The unbelievable story of the Madoff scam

[carpenter]

After being told time and again that Joe six-pack's over spending habits, are the blame for the grim state of the economy, more and more fraudulent crap gets published in the mass media, and exposes the unbelievable truth: All the defense mechanisms that were supposed to protect dear Joe's life savings, had their heads so far up their A$$s, that even the most creative Hollywood writers , wouldn't go that crazy in their screenplays.

Who knows how many firms this thing is going to drag down ..
http://online.wsj.com/article/SB1229...html#printMode

[John30_30]

Swindler makes Monkey of Sophisticated Investors with Elaborate Chimponzi Scheme

[mhardy6647]

http://www.nytimes.com/2008/12/15/bu...15palm.html?em

[Polk user]

Here is how he did it:


GREED



These were not stupid people but they were happy to get 10-16% a year even during bad times. They were greedy and only cared about the return. They should have known better.


If Madoff was able to con the smartest, richest people in the world for decades then maybe he should be Sec of Commerce and get us out of this mess the politicians got us in.

[treitz3]

Here's part of the problem......part of the linked article from the Wall Street Journal is in bold below....

Frank Christensen, a retired New York Stock Exchange broker. "I really think very highly of him," said Mr. Christensen. "People make mistakes."

What kind of skewed thought process does this cat have? He thinks highly of him? That just blows my mind that someone would ever say such a thing after what mind boggling criminal activities he was involved in.

Making a mistake is touching a hot stove element, or forgetting to pay a bill. Accidentally dropping a hammer on the hood of your brand new car, forgetting to pick up milk for the night's dinner.....those are mistakes. Milking that kind of dough from folks that includes charities is not a mistake. It's a crime. I mean, if this is the kind of attitude on Wall Street, what in the hell does someone have to do to get looked down upon and not thought "highly" about?

[John30_30]

Here's part of the problem......part of the linked article from the Wall Street Journal is in bold below....

Frank Christensen, a retired New York Stock Exchange broker. "I really think very highly of him," said Mr. Christensen. "People make mistakes."

What kind of skewed thought process does this cat have? He thinks highly of him? That just blows my mind that someone would ever say such a thing after what mind boggling criminal activities he was involved in.

Making a mistake is touching a hot stove element, or forgetting to pay a bill. Accidentally dropping a hammer on the hood of your brand new car, forgetting to pick up milk for the night's dinner.....those are mistakes. Milking that kind of dough from folks that includes charities is not a mistake. It's a crime. I mean, if this is the kind of attitude on Wall Street, what in the hell does someone have to do to get looked down upon and not thought "highly" about?

This brings up the crucial point about a guy like that and Enron's Ken Lay. Exact same type of personality. Reassuring, charming mask of veneer over a heartless conman.
You see these psychos gravitate to big $$ like sharks to blood. They've got a great sales personality and nothing more- no soul, no sense of responsibility. All they do is somehow "invent" a magical financial formula that no one else can see a paper trail for, and it's off to the races.
It's a game to them.

[George Grand]

Not nearly enough screwed Enron folks got to poke his ass with a stick in order to:

1. Make sure it was Lay.

2. Make sure he was dead.

[carpenter]

Here is how he did it:


GREED



These were not stupid people but they were happy to get 10-16% a year even during bad times. They were greedy and only cared about the return. They should have known better. .

Finally, someone who shares my definition of "greed": greed is "intended stupidity".

Now who is the greediest bastard of them all?
is it Madoff? who is a freak'n financial guru yet he promises something which is impossible?

Is it the rating firm's management who wants the rich banks to keep hiring them when they need a new security rated so they agree to scratch the bank's back?

Is it the Wall Street tool, who's idea of a family vacation is to charter a private plane and fly the family to a private exotic resort near Cancun, so he pushes those toxic investments to pension funds?

Is it the pension fund manager, who has to prove he can hit a 10% yield consistently, and thus get a huge bonus, so he allows himself to buy the trader's crappy investment?

Is it me and you, who's only question when investing our hard earned money is "What's the yield? the guy from XX found guaranteed 8% yearly, can you top that?"

Everybody along the chain is being intentionally stupid. everybody is being greedy.
so is All lost? capitalism can't work? bye bye free markets ?
no. not even close.
People are greedy by nature. period. but governments are supposed to regulate all this greed.

Someone in the government should have asked that Madoff character how come a business in the scale of tens of billions is being audited by three people?
someone should have asked Moodys how come they rate a package of self-certified mortgage-backed securities, AAA, which is what they should rate government bonds only.
someone should have made clear to the pension fund management that they will be held accountable if they throw a huge chunk of their trusted money to securities they won't dare invest their own money in.
Doing that is not that difficult. not that demanding. especially when you consider that the outcome of failing to do that costs the governets hundreds of billions.

[polktiger]

You missed one...

