Tuesday, December 16, 2008

More Good Comments on Madoff Situation

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Tuesday, December 16, 2008
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The 17th Floor, Where Wealth Went to VanishBack to Article »
Bernard L. Madoff’s offices in Midtown Manhattan are now an occupied zone, as investigators piece together an alleged Ponzi scheme worth billions of dollars.

RSSAll Comments - Editors' Selections
NYTimes.com editors aim to highlight the most interesting and thoughtful comments that represent a range of views.
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9.
December 15, 2008 9:09 am
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Hmmmm, it seems the market is like the tide. When the water recedes it often exposes things sticking out of the mud that you never imagined were there.
— jackm, Boston
Recommend Recommended by 197 Readers
20.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 9:09 am
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If Madoff's family did not know of his scheme, imagine the deep betrayal they feel. His life was a lie, motivated by extreme greed and lust for power. Madoff is a man with absolutely no conscience, empathy, or self respect. Obviously the man is intelligent to be able to construct his elaborate network of deception. It is deeply sad that he has not used his intelligence to a positve cause.
— Carol, Cary, NC
Recommend Recommended by 50 Readers
27.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 9:21 am
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Who puts all of their life savings in one investment strategy? Even a small time investor like me knows not to do this!I feel badly for those who lost everything, but the reason you put all of your eggs in one basket was because of the spectacular returns he was getting you.This is called greed.
— Mary, Md.
Recommend Recommended by 106 Readers
28.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 9:41 am
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"And the 17th floor is now an occupied zone, as investigators and forensic auditors try to piece together what Mr. Madoff did with the billions..."PLEASE....send the investigators and forensic auditors to Paulson's office...
— Jackie, RI, USA
Recommend Recommended by 104 Readers
48.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 10:03 am
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This situation hits close to home. Earlier this year a relative of mine was convicted for running a similar scheme, albeit with real estate investments. The scope of that crime was in the tens of millions. I was burned along with hundreds of others.Knowing the perpetrator in that case as I do, and having seen that situation develop, my feeling is that there are no easy answers when a massive fraud takes place.One reason for the fraud is ego. Successful people often have a hard time admitting failure, and they have outsize expectations about their ability to fix problems. And they may also believe that their success entitles them to act above the law when it suits them.The investors, in the end, are credulous. They want to believe that the impossibly good returns they're getting are real. They want to trust the guy that they've known for years. And they want to think they're smart enough to never be fooled. (I include myself in this category.)And then there's a whole network of accountants, lawyers and bankers who turn a blind eye to what's actually happening. These professionals follow a culture of secrecy and denial. This culture may serve the interests of their clients, but it also makes it easy for them to wriggle out of responsibility when it suits them.I learned quite a bit about the investment business this year. I asked my attorney recently, what's the difference between a Ponzi scheme and an honest hedge fund?There really isn't one. In both, financial managers are given free rein to move money as they see fit to live up to their promises to investors. The SEC and, in most cases, state regulators don't have much oversight over hedge funds' operations. It's a dangerous situation, because it makes investors complacent about secrecy and a lack of oversight.I have become convinced that money corrupts, always and inexorably. To combat that, we need checks and balances. We need a government who will enforce existing securities laws before the fact. We need lawyers, accountants and bankers who care about right and wrong. And we need educated, non-complacent investors who will ask tough questions.
— Ben, Massachusetts
Recommend Recommended by 189 Readers
55.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 10:08 am
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There is no possibility that one man did all this himself. The volume of paperwork is simply too great for one person to handle. There were lots of others who knew, or in the reasonable exercise of their mental capacities, should have known that there was a crime going on here. Those people must be caught and prosecuted or there will be no justice, because it is a certainty that all of the money is long gone.It is also true that there were many people in the business who kept pointing out that Matoff's methods didn't make any sense; they weren't listened to. To understand the phenomenon look at "The Emperor's New Clothes," by the Brothers Grimm. There was also fear on the part of the financial press and investigators that they would be sued by a man with $50 billion in assets. What was the SEC afraid of? Where were they in all this?
