What if you documented every bad thing that your family did during the year, every grievance you looked into, every poor decision someone in the family made, and every family rule that was broken or even allegedly broken? As I discussed here last year at this time, if you then turned that document into a report and your family was the U.S. Securities and Exchange Commission you’d have the “U.S. Securities and Exchange Commission Office of Inspector General Semiannual Report to Congress.”

This year's report has a great deal of substantive detail about the IG's investigation into the Madoff matter, which we have discussed here in detail already. From the Dirty Laundry department, however, here are some of the lowlights:

The Kansas Road Trip (pp. 79-80):

The IG writes that in July 2007, a senior official from the Fort Worth Regional Officer arranged for herself and three other FWRO staff to stay overnight at a bed and breakfast in Kansas that was owned by the senior official's brother and sister-in-law. The IG found that in addition to the fact that the senior official violated rules by using her public office for her family members’ private gain, the bed and breakfast was approximately 50 miles from the place where the group was scheduled to have a meeting the next day, leading to the entire group being late to its meeting the next day.

The Guy With the Three Knives (pp. 84-85)

In March 2009, the IG began looking into a complaint from a supervisor who received an e-mail from an Enforcement Accountant who worked for him that contained language that "could have been interpreted as threatening." The supervisor told the IG he'd also heard the Enforcement Accountant routinely brought a "large buck knife" to work. When the IG interviewed the Enforcement Accountant, it discovered that the Enforcement Accountant was then carrying a folding knife with a 3- to 4-inch blade, and had two similar knives in a backpack in his office in violation of criminal laws against "knowingly carrying dangerous weapons into a federal facility."

The Numerologist Ponzi Scheme (pp. 87-88)

In November 2008, the IG opened an investigation into allegations that a Supervisor in the SEC’s Office of Administrative Services had been assisting with the operation of a Ponzi scheme orchestrated by an Arizona man. The Arizona Ponzi schemer allegedly presented himself as “an international numerologist and spiritual financial adviser who could predict the future utilizing numerology.” He purportedly provided services as “a life coach” to individuals who paid to join his “VIP coaching program” and told the members of this program that “they could, through the use of numerology concepts, improve their financial well-being by investing in futures and commodities and/or enhance their spiritual awareness.” Eventually, he began soliciting members of his lifecoaching program for funds that he claimed would be invested on their behalf in copper futures using numerology principles to time the futures market. His scheme raised approximately $430,000 from 65 investors.

The OIG discovered that the Supervisor used her SEC e-mail account to conduct business on behalf of the Ponzi scheme perpetrator on virtually a daily basis, even handling the payments to and from his victims. The OIG did not find any evidence, however, that the Supervisor knew that this individual was operating a Ponzi scheme.