Madoff Made Me Do It

We need to continue our discussion of Bernard Madoff.

Many of you believe that he IS sitting on huge assets that he squirreled away from his investors.  I do not believe that.  Countries that historically have been safe havens for the deposits of ill-gotten funds and have in the past guaranteed anonymity are much more transparent now.  Switzerland’s famous numbered accounts are not as secure, confidentially wise, as they used to be.  If they were, we would have never uncovered the thievery and hoarded lucre committed by the Nazis.  The Cayman”s banking practices and services are also subject to investigations.  So no, I do not think Madoff is sitting on millions of dollars of capital stashed away somewhere.  I think Madoff was very true to the definitive Ponzi scheme and used new money to return some investment gains to old money. Sure, he skimmed a decent amount off the top to support his lavish lifestyle.  In my opinion, that was it.  He sacrificed absolute greed for longevity.

The money is gone.  For Madoff’s victims, their mental recovery must start and end on the acceptance of that fact.  Of course, that admission would entail that these poor people face up to a weakness, a stupidity, a certain greed, within themselves:

http://www.nytimes.com/2009/03/14/business/14nocera.html?hp

If litigation ensues against the earlier investors to pay back some of the funds to the later investors, called a “claw-back” (how apt, ugly and vengeful a term), this would serve only to extend the misery and anger.  The “taken” would then try to create a double whammy by getting some restitution any way they can.  This is the moral mayhem that would continue the model set up by Madoff in the first place.  Unfortunately, there will be no happy ending to this story.  We just need an ending.

Ponzi schemes, driven by ambition and greed, have had a steady occurrence throughout history.  Have a look at this report, from NPR (National Public Radio).  Even children can devise dishonest plans to get what they want, if they promise their intended victims to give them what THEY want.  In this story, the promised return, a fabulous fictitious cake, was the prize, and the boy wonder was actually selling cake derivatives:

http://www.npr.org/templates/story/story.php?storyId=101838294&ps=cprs

We can all laugh at this story because after all, it was about junk food, not people’s entire life savings.  But a lesson is a lesson is a lesson.  The onus of guilt should not be placed on the victims’ shoulders, but squarely on those of Madoff.  However, three rules are appropriate:

1.  If something seems too good to be true, it probably is.

2.  Don’t put all your eggs (Cadbury and otherwise) in one basket.

3.  Play the role of devil’s advocate often.  Always assume the worst until you are fairly sure the worst is not happening.  Trust, but only after you have verified.

This is not a happy way to live, but no one is going to protect you more than you are able to protect yourself.  This holds true for personal relationships as well as for material endeavors.  It is still early days in the Madoff scandal and emotional recovery will take years.  However, do not throw good money after bad, and I mean that literally as well as figuratively.  Whether it is an investment opportunity or a personal relationship, do not continue to go back for more if it has not worked out in the past.  You must be a willing partner in that protection process, because once you are taken, honey, you are gone.  Sad but true.  Even as we speak, there is some other fraud being committed, maybe even totally different from that of Madoff.  A somewhat negative and suspicious outlook is imperative in disallowing a person to enable the thief.

So Bernard Madoff made off with billions of dollars.  But he can not make off with YOU, unless you allow him.  Do not permit the Madoffs of this world to design and define your life.

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