and reflects on knowledge.
Sirach 15: 20.
When we learned of the Madoff fraud, we knew that he couldn’t have pulled it off singlehandedly; he had to have coconspirators. And this week we learned of one, who had been with him a long time and personally benefit ted by their scheme to defraud trusting investors.
Madoff was a perfect example of a “closed system,” where they did everything for the client (custody, trading (well, they were supposed to trade), reporting), with no independent third party to provide a check on what was going on. Custodians should be benefiting from this ruse as a way to emphasize the value they provide.
Author Harvey Mackay has stated that when something looks too good to be true, it probably is: that was Madoff. Unfortunately, with such a cadre of long-term clients who sang his praises, it wasn’t hard to persuade more and more to join the fold and allow the scheme to continue.
If there’s anything good that’s come from our market downturn and recession, it was the discovery of these tricksters who no doubt would be continuing today had it not occurred.
p.s., in today’s WSJ we learn of new books that have recently been published regarding the Madoff scandal. I don’t know about you, but I’m going to wait until more is known … I think it’s premature to see these books given the world of information yet to come regarding how he pulled this off.