Story Comments

Victims are SELDOM at fault! Whatever sector they are in - once targeted by the con - puts them and others like them in harms way. BUT the true investment con with criminal intent is a tough creature to steer clear of. They have been working on a plan to get your money for as long as it has taken you to save it!!

Agencies that govern investment behavior have to be given evidence and told there are problems. Not just by one or two investors --- but the entire lot of them. The trouble lies with the investors who do nothing when the early warning signs appear! By the time the hard facts are out that their money is gone - they wonder why no one was there to help them.

You must keep your eye on your investment - ALWAYS! And tell someone, tell EVERYONE if something goes awry!

Mr. Stewart, I have story worthy of your review. Your readers deserve the lid to be blown off the scam artists that push the term FRAUD to a whole new level.

Please contact ...(Read more of this comment)me. I wish to help those that are unable to help themselves due to a lack of experience in this type of situation.

Regards.(Show less of this comment)

The Monday morning quarterbacks who berate the victims for "putting all their eggs in one basket" or for "not diversifying" are clueless. My family's monthly statements from Madoff ran 6 pages in length and detailed a diversified array of blue chip holdings (GE, J&J, etc) and/or treasuries. In addition, this was not a hedge fund, as many misinformed journalists have reported. Although the statements and trades (if there really were any) were complex, it is no different that having all your stock and bond holdings with any single investment advisor. The vast majority of investors do not "diversify" among multiple advisors. They diversify in a variety of stock and bond holdings under the umbrella of a single investment firm, whether that is Charles Schwab, Fidelity, Morgan Stanley or Madoff.

In their race to blame the victims, the Monday morning quarterbacks are adding guilt to tragic losses borne by victims who thought they were diversified.

A thought on the Jewish connection. It is very common for a con artist to look for marks with trusting affiliations. It makes no matter, the religious / ethnic group. "If you can't trust your 'brother', who can you trust?" makes for easy pickings.

The Madoff fraud scandall is nothing compared to the largest ponzi scheme of all time, the US Social Security system.

Mr. Stewart,
Your comment about big CPA firms is WRONG.
And you should retract your comment.

Bigger is NOT better:
Have you forgotten ENRON????
Think big CPA firm: Arthur Andersen
HOW ABOUT ZZZZBEST, BARRY MINKOW AND YES BIG CPA FIRM ARTHUR YOUNG!!!

THE LIST GOES ON AND IS ENDLESS.

THERE ARE MORE SMALL CPA FIRMS DOING BETTER WORK
THAN BIG FIRMS.

THE FACT OF THE MADOFF MATTER IS THIS:
THERE ARE MORE AUDIT CONFIRMATIONS
SENT AND RECEIVED BY BIG 4 CPA FIRMS
FOR THE VARIOUS FUND OF FUNDS. DON'T YOU
THINK THERE WERE A FEW BIG FIRMS
AUDITING THE INVESTMENT PARTNERSHIPS
INVESTED IN MADOFF FUNDS????
THE BIG 4 ARE ALL RUNNING FOR COVER RIGHT NOW.

HERE IS ANOTHER FACT: SERIOUS FRAUD AND
COLLUSION IS ALMOST IMPOSSIBLE TO DETECT!!

LOOK AT AIG, CREDIT DEFAULT SWAPS, AND
SUB PRIME MORTGAGES!!! THERE ARE MANY
COMPANIES AND INVESTORS THAT DID AVOID
THESE MASSIVE FRAUDS AND COLLUS...(Read more of this comment)IONS.
WHY??? BECAUSE THEY USED COMMON SENSE.

YOUR COLUMN DOES SITE SOME USE OF COMMON
SENSE, BUT THEN YOU DIGRESS, DEFLECT AND
DEFEND POINTING THE FINGER AT SOMEONE ELSE.
MY FATHER ALWAYS REMINED ME:
IF YOU POINT YOUR FINGER AT SOMEONE ELSE
REMEMBER THERE ARE 3 POINTING BACK AT YOU!!!

PLEASE FORGIVE MY "SHOUTING"
BUT WE CPAS DO BEAR SOME RESPONSIBILITY,
JUST NOT ALL.

