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"Madoff's Victims"
I refuse to share the tears shed for the poor folks wiped out by Bernie Madoff's ponzi scheme.
The culture teaches us from our earliest days "Don't put all of your eggs in one basket."
An economic decision should be made on the basis of its economic basis not the social cachet of the financier. To the extent that the investors viewed themselves as part of an "in" group belonging to the right clubs, organizations, charities, they were behaving at best as a high school clique and, at worst, as a privileged elite.
Madoff's returns defied all logic. The phrase "if it's too good to be true, it probably isn't" applies.
As well, some of the investors may have believed that Madoff was cheating by using a form of illegal insider trading know as front running.
These people should not be pitied, helped out, rescued, or kept from the consequences of their folly.
At best, the were stupid, snobs and suckers. Some may well have been sociopaths.
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What about the non-profits? Those whose pensions/retirement accounts took a hit due to Madoff's criminal enterprise?
General blanket groupings are seldom accurate, much less fair or justified.
We are all victims of Madoff due to the impact upon individuals and charities, as well as economic market mess.
In my opinion, the anger and venom you are directing to all who were his 'victims' is senseless and without valid basis. (And no, I did not have any ties/connection with him or any of his dealings.)
March 7, 2009 11:47 AM | Reply | Permalink
A not for profit's board or investment committee has a fiduciary responsibility to the organization. Any reasonable due diligence would have dissuaded them from investing with Madoff.
If, however, the money was funneled through a feeder fund, the failure in due diligence falls both to the feeder fund and those in charge of the not for profit's investments.
Harry Markopolous is a fine man, a hero, and someone to be admired greatly. His letter to the SEC about Madoff is first rate and right on the money. But Mr. Markopolous is not Einstein. Many people believed that Madoff was running some kind of scam. No one, no one can possibly report such consistent returns year after year after year.
The crisis we all face comes, first of all, from greed and then, in many cases, from crimes. But greed is the fuel. And it was greed that forced the "victims" to ignore the obvious red flags.
I read of one "victim" who lost 7 million to Madoff and is wiped out. He was making about 700,000 - 850,00 a year. Had he put his money in basket of municipal bond at 3% tax exempt, he'd have had $210,000 tax free a year. If he wouldn't live on that "pittance," he deserves to starve.
The point is this: MADOFF and HIS "VICTIMS" were simply on different locations on a vector of greed.
March 7, 2009 6:11 PM | Reply | Permalink
But the victims are those who received support and assistance from the non-profits.
It's a ripple effect. Thousands, if not millions, of 'victims' never invested or even knew his name.
And truth is, the biggest 'monster' is not Madoff but the SEC and other public entities. (Not to mention the system that is allowing him to live in his penthouse and keep his own creature comforts, etc.)
And yes, Harry Markopolous is a HERO!
March 7, 2009 8:21 PM | Reply | Permalink
I agree about the "trickle down" victims. They indeed are such. I was writing about those who invested with Madoff knowingly whether directly or indirectly through feeder funds.
The Emperor's New Clothes might be a parable here.
Anyone, with half a brain, should have doubted Madoff. They may not have figured out what he was doing the way our hero Mr. Markopolous did, but they should have smelled a rat.
If I appear to be talking in cliches, it is on purpose. The language and the culture warned those who chose not to hear.
March 8, 2009 8:40 AM | Reply | Permalink