Frauds, like economies, go in cycles. As boom turns to bust, frauds emerge with the inevitability of a hangover after a party. During the celebrations, there are more opportunities to pick pockets and less chance of getting caught. In the cold light of day, people check their wallets and call the police.

With the economic boom coming to a crashing end, the wave of frauds has arrived right on cue. The Madoff scandal is a classic case. During the good times, Bernard Madoff could keep the massive confidence trick going for years. The profits he claimed to be making for investors looked too good to be true. But enough people were conned that he could pay the old investors with money from the new victims.

That was until the credit crunch hit. Too many investors asked for their money back, and it was just not there.

Insider dealing also thrives in a boom. The explosion of corporate deals between 2004 and 2007 left thousands of people in possession of highly valuable inside information about potential takeovers. That presented a golden opportunity for the likes of Matthew Devlin. Both these cases occurred during the boom. Other frauds are fuelled by the approach of a bust. Robert Maxwell raided the Mirror pension scheme to keep his empire afloat at the end of the 1980s boom. Bernie Ebbers fiddled the numbers at WorldCom to plump up its profits as the internet bubble burst. We have yet to see the equivalent frauds in this cycle. But it is surely only a matter of time.

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