— Joel L. Friedlander, Plainview, New York
Recommend Recommended by 92 Readers
69.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 10:37 am
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One side effect tragedy not discussed here is how many of the people duped by Madoff were major contributors to philanthropy. Here in Boston, the Carl and Ruth Shapiro Fund has lost millions and millions which they generously gave to local institutions. What a jerk this Madoff is.
— BeverlyCY, Boston
Recommend Recommended by 27 Readers
70.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 11:42 am
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People are posting comments about jail and being broke. Nothing will happen to him.He's already back at home and he's facing at most, something along the lines of a $1 million fine, which is a joke, seeing how fast he came up with his $10 million bail, and some prison time. This will be served at the end of a long trial and it will also be at a country club, compared to a real prison.
— PJC, New York, N.Y.
Recommend Recommended by 42 Readers
95.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 11:45 am
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"Hmmm ... so now the wealthy from Country Clubs are going to ride the bus alongside me? I wonder what their cologne preferences will be.""Good to see some rich people suffer."The so-called "wealthy from Country Clubs" worked hard to procure their wealth and a lot of ordinary citizens also lost their savings to this con man. But from the remarks like the ones I've quoted above, you'd think that having an above-average income would be tantamount to being evil. What about the people who bought houses knowing very well that they wouldn't be able to pay their monthly mortgages? Are they greedy for wanting a home? I am baffled by the very lack of sympathy for those who lost everything. Clearly, the only person who should be blamed in this case is Madoff himself.
— L.Y., New York, NY
Recommend Recommended by 26 Readers
143.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 11:56 am
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As a professional in a small non-profit that receives many of its donations from people whose money was invested with Madoff, I am heartbroken.
— ellie, washington, dc
Recommend Recommended by 24 Readers
236.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 1:54 pm
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I have seen a couple of uninformed comparisons of Social Security to a Ponzi scheme. If you don't know the difference, than you have a very poor understanding of the concept of intergenerational solidarity. While it is true that Social Security if it is too be self-sustaining requires ever larger inputs, it is also true that generous socially conscious nations can choose to reallocate resources to social security when in fact the inputs from current workers are inadequate. And the fundamental, basic difference, for those of you who don't get it, is that Ponzi schemes are about stealing from people, whereas Social Security schemes are about allowing people to age with dignity. There's a world of difference there, and glib false comparisions between Social Security and Ponzi schemes say more about the commentator's lack of committment to the fabric of our social contract as a nation than to any false analogies between generosity and fraud.
— Andrew, South America
Recommend Recommended by 44 Readers
305.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 4:26 pm
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Reading these comments, it appears that many people don't understand why one would invest in a fund like this. Greed was not a primary motive. Madoff's returns were only half as good as leading mutual funds during the boom-90s. What made his fund attractive to large investors, particularly institutional investors, was his fund's predictability. Madoff always paid out the same percentage no matter what. As a result, many investors actually used his fund as their "safety," while investing in riskier hedge funds at the same time.In the early growth years of his fund, Madoff may have been operating somewhat legitimately, pocketing the difference between his market gains and the payouts he made to investors. He was probably forced into "ponzi" territory when the market slowed, and he could no longer afford to pay out his standard gains. Initially, this would have only presented a "paper" problem, but when a number of his investors wanted to cash out this fall, he was stuck.The idea of promising a fixed payout from an investment is not new. Banks have been doing it for years with CDs. Mr. Madoff may have picked an unrealistically high rate of return for his fund, but maybe not. Time will tell whether this was a deception from the beginning or just a case of flawed financial management.
— Todd, Burlington, VT
Recommend Recommended by 11 Readers
313.
EDITORS' SELECTIONS (what's this?)
December 15, 2008 6:53 pm
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...and after reading many of the comments, I just needed to say....The $50 billion is not lost. The $50 billion never existed in the first place! People invested X and were given statements to show X had grown into Y. None of the Y was ever real - unless of course you withdrew all the funds and closed your account. All those statements showing your account balance were just make believe.
— Kathleen, New York City
Recommend Recommended by 5 Readers
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