Is it me and you, who's only question when investing our hard earned money is "What's the yield? the guy from XX found guaranteed 8% yearly, can you top that?"

.

You did not mention a government cure to the last one.

We have lots of problems in the financial markets and our economy, but I don't share your optimism that the 537 elected idiots in DC have the ability to comprehend the problem let alone get past their own personal greed and legislate a solution for the good of the country.

Back to the original post - Ponzi the namesake of the Ponzi scheme would likely be proud of this scam. But where I am lost is what happened to the money. You don't just spend $50 billion what did he do with all the money?

[sucks2beme]

You missed one...



You did not mention a government cure to the last one.

We have lots of problems in the financial markets and our economy, but I don't share your optimism that the 537 elected idiots in DC have the ability to comprehend the problem let alone get past their own personal greed and legislate a solution for the good of the country.

Back to the original post - Ponzi the namesake of the Ponzi scheme would likely be proud of this scam. But where I am lost is what happened to the money. You don't just spend $50 billion what did he do with all the money?

He most likely skimmed off the top. He then used new investments to pay
the "dividends" on the old investments. And pay back anyone that left
the game early. When you run out of new money, or get a run on
the "investment", then the last guys in are holding the bag.
So money goes out as "dividends" and play money for the scam artist.
And, of course, the cost to continue the facade, including a nice office
with a couple of skirts for show, a few bribes here and there, and paying his
son to help out. The son that had no idea how the operation worked.

Who says you can't spend $50 billion? This guy has been running the
scam for a long time. And living the good life. The Wall street elite
have burned through money likes it's not real. Big paychecks, bonuses,
parties, private planes, it all costs big bucks. One of the big wheels of
a large company blew $300k on a birthday party!
How much is enough? You got your answer. There is no limit.

[joeparaski]

One thing I don't understand....how can someone who screwed over so many people still be alive? I mean there must be at least ONE person he screwed that is mad enough to do something about it.

Joe

[carpenter]

You missed one...



You did not mention a government cure to the last one.

We have lots of problems in the financial markets and our economy, but I don't share your optimism that the 537 elected idiots in DC have the ability to comprehend the problem let alone get past their own personal greed and legislate a solution for the good of the country.

The elected idiots are not the ones to deliver the goods, Its a job for professionals.
Let me ask you something: Do you cheat on your taxes? probably not.
why not? because you are intelligent enough to realize that you might get audited, and you do not want to go to prison.
If a Moody's manager would know that he might also be audited for the ratings his team issues, and that if he can't explain why a package of a Billion $ of self-certified (which mean NOT CERTIFIED AT ALL) 100%-funded mortgages is getting the highest rating possible, he might go to jail, then this total lack of accountability for what they call OPM (other people's money) will stop.
in which case John Q greedy won't be able to throw his pension away even if he wanted.

[polktiger]

The elected idiots are not the ones to deliver the goods, Its a job for professionals.

I agree their needs to be more "professional" involvment, but America from top to bottom, as a whole, is too interested in getting rich quick. It is disgusting. Concepts like lotteries, etc only enforce the idea. When it comes to traded securities, too few John Q public actually take the time to comprehend what their advisors are telling them, because they don't want to be bothered with it. I see it everyday and know it to be a fact.

Now the people pushing the crap generally are no better becuase they intentionally package the crap so people can't understand they are buying a pile of crap even if they tried.

I agreeed for the most part with what you said, but I felt you left out the important part that John Q public needs to wise up and start looking out for himself because there are not many people out there who are, and government intervention is not a solution. Those cats really are only looking out for themselves.

Here is one for people to think about - is GM really a car company or are they privatized social security and medicare.

[carpenter]

GM is one big open question. I'm not sure where I my mind is on the bailout program.
the only thing I'm sure about is where my heart is. I'd hate it if there weren't any Independent US car makers.
I'm not suggesting that mine or anyone's sentiments should be a factor. of course, any decision should be based on a no BS assessment that GM can return to be a profitable business. I'm just venting here.

[treitz3]

Where in the hell was the Security and Exchange Commission throughout all of these decades? Who got paid and why do they still have a job?

[carpenter]

Where in the hell was the Security and Exchange Commission throughout all of these decades? Who got paid and why do they still have a job?

Exactly.

[carpenter]

Oh man, this is just sad
http://www.msnbc.msn.com/id/28368421/

[fatchowmein]

Oh man, this is just sad
http://www.msnbc.msn.com/id/28368421/

We'll probably see more of it from managers who have to answer to their clients or from clients who saw a lifetime of savings disappear along with their lifestyle and social economic level.

This is also probably why Madoff is being watched closely. They don't want him to off himself or, more likely, give somebody else a chance to do so.

Sad, sad, sad...

[Jstas]

The "jumping off the rooftops" has started unfortunately. I doubt he's the first, probably won't be the last.

[obieone]

This guy scammed people, that had some of fattest resume's on the planet. Why?
Because they had their 'blinders' on!