Tuesday, December 16, 2008

Inside the Mind of Bernie Madoff

Yeshiva web page, before and after

It's easy to understand the revulsion and even hate that has surrounded disgraced alleged Ponzi-schemer Bernie Madoff (aka Bernie Made-Off) or why one of his victims, Yeshiva University's business school, decided to white-out his visage from the web page of its annual dinner.

I'm sure that the people victimized by this scum would be delighted to white-out the actual Bernie Madoff, and not just his punum in some photograph.

But it's less easy to figure out exactly what motivated this gent (assuming, again, that he actually did all the stuff attributed to him.... we do have a presumption of innocence and all that). In other words, what was Bernie Made-Off made of? Was he a schmuck or a shtarker? (Forgive the lapsing into pidgin Yiddish.)

This was not some sleazebucket penny stock pimp, but rather a respected trader who was a pillar of his community and philanthropist. I have to admit: I've been writing about scam artists for the longest time and I just can't figure this one out. (I'm having similar difficulty figuring out how the CEO of National Lampoon got mixed up with stock scamsters.)

Several possibilities occur to me:

1. Madoff commenced the scam in the hope that it could be terminated at some point and his investors made whole without their knowing anything had happened. Sort of like the bank teller who steals and then tries to put it back.

2. Madoff was a sociopath, who knew precisely what he was doing at all times and felt that he could get away with it indefinitely, and had that mindset from day one.

3. Madoff commenced in the hope that he could make his investors whole, but after a while realized that it was easy money and that he could get away with it indefinitely.

This is all pure speculation, of course. His statements just before his arrest, as described by the feds, give the impression that Nos. 1 or 3 are probably the closest to what happened. But then you have the nature of the victims, elderly people and charities that Madoff allowed to "invest" in his scam knowing that they were flushing their money down the toilet. He may have begun the scam as a boob, but he ended up as a criminal.

Again, that does not answer the "why" question? Why did he do it? Did he have some kind of gambling or substance addiction? Were there third parties involved? Was he being extorted or muscled? Was he the only participant or beneficiary of this scam? I find it very hard to believe the story being circulated in the news media that he was the only person who knew about the scam. I also wonder if his public image was as manufactured as his financial statements.

I'm sure that criminologists will be studying this one for a long time.

UPDATE: Ex-SEC chairman Artie Levitt fires back at critics in the New York Post. The SEC ignored whistleblower allegations against Madoff way back in 1999, when he was still being feted by the media as the "investor's friend." Lots more on Levitt's atrocious record as SEC chairman (albeit exceeded in sheer awfulness by current SEC boss Chris Cox) can be found in Wall Street Versus America.

© 2008 Gary Weiss. All rights reserved.

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