Tuesday, July 8, 2014
Bernard Madoff's Ponzi Scam May Be Two or More Scams in One
Bernard Madoff's Ponzi Scam May Be Two or More Scams in One Watch Out This Ponzi Scheme Could Be Something Else! Lex Loeb Contributor Network . I know a hoax when I see one. One sure sign of a good hoax is when the news media completely buys into it. I started following the Bernie Madoff Story from the beginning after my double take in thinking I had read that it was a 50 million dollar ponzi scheme. I re-read it a couple of times and it said 50 billion dollar Ponzi scheme. 50 billion dollars. The typical ponzi schemer is not very good at math and I believe that they can genuinely get caught up in running such a scam just by believing in the fantasy of their own apparent success as master investors, Ultimately they must realize they got into trouble and cook the books to hide what is going on while living a prestigious life style with as much luxury as other people's money will afford them. By the time the unsophisticated ponzi scheme gets in way too deep they have stolen a million dollars or maybe a hundred times that at best, I have to emphasize that there is usually a amateurish unsophisticated person behind the run of the mill ponzi scheme. Often it seems it is someone who does not know a lot about book keeping or business or finance or accounting. The typical ponzi schemer tends to buy an expensive lifestyle for themselves and uses that to advertise their success because the appearance of success attracts money from new people who are looking to cash into that dream. Then comes that good morning wall street journal headline that caught my eye about the $50 billion dollar ponzi scheme. Then the details of the case started to get even more press. The defrauded victims and the interesting way Bernie set up his shell company as a brokerage firm that could end up costing tax payers for a substantial portion of the losses. That immediately became the red flag that Bernie is still running a hoax and a scam and probably a scheme or two too. This cannot be an unsophisticated scam. If Bernie was stealing 17 or 50 billion dollars in other people's money he certainly was and is not living the lifestyle of a multi billionaire. That is a little troubling because if he did not spend the money or give it away he would have had to loose it in actual investments or hide it away. As the details come out about 50 pedicures and a 500,000 dollar yacht, a 5 million dollar condo apartment it looks much more sophisticated than the heavily advertised ponzi scheme. Bernie is still running some other kind of scam, a bigger scam, if 17 billion dollars or 50 billion dollars is missing he has lot s of money stashed somewhere. He maybe prepared to go to jail but it may also turn out that he has some terminal illness. He really looks like he is enjoying his down fall way too much. I have had to deal with real life con artists and some pretty smart ones but this guy is way smarter, You can see it on his face in recent photos. Bernie Madoff is taking the FBI and other investigators from the SEC on a big joy ride. The story is that he goes to his sons and tells them that he can't make ends meet because he is running a ponzi scheme, but he is living within the means of someone making a few million of dollars a year not Billions. Bill Gates may have Billions of dollars but it is a rare year where we see him spending even a half billion dollars on his life style. Billionaires can thrive on a few million , maybe ten spent a year on excess but most tend to be tight wads which is how they became billionaires. Either Bernie stashed away billions or he spent them. If I were one of the investigators I would start worrying that Bernie has more than just two sets of books. One set of books that pretend that he was legit, One set to prove he was running a ponzi scheme designed for the police and investigators to find joyful reading and a secret book of what he really did with the money he intended to steal and will get away with stealing. There could even be a forth book hidden in his really smart head somewhere. This looks like a designer ponzi scheme where many of the tax implications were realized before it was constructed, There is a fair chance that one or more of the victims could even be accomplices but the government might never figure it out. Bernie just looks way too smart to have gotten himself into a ponzi scheme trap without intentionally wanting people to think that it was true. When you have a scam within a scam within a scam it has a sophistication to it that may just help the con artist get away with it. It starts looking like a very sophisticated hoax to cover up even more interesting financial crimes than a garden variety ponzi scheme. An ordinary ponzi scheme operator is more like a lucky gambler who finds he can win big some of the time and it goes to his head. He then puts on the airs of really making it and sells his services to others. If his luck holds out no ponzi scheme ever materializes but usually luck is just an accident and that is when the ponzi scheme begins with the operator trying to tide over his losses and doubling down for bigger future wins to cover losses. Then the ponzi scheme becomes the only option to keep the fantasy going and these guys dig themselves deeper and deeper into the business of outright fraud. There is a certain innocence to begin with in ponzi operators until they discover the luxury of the game and you get a ZZZ best scenario. Bernie Madoff does not exactly fit this profile. He has a viable legitimate wall street business that is profitable enough to account for his life style. He is one of the people who invent complicated financial derivatives which are sort of the condo market of the securities industry. He knows his math. He is educated. He is connected. We know he is definitely a psychopath because his friends are fooled into trusting him. Even his family is being fooled. There is a good chance he has more than one family, more than one wife, more than one mistress and more than one identity. Everyone already knows he has two sets of books. The investigators are probably looking at a two sham books to assess the nature of the long running scam. The real books might be on some secret lap top where Bernie's net worth is 10 to 40 billion dollars but the name on those accounts is something like Howard Johnson who lives in Grand Cayman and Singapore. Some of his alleged victims might actually be accomplices no doubt. The decision to plead guilty and go to jail might mean that Bernie knows his life expectancy is a lot less than the time it will take for a trial to go though. If he has stashed billions of dollars why and how does he intend to benefit from those dollars? Understanding wall street game player mentality might explain that. I would guess the money might end up going back to similar charities like the ones he stole it from or his other secret families are very smug with the money, A very rich mysterious mistress could be out there somewhere with almost as much money as Bill Gates or Warren Buffet but she likes to spend it wildly going shopping. What ever Bernie really did with the money he will never divulge to investigators unless they happen to find out independently. The possible Mistress probably lives overseas if she exists and probably has financial pedigree so no money laundering would ever be suspected. The more it looks like Bernie may have set up the scam in a way to allow SPIC or other government insurance agencies to pick up at least part of the tab to pay his defrauded victims many of which are charities quickly leads to the conclusion that Bernie had lots of tricks up his sleeves. A master of the derivative financial instrument, he invented a derivative financial fraud that may have protected some of his investors. Following his trading activity and the money trail he is cooperating with authorities to show them is like being led out into the wilderness like a cow by a professional cattle rustler. A friend of mine wrote a book , not yet published, on anti social personality people like Madoff and it is too bad that it is not yet published because a lot of fraud investigators could the book's insights. The book was written with parole officer experience insights. The Big red flag with Madoff is that he is cooperating with authorities and immediately telling them that he was running a ponzi scheme. This no ponzi scheme . It is an evil genius Madoff Scheme and it not a thing of the past but probably an ongoing scam with more victims to come. If the investigators get lucky they might discover his main Howard Johnson identity but that is very unlikely until Madoff decides to sell his memoirs. Madoff could have stashed away billions of dollars and that very likely he did just that. When he declares he is broke and an unsophisticated fraudster that is yet another huge red flag no one is noticing. .