Bernard Madoff has set a new record.

He has ripped off a gullible public to the tune of $50 bn dollars.

http://www.nytimes.com/2008/12/13/business/13fraud.html?bl&ex=1229403600&en=41084e144739b723&ei=5087%0A

By the standards of George Bush or Robert Mugabe this is small change. But Madoff did not have the resources of a government to help him. For a lone entrepreneur this is an impressive effort.

What should be done to prevent his happening again?

The obvious answer is to mete out severe punishment to the miscreant and impose ever more regulation.

Here is an alternative approach – one that I think would create a climate that would make it impossible for con-artists like Madoff to ply their trade.

The government issues a statement along the following lines:

WARNING

IT IS NO LONGER A CRIMINAL OFFENCE TO RIP-OFF THE GULLIBLE PUBLIC BY OFFERING THEM SUPER HIGH RETURNS ON THEIR INVESTMENT

IF YOU SEE AN INVESTMENT OPPORTUNITY THAT LOOKS TOO GOOD REMEMBER THAT IT COULD BE A RIP-OFF.

IF YOU ALLOW YOURSELF TO BE RIPPED OFF IN THIS MANNER YOU HAVE ONLY YOURSELF TO BLAME. ALL YOU CAN EXPECT FROM YOUR GOVERNMENT IS RIDICULE AND SCORN.

ONCE A WEEK DURING QUESTION TIME THE NAMES OF PEOPLE WHO ALLOWED THEMSELVES TO BE RIPPED-OFF WILL BE READ OUT IN PARLIAMENT ALONG WITH DETAILS OF THE SCAM THEY FELL FOR. IN THAT WAY THE WHOLE COUNTRY CAN ENJOY THE JOKE AT YOUR EXPENSE.

IF YOU LOSE YOUR SUPERANNUATION SAVING TO A PONZI SCHEME LIKE THIS YOU WILL BE INELIGIBLE FOR THE OLD AGE PENSION

ANYBODY WHO SUCCEEDS IN RIPPING OFF THE PUBLIC FOR MORE THAN 10 MILLION DOLLARS IN ANY ONE YEAR WILL BE GRANTED THE ORDER OF AUSTRALIA

THE MOST SUCCESSFUL RIP-OFF ARTISTS WILL BE APPOINTED AMBASSADORS TO COUNTRIES WE WOULD REALLY LIKE TO SCREW. SUCH INGENUITY SHOULD BE USED IN THE SERVICE OF THE NATION.

This notice would be read out on every TV and radio station at least 10 times daily during prime time.

Every resident of Australia would be required to sign this declaration once yearly at annual signing ceremonies.

See also:

http://en.wikipedia.org/wiki/Ponzi_scheme

and

http://www.imdb.com/title/tt0379632/

Nice work stevenlmeyer and I'm inclined to agree.

However, from a practical standpoint, there are an awful lot of very stupid people out there and being stupid doesn't necessarily make them bad people who deserve to lose all their money.

Though it would speed our social and educational evolution along by a few decades, I think.

Dear Steven,

Both my parents got burned by the "Pyramid Society"
investment - where the directors pocketed as much as
they could, before the collapse of the scheme.

It is interesting that "greed" is the new religion,
drawing in many converts. No matter what past history has
shown, nobody ever learns.

There will always be people wanting the easy way to
wealth. And there will always be people who think
they are not as stupid as other people.

Your suggestion made me see the funny side to all this.
It could be the beginnings of
a very entertaining movie script.

Think about it ..

Ponzi schemes are as old as Moses.

We have enough legislation to sink a battle ship but there is no point in trying to legislate against them when

Spin prevails over substance

Greedy people are drawn, like a moth to the light by their own greed

Bad people are born, free of a moral conscience and intent on defrauding the gullible and the greedy.

the old adage applies....

if it sounds too good to be true, it probably is

the alternative is also true

if this opportunity is so good.... why is this stranger offering it to me, instead of keeping it for himself?

mediate the incomming V the outgoing/funds[like a house of settlement's,that oversees ALL fund flow[see how blackmarketeers are washing their illgotten-gain without being caught[any shop/front washing it'clean;'has to be standing out as doing'better'than their industry average.

