What kind of man is named ‘the greatest conman of all time’?
The documentary The Madoff Hustle: This world attempts to answer the question above, as they explore who Bernie Madoff was by interviewing his victims as well as his peers.
The documentary begins with the story of Bill Foxton a glorified war veteran who happened to lose his life savings because of the Bernie Madoff con, which ultimately led to his death as he committed suicide. This story drew me in as it showed that many from all walks of life were drawn to Bernie Madoff and his con, even an author who published a book on gullibility was conned out of thousands (I know it is harsh, but that is quite funny and ridiculous).
So, what exactly was his con? Well Bernie’s ‘elaborate’ scheme was none other than a Ponzi scheme, a well-known simple con which tricked his victims/investors out of $65billion. The Ponzi scheme consists of obtaining money from investors by promising them high returns with little/ or no risk. Sounds good right? But something I have learned from my 22 years of existence is that, if it sounds too good to be true, it usually is. Although victims thought this was a great investment, the steady returns they received were actually from a pot of their own money! Of course, the rest went straight to his pocket. I think this con links to the ‘seven sins of finance’ which were published by the Financial Times under ‘misleading customers’ as Bernie was clear misleading customers to believe this was a legal and safe investment and made the victims feel at ease when investing.
I found the most interesting parts of the documentary were when the documentary provided an insight into Bernie Madoff’s life. I personally think that many of his victims were investing in Madoff himself or at the very least the idea of him. I guess it is quite admirable that he really did come from nothing to make something of himself and this is a quality which many find admirable, however the problem lies in the way in which he got there.
He was a well-known gentleman on Wall Street after all. I get the impression that he was quite similar to Gatsby, in the sense that he was from humble beginnings and he played off on the concept of ‘exclusivity’ to make his millions or shall I say con thousands of people, to make his millions. This exclusivity was like earning your invite to the party, many people wanted to meet the walking gold standard of Wall Street that was Bernie Madoff, just so they could discuss the chance to invest. After all, all of their friends were doing it and they didn’t want to miss out.
Of course, it is important to note that this exclusivity did not attract all of Bernie’s victims. For example, it could be suggested that Bill Foxton would not have been motivated by this because of the simple reason that he was not apart of the social circles around Bernie. So, it is important to consider other motivations for investing. In the documentary, some of the victims explain that it was the low risk aspect of the scam that appealed to them. In fact, the investors received around 1% per month each year, for many years so from the outside it was a very steady investment. They never would have thought that they had invested in a Ponzi scheme as they are well known for fizzling out after a few years. Yet this scheme had already surpassed that time frame. I think that the reason which the Ponzi scheme was able to survive that length of time in comparison to others is because Bernie Madoff was behind it, his reputation meant that many trusted in his abilities and also as a respected member of his community.
The good news is that the old man is rotting in jail as he was sentenced to 150 years back in 2009, when his scheme came crashing down. As more and more people invested in the con, Bernie struggled to keep up with the demands, especially when the investors began to ask for their money back. The problem was too many people wanted too much money back at the same time. I think the timing of this was interesting as in 2009, many people were experiencing financial difficulties because of the financial crash so it would make sense for people to withdraw funds from their investments in order to make ends meet.
Which leads me to question, how did Bernie Madoff get away with this scheme for so many years? How did this not ring alarm bells for the authorities? My view in regard to laws and regulations is that often it takes a highly publicised case to highlight the fact that the laws and regulations need to be revised in order to truly prevent fraud. The problem with that is that regulations are often reactive rather than proactive and regulations should be in place to prevent such highly publicised cases from happening in the first place.
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