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Madoff pulls off the biggest scam in U.S. history

If the banking crisis has not convinced you that Wall Street is populated by a bunch of arrogant, greedy and amoral shysters, then the Ponzi scheme now unfolding should.

Reports are that Bernie Madoff , an erstwhile “pillar of Wall Street,” swindled $50 billion from a motley crew of rich folks, from Hollywood director Steven Spielberg to purportedly sophisticated fund managers, by promising returns of 15 to 22 percent on their money that not even the Almighty God could guarantee.

Turned in by sons
After investors became spooked by the ongoing global financial crisis and started demanding billions, Madoff reportedly felt compelled to confess to his sons that his reputation as an investment genius was “all just one big lie”; that his business was insolvent for years; that he was “finished and had absolutely nothing”; that “there is no innocent explanation”; and that he “expected to go to jail.” His sons, who evidently knew nothing about his scam, turned him in to the FBI. He has been charged and is currently holed up in his swank New York City apartment on $10 million bail.

It does seem rather miraculous that Madoff managed to dupe so many people for so many years by doing nothing more than stealing from Peter to pay Paul. (It is rather fitting that his last name is pronounced “MADEoff ”, as he made off with a whole lotta loot.) It is a measure of how successful he was in luring suckers into his scheme that stories abound about the number of people whose money he refused to take. In other words, you had to audition for the privilege of having Bernie steal from you.

Meanwhile, the scope of Madoff ’s fraud is such that it is on track to surpass the one perpetrated by the snake-oil salesmen at Enron, whic
h, at $60 billion, stands as the biggest in U.S. history.

What happened to earning money?
To delve too much into this sob story would be to indulge in the most unseemly form of schadenfreude (reveling in another’s misfortune), especially since his victims include worthy charities and pension funds that have lost their entire endowments. But I must observe that Madoff would not have been so successful if a bunch of greedy rich folks were not so eager to become even richer. And if the heads of many banks in America, Europe, Asia and the Middle East had been content to earn their money the old-fashioned way, Madoff would’ve been scheming only with millions, not tens of billions of dollars.

This scandal also confirms my abiding suspicion that much of the U.S. financial market is little more than a house of cards, in which croupiers with MBAs continually shuffle decks to determine winners and losers. Let us hope that the sublime fates of Enron’s Ken Lay and Jeff Skilling disabuses all White-collar criminals of their patently fatuous presumption that, because they swindle billions from stock portfolios and pension plans, they are somehow smarter and more honorable than street thugs who steal nickels and dimes (by comparison) from banks and purses.

‘Madoff scheme’
Unfortunately, as P.T. Barnum folklore has it, “Th ere’s a sucker born every minute.” Given the unprecedented level of this fraud, I hereby declare that we should retire Charles Ponzi and henceforth refer to the scheme that bears his name as a “Madoff scheme.” I have no doubt that Madoff will be convicted and sentenced to spend the rest of his life in prison, if he doesn’t opt instead to take the coward’s way out, suicide, instead.

Source: Florida Courier


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