'STOCK'gambeling should be taxed to underwrite the'invested'share market/money market-funds[and every_trade must pay.[whatever happend to the'transaction/tax' on ALL transactions]the GST/C-T is small change to a globally run transaction/tax[the poor pay more gst[while the elites claim egsemptions[while living off their protected trust-funds]it's these that got'caught-up'in this latest[50 billion ponzi/sceme,thus it appears that the elite took a big-hit[poor them]lol

they didnt like bank-intrest thus took the risk[and got burned][BUT even so it should not be allowed to happen[but bankers should be paying intrest on OUR banked cash[not giving us bankfees to pay,so they can favour the rich with reduced bank fees]

no buisness should be allowed to do buisness under the buisness name[a real person should be accountable][we currently have things backwards[its buisness that has protections and individuals bear the burdon[it should be the other way arround]

govt should be doing its duty of protecting us as individuals not subsidising industry into further omnipotant excess to faceless multinational coorperate companies fronting for other multinational coorperations[see the cross-holding of any share-register

[as even the courts have adopted the buisness protectionism model in law[current law derives its authority from the act[not the constitution,we lost constitutional law long ago]because people dont know the difference between a-law and an-act[an act is only law if you do buisness UNDER THE ACT]

thus drug law is immoral[but its under a HEALTH/act DEEMED criminal[but to be a legally;constitutionally criminal-act;the LAW NEEDS a victim who suffered injury[the only injured party with drug possesion is the possesor[thus they alone[who,under CONSTITUTED-law should be having legal_standing[thus constituted protection,is the self same drug user govt has actually declared'war'upon[and this act by lie is a really bad-law constitutionally speaking[aswell]as morally.

there are so many scams[like sport as news]but media yet dont bother giving us even a half hour of REAL-NEWS;that is one of the biggest scams[thanks to'packer'making sportreporting as 'news']this scam, alone now underpins the NON exposure of so many more'other'scams

If something seems too good to be true, it usually is.

Taking Steven's pathway a bit..

I propose simply having a 'This was your life' show where each week the people stupid enough to be bitten by such things are featured on national TV... and their stupidity underlined.

Even when the police have explained to sucked in Nigerian Scam victims that ... 'this IS a scam..don't send any more money'....they did !

So..some people appear wired for disaster. Not much you can do about it.

It looks to me like the suggestion is to legalise fraud, and let the market take care of it. Wasn't that recently tried on a massive scale in the US, and got us into the current mess?

My perhaps naive understanding is that what we have now is pretty close to what is suggested anyway. Providing you don't offer an investment to the public, the rules are very relaxed. In other words in a private contract between individuals you can do pretty much what you want. All you have to do is fulfil the conditions in the contract. Any attempt to publicise or advertise an investment is going to make you run afoul of the "offer the investment to the public" rule, or course.

It is also my understanding that Bernard Madoff didn't do that. You had to approach him. Knowledge of his product was spread by word of mouth. This is perhaps skating the edge of the "not offering a public investment" rule, but he has been charged with one thing which seems to indicate he has managed to stay on the right side of the rule so far. There will be many rich and powerful people pushing for it to be taken to the other side of the rule, and if they succeed he will get the book thrown at him. But if they don't his major crime will be breach of contract.

CJ,
Erratum; should read 'IS'

Steven J.
Just what the world needs punish the victims. If only people were smart enough or were able to be content with enough. This attitude of 'I WANT more'= ' I NEED more' is the fallacy, driving force for today's consumerism. Everywhere you turn there is pressure, indoctrination to keep up with some fabricated image. New everything, debt etc therefore it's not surprising the more gullible(less intellectually/emotionally equipped) fall for cons like this.

When I was a state manager, my boss was uncomfortable with the fact that I chose to drive a van (multipurpose) as my corporate car rather than a Bellina (condomadore) even though no client ever saw it. Likewise today I drive a 14 yo Subaru heritage and yet people want me to drive something more fitting to my position…why? Its comfy it, goes, stops on command and is inexpensive to run!
I am told corporate image…again no client sees it.

