so, yes, diversification helped them, but it also helped to break them because they couldn't lay their hands on any liquidity. as for the consumer protection agency, i say god bless them.

i'm all for it. i don't know if they are in over their heads or not. i suspect they are. wall street is the most dangerous neighborhood in america, and to spout platitudes and to shake your finger at these people and say, no, you shouldn't be doing that, these credit card swipes and all that, that's just not really nice, not fair to the consumer, not fair to the producer, not fair to the seller, wall street will fight them every step of the way. so they better be tough, and they better be ready. anybody else? yes, sir. >> when you -- [inaudible] it seems that -- [inaudible] >> [inaudible] thank you chg -- thank you. >> i want to thank everybody for

coming here. i'm so happy to look out and see this beautiful crowd. this is, this is great. people are actually interested in money. wow, that's great. [laughter] >> my question is with the state attorneys generals. so often you read about the settlements, and it's monetary settlement. again, no criminal prosecution. they seem to be getting away with a slap on the wrist, and a lot of publicity for the attorneys generals, but is there anything meaningful really that comes out of this, that it's going to result in reform situation? >> you're a very savvy guy. that's another great question. the answer is, no. [laughter] goldman sachs was fined $550 million for bamboozling its clients. and by the way, i know very high-end investors, people with hundreds of millions of dollars

were considered pikers to goldman sachs and are losing their shirts. that $550 million settlement that was paid out was made up in many two days, was recouped in two days. so it's not even a slap on the wrist. it's kind of a sneeze without a god bless you. anyone else? please. this may be the last chance you have to talk to the last cynic on -- [laughter] in gaithersburg about how to handle your money. well, if not -- >> [inaudible] >> oh. yes, sir. >> phil, continuing your example of wells fargo if you'd be willing to be specific, was there, was there no connection at all? was there an entire disconnect between the prior activities and awareness of them and then the

approval of their bottom feeding to pick up wachovia in the tough times? >> well, when you -- very interesting question, excellent question. obviously, you keep your eye on things. yes. bottom feeding is the word. when they picked up wachovia, they were very near the bottom. because wachovia was one of the big sellers of option rate securities. now, what wachovia failed to tell its customers, its clients, its suckers, its chumps was that every time an option rate security sale was made unlike a money market, an ordinary, plain, vanilla money market fund was that the broker got a commission. so when you sold a stock, as i did, i had bunches of brokers, lots of brokers, okay? and of those brokers over 30-some years, i can count five that i would say are honest

people. but in any case, every time i would take a profit my broker would say, okay, we'll buy -- let's get into, we'll put that cash away in the option rate money market bank. i didn't know that he was make what they call a tail, a tail on every frank action. transaction. so as to wells fargo, yes. when they were out in acquisition mode and they picked up wachovia, yes, indeed, they were very close to the bottom of the marianas trench when they picked up that company. does that answer your question? the -- and now they're together. they're together. they're like oppenheimers. this is the way to do business, you know? it's just like this. and where do you fit in this little pattern? that's the whole point. that that symbolism, this business does not allow for your hand to get involved.

anybody else? questions, please. >> quick question. i've recently been reading about the great depression, and i'm just curious, i don't know how much a student of history you are, but those who don't study history are doomed to repeat it. how much of this stuff resonates or makes sense compare today what happened in the great depression? were there any lessons that should have been learned then or subsequently that we didn't learn that sort of contributed to -- or ignored that contribute today the most recent downturn? >> yes, and we're doing it again. the great depression was a subject of criminal behavior, insider trading, um, what they call pump and dump. pump and dump, by the way, is what they do to you, for instance, when you have an initial public offering.

linkedin just went to do an initial public offering. they say come on in, and get involved, and there's only so much stock available. and when that stock is gone, you won't be able to get in on the, on the gravy train of linkedin. well, linkedin went from be here, $45 on first day, up to $90 some. that was the pump, okay? pump, pump, pump, pump, pump. and then the next day, of course, you sell. so all the chumps, okay? those investors who were lured in to this little trap lost a lot of money, and everybody else made a lot of money. another thing, too, i cannot read it -- oh, i got ya. i see that. the lessons of the great depression and the great recession are being repeated here today. wall street is fighting like

crazy against any kind of reform, any kind of regulation. it wants to do business as usual, and it will fight to the last minute in order to continue to do that. and it's only citizens and investors who are standing in the way of them simply running over everybody again. we're already predicting another big dip coming soon. so beware of that. i wish i could bring you little mary sunshine messages, but all i can say is beware. yes. anyone else? >> how you doing, sir? >> i'm doing fine, thank you, mr. troupe. >> so as we all know, we have two equally despicable parties in government, and the debt

ceiling seems to keep getting up over and over and keeps getting raised, and it's becoming an issue where people are starting to actually be aware of the debt ceiling. can you tell me what do you think is going to happen if, a, they raise it and continue to raise it or, b, if they actually hold and say we're not going to raise it, what do you think would happen in either of those instances? >> excellent question. let me take the last part first. if they don't raise the debt ceiling, everybody here that owns treasury bonds won't get any money. too bad. okay? anybody out there have any treasure are i bonds? -- treasury bonds? yes. everybody that's got a mutual fund -- too bad, too bad, too bad. and we'll have to say to china, who is our great, you know, partner, you know those billions and billions and billions of dollars you got -- sorry, we can't pay you. the market will tank. it will cause reverberations

