Madoff’s Investors Needed a Blagojevich Moment

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Madoff’s Investors Needed a Blagojevich Moment: Ann Woolner
Commentary by Ann Woolner


Dec. 16 (Bloomberg) -- Kind to employees, generous to charities, devoted to regulation of the financial services industry, Bernard Madoff was a much-admired man whose oldest, dearest friends are among his biggest victims.

Now it seems those fine attributes cultivated over a lifetime were nothing more than a con, a cover for one of the more blatant ways to steal money without gun or mask.

He told his sons last week he had been running a “giant Ponzi scheme,” precipitating his arrest.

A former chairman of the Nasdaq Stock Market, Madoff was so smooth, so reassuring, so sophisticated, and such a stalwart on Wall Street, that few suspected. If he had been as profane and as blatant about helping himself as Illinois Governor Rod Blagojevich was, the feds would have been on him years ago.

But Madoff’s joyride lasted for decades, judging from the aging red flags now being reported. He made suckers out of some of the most sophisticated investors in the world.

Investment management firms Fairfield Greenwich Advisors, Kingate Management Ltd., Tremont Capital Management and banks in Spain, France and Switzerland are counting up their losses.

In Ponzi schemes, new investors unwittingly supply cash for what passes for dividends to earlier investors, but the securities don’t exist. The operator pockets the rest. And as long as new investors keep showing up and few folks demand their capital back, it all works just fine. .............(more)

The complete piece is at: http://www.bloomberg.com/apps/news?pid=20601039&sid=aRkt3IRpzH0c&refer=home