The Madoff Mistake

Don’t Make the Madoff Mistake

While the sunken economy and lack of job market continues to harsh all our worlds, there is another financial concern that has risen recently, that may redirect your beliefs about where to put the money that you do have. While investment may be wise for some, and profitable for several, there are grave risks that come with investment if people do not do their homework, or if they do not invest wisely. The latest Ponzi scheme in New York City, by Bernie Madoff is a warning to all of us, to make sure we do a thorough check on where and with whom we put our money, even if they are seemingly the god of financial return.

For those of you who may not be completely informed about the Bernie Madoff investment fraud, he essentially scammed billions of dollars of investment money from very high profile citizens over a two decade period. He did this through a classic Ponzi scheme, which was named for an Italian immigrant in the early 20^th century, around 1919, wherein the fraudulent investor pays off old investors with new investor money, thereby tricking them into thinking it is their gain. Madoff was able to do this for over 20 years, ripping off billions of investors, most of whom had devoted their entire fortunes, and every last penny they had to this white collar criminal.

Now, while it is sad, and while it is easy to feel pity for these thousands of investors that were scammed out of their entire life savings and personal fortunes (including nobel prize author Elie Wiesel and his wife, who not only lost $15 million from their foundation, but lost their entire personal fortune as well) it is also a blaring warning to the rest of us not to stash all our pennies in one place, no matter how lucrative and fool-proof the investment may seem. This way, if one of the investments or stocks turns out to be a fraud, we aren’t crying in front of a courthouse about how the S.E.C let us down and the government should bail us out like they did so many other companies. Many of the Madoff victims are blaming the government and the S.E.C. for letting this happen to them, but the government did not twist their arms to give Madoff every last penny they owned. They also didnt prevent them from doing a bit of research on Madoff, or prevent them from getting answers from Madoff that he was shady about, such as how he got such consistent returns, or what exactly his strategy method was. While Madoff had a lot of high profile investors and indivuduals, he didn’t have any institutional firms or endowments that invested with him, because these are the kinds of questions that they demand to know before doing so, and according to several of these foundations, Madoff was sketchy and evasive about answering.