C.D.GIEDT, CPA
NEWPORT BEACH, CA(Show less of this comment)

As a tax-CPA and investment advisor, I'd like to state the following:

(i) Hedge funds and other non-registered investments (they are not listed securities on a stock exchange, and, therefore, are not publicly traded) are extremely risky and often subject to manipulation by the promoters who often times receive large initial fees upon funding;

(ii) Such investments are also, illiquid. And, as a Wealth Manager/CFP, I would generally not even consider such an investment for a client as the due diligence would be cost prohibitive. Put simply, in the instant case, when one started to ask for specific information and got vague answers, or no answers, from Madoff, that would have indicated enough to me to not make any investment.

(iii) Remember: "If it sounds to good to be true..." Many investors, in my view, had their judgment clouded by the exceptional, and unbelievably constant, purported returns that Madoff provided.

(iv) I personally heard of Mad...(Read more of this comment)off through my late father-in-law and what I was told made absolutely no sense to me then (of course, I didn't consider the bold-faced fraud).

(v) I am myself Jewish, however, as far as Jews duping Jews, hey anti-social personality types come in all colors and creeds; and,

(vi) Finally, please understand that our economic system if far from perfect and, it is possible that Madoff might have been stopped sooner. Also, what Madoff engaged in was not aggressive and/or improper financial statement accounting or even accounting fraud which certain publicly-traded entities engaged in, it was fraud in the essence. But, the reality, as uncomfortable as it may seem to many, is that these frauds will occur from time to time in our system. That doesn't mean, I don't think we can improve the regulation and the speed at which we shut them down. But one has to have a realistic view.

Again, these private placement investments which are typically made to "accredited investors," (these are individuals who typically have 1M in net worth, not counting their homes, or meet certain income tests. In effect, they are deemed to be prepared to incur a financial loss) can be subject to tremendous manipulation and, perhaps, Congress with the help of SEC; can start to reconsider regulation in this area.

Rick K. Shapiro
W. Hartford, CT
(860) 232-4121
(Show less of this comment)

One of the unusual characteristics of the Madoff Scandal is the focus he placed/found in his own Jewish community in NYC and Miami Beach. Some have opined that the focus is related to the Jewish Culture's "survival" mode and /or the trust of "good Jewish boys" by other Jews. The public face of those cheated seem overwhelmingly Jewish, no? Are there lessons to be learned?
marchup

Does anyone remember Enron, Parmalat, and other major financial scandals where well-known accounting firms used "creative accounting" that was only discovered after the financial collapse?
That's how Arthur Anderson firm disappeared. Beware! It is difficult to know who you are dealing with and you cannot accept certified financials at face value ever.

This sentence is the first mention of Bayou ... "This simple step would have saved investors from both the Bayou and Madoff frauds." ... no background provided.

The caution against unknown or micro-accounting firms auditing funds you invest in is incredibly important. If the firm is not registered with the PCAOB, then an investor should check the AICPA website for their tri-ennial peer review. If a firm has not been peer reviewed or inspected, STEER CLEAR! But insisting on a Big 4 is no guarantee. Many other firms in the top 25 or top 100 are very good and appropriately priced for many funds, although given the ALLEGED size of the Madoff holdings, a Big 4 might have been a good choice. Please don't condemn the smaller firms (many of which have 100's or 1,000's of employees) on the basis of one firm which apparently did its best to dodge scrutiny.

I too am a fan of Stewart's columns. And I likewise agree that those victimized by Madoff and the Bayou frauds are NOT at fault. They and their wealth were deliberately targeted and exploited by criminal con men, while Christopher Cox and the SEC looked the other way. Therein lies the reason for the lack of trust - the regulating agency is a sham. If you've ever been ripped off by a broker or other individual working in investments/finance you know all too well of what I speak. There simply is no heft in the purported regulations.

I'm a long-time James Stewart enthusiast, but I just don't buy this column. The way to avoid being dupped is to have rules, systems and organizations in place to carefully monitor the industry and keep things like this from happening in the first place. There is a total lack of confidence in the financial system today for good reason: the financial system gives the individual investor little reason to HAVE any confidence and that individual investor is also smart enough to know you can't do it all, figure it all out, navigate this mess all by yourself. Yes, you need to use common sense but you've got to have something to trust.