In the News
The Biggest Swindle in History
While we feel for the investors who lost everything, every woman should learn from their tragic mistake
Bernard Madoff, the biggest financial swindler in history, goes to court in New York City today. Madoff has admitted he stole $65 billion from thousands of investors in a Ponzi scheme that may have gone on for decades.
A Ponzi scheme pays out returns to investors out of their own money or from the money paid by new investors rather than from real profits on actual investments. Because of Madoff, many have lost their entire life savings, and several charities who invested money with him have had to shut down.
Madoff, who is 70, is set to plead guilty, and he faces a potential 150 years in prison. He will spend the rest of his life in jail. But there are lots of unanswered questions about this extraordinary case, and Madoff doesn’t seem to want to answer them. Who else was involved in creating and maintaining this gigantic fraud? Was his wife, brother, sons and niece, who all worked in his investment firm, involved?
How could so many really smart and prominent financial people be taken in so easily? How could so many others trust all their savings to one man who was distant and aloof to most of his clients. And, most mystifying of all, how could someone be so coldhearted and greedy–so really evil–cheat so many out of so much, some who were his lifetime friends?
I know someone who lost her savings. Her name is Alexandra Penney, and she is a writer and artist. She started work when she was sixteen, wrote a couple of best-selling books and was a successful magazine editor. In the past few years she has been leading, she thought thanks to Bernie Madoff, a very comfortable life in a luxurious apartment while owning a couple of vacation homes.
Alexandra has been writing in a series of articles called “The Bag Lady Papers” about what has happened to her since Madoff confessed. The title is really ironic because when I knew Alexandra well she really was afraid of ending up a Bag Lady. I doubt that will happen, but certainly she will have to cope with a somewhat different lifestyle. I sympathize with her and, even more, with the far older people who lost absolutely everything. Some even mortgaged their homes to keep investing with Madoff, who offered his clients steady positive returns no matter what was really happening in the stock market.
But I have also been fascinated by those who comment on what Alexandra writes in a very critical and nasty way. Talking about this with another friend, she made a very astute observation. “Of course, it is awful to be cheated, awful to lose the money you worked hard to earn,” she said. “But it is easy to see that those who invested with Madoff took no responsibility. They just felt good because they thought they were getting richer and richer. They left it all to him. They didn’t check on anything…”
I don’t know if more women than men were cheated by Madoff, though I have seen lots of interviews with elderly widows who are now broke. But I do know when it comes to dealing with money, women, in general, still tend to take less responsibility about their own financial well-being than they should.
Most of us will never be able to make the big investments that Madoff demanded of his too-willing clients. But we all can learn a lesson from this incredible scandal about being careful and very vigilant about our own finances.