Ten Years After the Madoff Scandal: What We Can Take Away
It’s hard to believe it’s been ten years since the Bernie Madoff scandal burst onto headlines all over the world. Part of our disbelief may be the fact that it often seems like Madoff never really left the news for more than a few months since his multi-billion dollar hedge imploded in 2008. There was the Madoff family fallout, investors committing suicide, the lawsuits, the settlements. Then last year we got the HBO movie, The Wizard of Lies, starring Robert De Niro as Madoff.
In spite of all that, new information about the gigantic $65 billion fraud continues to leak out. Did you know that Madoff keep his fraud going for almost half a century? Incredibly enough, it’s true. On the tenth anniversary of the Madoff scandal, the FBI and other government agencies that worked on busting and then untangling the mess Madoff left behind have been more forthcoming than in the past. Their efforts, which included contributions from fourteen FBI agents, forensic accountants, actuaries, and dozens of support personnel, have been enormous.
Facts about the Madoff Ponzi Scheme and Scandal
Here are some eye-popping facts that have emerged in the aftermath of the investigation into Madoff’s epic Ponzi scheme:
Madoff’s funds lost $20 billion in cash
$15 billion in cash has been recovered
Approximately 10,000 victims lost money to Madoff
The scam began in the early to mid-1960s
Agents went through approximately 11,500 boxes of documents
Stephen Spielberg, Kevin Bacon, and Norman Braman were all investors
While Madoff never ratted out any of his co-conspirators, the FBI prosecuted them in a trial that lasted six months
Greed and Naivete Makes People Forget the Unforgettable
We may never forget Madoff’s crimes. Let’s hope we don’t. And yet, investors still fall prey to so-called “mini-Madoffs” every day all over the country. If you keep your eye on the financial press, particularly news from regulators such as the SEC or FINFRA, Ponzi schemes identical in nature and structure — if not scope — to Madoff’s bubble up and burst too often to keep track.
There are two big reasons we forget the unforgettable: greed and naivete. Both are essential human qualities to which we may all fall prey. Greed. Consider the fact that many of Madoff’s investors were super wealthy individuals who simply wanted more than they already had. Naivete. This is quality that lets us believe that our greed can be gratified without risk and consequences. It makes us susceptible to the “too good to be true” investment pitch that says we can earn steady yields with no risk. After all, Madoff’s signature pitch was simple: 10% annual return, and you will never lose money…
The Real Lesson from the Madoff Scandal: Know Yourself
Well, as 2008 taught us, not even the greatest financial criminal mastermind in history never loses money.
If we’re really to learn a less from the Madoff scandal, it should be about ourselves. In a way we should focus less attention on Madoff himself, and more on the investors he took in — we can learn from their susceptibility to the guaranteed returns and no risk pitch and guard against it.