Madoff Made-off with Minneapolis
Bernie Madoff has made a name for himself by not only creating a safe bet for investments in a dwindling economy, but more so by being arrested for swindling over fifty billion dollars from his clients. Recently Madoff was arrested for his behavior, a Ponzi scheme that hit the Twin Cities particularly hard. How could this happen? I have to wonder to myself if these people that were investing with Madoff fully understood where exactly their money was going. With over twelve percent in returns on should be automatically cautious about where they’re throwing their money. However, some of the failures must also be passed onto government regulators who failed to understand Madoff’s scheme.
Madoff created a name for himself as a chairman of NASDAQ, and by being the middle man between brokers and investors, since NASDAQ has no selling floor where buyers can meet face to face with sellers. (Time) Over a number of years he created a persona about himself that led people to believe that his company was a reliable and safe bet for their money. The first thing that a thief has to do is gain trust. Madoff had the trust of all of his clients, and he used it to his advantage. His $50 billion Ponzi scheme landed in second place among a top ten list as the biggest scheme in history. (Business Pundit) So how did Madoff make it successful? Taking a look we see that he evidently “preyed” on Jewish communities and his investments often ran as philanthropies. These organizations worked on volunteer money. But we must also take a look at what exactly a Ponzi scheme is. Webster defines it as an investment swindle that encourages investors to take bigger risks by being paid off with money by later investors in a chain. But it seems evident that most Ponzi schemes end up as a collapse. However, Madoff sees incoming money, and of course he is going to continue, as long as he covers up his foot prints. It is issues such as this that make the Stock Market a dangerous investment. Upon sufficient research one may make a lot of legitimate money off of stocks, but people like Madoff and circumstances where the market can crash make it unstable. The nature of the stock market itself is what lured people into Madoff’s arrangement. He promised them double digit returns in a market that could rarely give away half that amount in today’s conditions.
Madoff’s crime hit Minneapolis particularly hard. Dave Kansas’s article explains why the Twin Cities fell such big victims to Madoff. We must look at why the Jewish families in Minneapolis-St. Paul were so willing to invest their money with an unknown investor. Kansas claims that this tightly knit group of golfers often trusted their friends, citing that “the people you golf with, after all, are usually people you trust.” This tight knit nature of the Oak Ridge country club left the members vulnerable to such fraud, and it’s easy to see why when investors see the results their fellow investors are getting. This is not even the first time that the Twin Cities have been hit. Two months before the uncovering of Madoff’s scheme, Tom Petters- owner of a local tycoon- was arrested for allegedly scamming almost four billion from investors. Petters also gained the trust of religious families. While there are reports of people regaining some of their lost money, there are still hundreds of people that sit with frozen accounts, some accounts holding children’s college funds or self-retirement funds. This scheme will surely set an example for any investors in the state of Minnesota, and it may be expected that they will turn to other forms of investment such as real estate. This is just another reactant in the economic downturn that has so many Americans already hurting in the pocketbooks.
In Kansas’s article, he claims that the only way that the affected families will gain money in return is if the government decides to start a fund, since some may say it is their fault for not monitoring Madoff’s behavior in a close enough manner. What is important is that the innocent people see some sort of refuge in this whole situation, whether or not the government subsidizes them. I think that we can’t blame the investors for what happened, and Madoff’s fortune should be dispersed among affected families. There has also been controversy about Madoff’s wife, Ruth, and his two sons, Mark and Andrew, and whether or not they had any involvement in the scheme. All three family members were part of the organization, and all held senior positions for over 20 years. Though lawyers of each family member claim that they knew nothing, and Bernie Madoff himself claimed that it was all his fault, I am skeptical as to just how much they did know. It seems very convenient that none of them dug their noses into Bernie’s business, and may suffer few consequences to his predicament. I personally think that they should all be convicted, regardless of what their convictions may be. It is obvious that they all played a role in the wrong doing, and last time I checked, wrong doing needs to be punished.
Gandle, Stephen. "Wall Street's Latest Downfall." Online posting. Dec. 2008. 27