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The World's Largest Financial Scam. Is It Over Or Still Going?

I felt compelled this week to break away from my normal self-help format of this blog to comment on the Bernard Madoff case. After admitting he was running a multi-billion-dollar Ponzi scheme in December of 2008, Madoff enjoyed several months of freedom after posting bail. Bernard Madoff plead guilty to a number of felonies and the estimate of losses from his scam are as high as $63 billion. Some of you may ask what this has to do with you, or why any of us that did not lose money should really care about this case.  I am not a conspiracy theorist, but the word conspiracy is in the dictionary for a reason. As someone that worked in the financial services industry as a stockbroker and investment advisor for nearly 20 years, I can tell you that there is much more to the Bernard Madoff case than the public knows.

Complete Madoff Timeline Of Events

First, a whistleblower by the name of Harry Markopolos provided detailed information to securities regulators 10 years ago about his belief that Madoff was running a Ponzi scheme. Despite his repeated efforts to get someone to investigate Madoff, nothing was done. We have also learned that Madoff's investment firm was audited multiple times by securities regulators and yet his financial scheme was never discovered.  I find this not only inconceivable, but simply impossible. I cannot think of any scenario where literally billions of dollars could be unaccounted for and yet a financial firm passes an audit by securities regulators. How could Bernard Madoff have gotten away with this for so long? According to some reports, the scam was operating for between 20 and 30 years!


Secondly, there is no way that one individual could have pulled off a scheme of this magnitude. What we are expected to believe is that one man was able to con thousands of investors and hide billions of dollars from auditors, his employees, his family members that worked with and for him, and his accountants.  There is simply no way that one person could have done all of this. This raises the question of why we have only one person in prison for what was clearly a conspiracy that had to involve a large number of people. Bernard Madoff was sentenced to 150 years in prison on Monday. A man with his wealth and legal representation could have put up quite a legal fight that may have lasted for years. He may have even been able to have gotten off on some kind of legal technicality, stranger things have happened. Why would he plead guilty and simply agree to go to prison for the rest of his life? Something just does not seem right about this. This is a man who has shown no remorse and has clearly operated without a conscience for decades. Despite pleading guilty, it appears that Mr. Madoff has cooperated very little with authorities. As a result, there is currently a worldwide search for his assets, which may be well into the billions hidden in offshore accounts.


Lastly, why have we not heard very much about Madoff's political connections. For example, it has been reported that his niece is married to an SEC enforcement attorney.  What about the political contributions that he made?  Although most of his contributions were made to Democrats, he hedged his bets and also contributed a modest amount to Republicans as well.

Contributions To Democrats

Massachusetts Rep. Ed Markey
New York Sen. Hillary Clinton
Massachusetts Sen. John Kerry
New York Rep. Carol Maloney
Massachusetts Sen. Ted Kennedy

New York Rep. Charles Rangel
New Jersey Gov. Jon Corzine
New Jersey Sen. Frank Lautenberg
Former Missouri Sen. Dick Gephardt
Former New Jersey Sen. Bill Bradley

Contributions To Republicans

Former Texas Rep. Jack Fields
Arizona Sen. John McCain
Former N.Y. Rep. Vito Fossella
Former Louisiana Rep. "Billy" Tauzin
Former N.Y. Rep. Daniel Frisa
Former N.Y. Sen. Alfonse D'Amato

In closing, it is a tragedy for all of the investors that lost money in this case.  It is probably even a greater tragedy that the scam seems to continue on as we are hearing nothing about arrests or indictments of anyone else beyond Bernard Madoff.  I have no doubt that there is a very wide circle of co-conspirators that had to be involved here.  Until they are all brought to justice, it is my opinion that the Madoff scam is still going.

Helping you make the most of God’s money!

James L. Paris
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