worldwide. it will be calamitous. that's what will happen if we don't raise the debt ceiling, okay? so this is not a matter of principle, this is a matter of pragmatic reality. we have to raise the debt ceiling. and it's -- and the prospect of it not being raised even for a moment is already causing tremors, and that's why you saw the market dipping, one of the reasons you saw the market dipping down last week. if we do raise the debt ceiling, we'll be able to pay off our creditors, okay? now, we, obviously, will have to make cuts, we'll have to make adjustments in our budgets and so forth and so on. but in the end you have to pay your credit card bills. it's as simple as that. you have to pay your mortgage, it's as simple as that. so the ceiling must be raised. it will be raised. that isn't to say that it won't be raised without a lot of, you know, people lighting their hair on fire about it. but eventually, yes, it will be raised. and i certainly hope it will

because i'd like to have my cash, frankly. anybody else got a question? oui. oh, mon six -- >> as part of the debt problem, there's proposals to raise revenues by higher taxes. i read, you know, the real wealthy people only pay a little over 15% because that's what capital gains and dividends are taxed at. so maybe they're up to 17 or 18%. is there any chance at all of the dividends and the capital gains rates being increased? >> another very good question. i don't think we'll know the answer to that until after the 2012 elections. right now the top 1% of wage earners, or shall we call them

america's answer to air strock cat ri -- aristocracy in the leisure class, make more than 50%, own more than 50% of the wealth of this country. and guys like warren buffett, you know, that grandfatherly, lovable old figure pays fewer taxes than his secretary. after 2012 we'll find out whether we can equalize this somewhat. thank you for that question. i've been given a sign out there that says i have ten minutes left, and i don't know if i've eaten up that ten minutes. anybody else got any questions? yes, sir. >> um -- >> mic. >> i wish we could hear you as well as this mic. this mic sounds great. [laughter] you know? turn your mic up a little bit. i read your book, it's a great

book, i highly recommend the book to everybody, it's fantastic. what positive has come that you've seen from your efforts from writing the book, and what are some of the efforts outside of the book that you've done that people may not know that they should be aware of how they can connect to you and how they can find out more information? >> well, i think about, first, the thing about the mic, i'm wearing this, i don't know if that's picking up. what is the result of our efforts? people have wised up. i know some people who have problems with crooks even outside the country that may have learned a lesson or two from this, that you needn't be intimidated by these goofballs on wall street because, really, your broker is pretty much a

well-dressed used car salesman, and i don't mean to denigrate used car salesmen because at least they typically know what's under the hood. most of your brokers don't. and what was your other question? >> how can we connect with, how can we find out more -- [inaudible] sources online? >> well, you can go to my web lite which is beruthless.net. and you'll notice, if you can see this, you'll note right away the wolves here from tolkien's trilogy. and you can call me, e-mail me, whatever. i'll help you with your questions. and i don't even charge for it. so with that unless there are any other questions, i'm going

to say adieu, adios. have a great day. watch your money, be your own policeman, to the homework -- do the homework. bad luck -- good luck to all of you, and i hope the next time we meet everybody here is richer than rockefeller. thank you. [applause] thank you. >> thank you all for coming. that was great. i just wanted to remind everyone that phil will be signing books over here to my left, to your right, in the book autographing area. don't forget to fill out a survey, and also if you're interesting in hearing about next year's festival, sign up for our e-mail newsletter. we should be going on. thank you. in. >> that was phil trupp.

we'll continue our live coverage of the 2011 gaithersburg book festival in a few minutes. >> visit booktv.org to watch any of the programs you see here online. type the author or book title in the search bar on the upper left side of the page and click search. you can also share anything you see on booktv.org easily by clicking share on the upper left side of the page and selecting the format. booktv streams live online for 48 hours every weekend with top nonfiction books and authors. booktv.org. >> this is a sad day, i have to say, in mrs. kennedy's life. this is the red room, and the reason i show this is that was the first room that she completed in her restoration, but this was the day of her husband's funeral. and she insisted that she meet those who were coming from afar, those who were diplomats, the

diplomatic corps from abroad. and so she stood with her brother-in-law, senator edward kennedy, to her right, and she insisted on greeting everyone who had come to pay their respects to her husband. on a more glittery note, again, we remember her for her state entertaining. in the short amount of time that she was in the white house, and it was only a little over a thousand days, she and her husband threw 16 state dinners. in the first term, full four years of the w. bush term, they held, i believe it was two. now, mind you, 9/11 happened during that time, there were security issues, but the bushes, the second bushes from texas were just not as interested in that. they weren't as interested in state entertainment. they weren't as interested in bringing people from abroad and entertaining them at the white house. the kennedys loved that lifestyle. they both came, you know, from the northeast, they both had

ties to new york city. president kennedy had ties to hollywood going back to his father's day there as a hollywood mogul in the 1920s. so they loved that, that glimmer and that panache of entertainment. but they also, particularly mrs. kennedy, loved the arts. so she would use each and every one of these state entertainment occasions to bring artists to the white house. >> you can watch this and other programs online at booktv.org. [inaudible conversations] >> and we are back here at the second annual gaithersburg book festival in gaithersburg, maryland. up next, edward dolnick on isaac newton and the birth of the modern world. >> good afternoon and welcome to the second annual gaithersburg book festival. my name is kathy, and i'm a city

council member. gaithers been -- gaithersburg proudly supports culture, and we are please today bring you this event. a couple of announcements. for the consideration of everyone here, please silence any devices that make any kind of noise. your feedback is critical in helping us to improve this event. surveys are available here at the info desk and online at our web site. everyone who submits a survey will be entered into a random drawing for a nook color, so, please, be sure to fill one out and submit it. we welcome c-span's booktv and their viewers across the country. if there is time during the presentation for audience questions, please make sure you use the microphone right here so everyone here and in the television audience can hear you. edward dolnick will be signing books immediately after this presentation. bas books are on sale in the