Personally I believe that excess should be ridiculed not poverty being pitied or victimized.

read my lips[the media lies to us[is paid to destract us]is the means by which we have been decieved and destracted

http://www.prisonplanet.com/terrorists-in-pakistan-planning-over-20-attacks-on-britain-says-gordon-brown.html

More than twenty serious terrorist plots to stage attacks in Britain are being planned/Gordon Brown said!

http://www.prisonplanet.com/gates-warns-against-%e2%80%98testing%e2%80%99-obama.html

Defense Secretary Robert M.Gates warned Saturday that foreign powers should not try to“test”President-elect Barack Obama with a crisis in his first months in office and that Mr.Obama remained committed to the security of the Persian Gulf and American interests in the region.

http://www.prisonplanet.com/false-flags-attacks-common-but-rarely-reported-in-the-corporate-media.html

Revelations about a shadowy right-wing group called Ergenekon participating with Turkish military and intelligence elements in “false flag” terrorist attacks in order to bring down the Turkish government are nothing new and are, in fact, a normal tactic used by intelligence services.

ATTACKS IN MUMBAI

http://www.prisonplanet.com/media-forced-to-backtrack-on-al-qaeda-link-to-mumbai-attacks.html

Media Forced To Backtrack On Al-Qaeda Link To Mumbai Attacks

http://www.prisonplanet.com/as-predicted-india-links-mumbai-attacks-with-pakistan.html

India, Corporate Media Moves To Frame Pakistan For Suspicious Attacks

http://www.prisonplanet.com/mumbai-attacks-blamed-on-al-qaeda-as-pretext-for-us-military-response.html

Mumbai Attacks Blamed On Al-Qaeda As Pretext For U.S. Military Response

http://www.prisonplanet.com/mumbai-attacks-to-be-linked-to-obama-target-pakistan.html

Mumbai Attacks To Be Blamed On Pakistan?

http://www.prisonplanet.com/pakistan-says-indian-planes-entered-airspace.html

Indian warplanes crossed into Pakistani airspace on Saturday over two parts of the country where the militant group accused of carrying out the Mumbai terror attacks is active,according to Pakistani officials, who said they scrambled their own air force jets to chase the Indian aircraft back across the border.

http://www.prisonplanet.com/us-may-offer-israel-nuclear-umbrella-against-iran-paper.html

The new U.S. administration will provide Israel with nuclear deterrent guarantees in case of a potential nuclear attack from Iran, an Israeli newspaper said on Thursday.

http://www.prisonplanet.com/us-russia-to-discuss-missile-shield-in-moscow.html

US negotiator John Rood will visit Moscow next week to discuss a controversial US anti-missile shield and a successor to a nuclear arms reduction treaty,the State Department said Friday.

http://www.prisonplanet.com/georgia-guidestones-vandalized.html

The Georgia..[an israeli outpost]..Guidestones,which call for the earth’s population to be reduced to 500,000,have been vandalized.

Journalist Throws Shoes At Bush

http://www.prisonplanet.com/journalist-throws-shoes-at-bush-during-iraq-visit.html

Corporate media outlets are not reporting what the man said as he threw the shoes,“This is the farewell kiss you dog….this is from the widows,the orphans and those who were killed in Iraq.”

http://www.prisonplanet.com/rumsfeld-on-eve-of-iraq-war-%e2%80%98if-you-think-we%e2%80%99re-going-to-spend%e2%80%99-1-billion-in-iraq-%e2%80%98you%e2%80%99re-sadly-mistaken%e2%80%99.html

an advanced copy?

http://www.prisonplanet.com/nyc-ruling-limits-airlines-liability-for-911.html

Scam? well in my view it is not at all unlike the American stock exchange or lending agency's.
A great deal of the greed went unchallenged and most of the lost money was in no way different than this theft.
We may never find a way to regulate such as this greed and personal interests gets the inside running in life always.
Remember just months ago here in our country banks forced workers to push loans or leave the job.
Only the needy or the greedy fell for this criminal, what will his sentence be?
Work out how much time for each billion he stole and he gets off better by far than a car thief, such is our concern for others funds.

Rstuart, examinator, belly

I believe passionately that the best defence against people like Madoff or Australia's Ray Williams / Rodney Adler / HIH debacle is an educated public.

The question is, how to educate the public? It has to be something dramatic, something that will grab the attention of people. My proposal will do it.

My hope is that the prospect of people losing money AND becoming a national laughing stock will induce more caution. It will also help publicise the various types of fraud out there which, hopefully, will make people more alert.

Ponzi schemes are more common that you may think. Arguably the ultra-generous old age pensions that European governments pay their citizens are a form of Ponzi scheme. Will the current generation of tax payers enjoy the benefits when they reach retirement age?

Examinator,

I ditched my car and now ride a bicycle. I enjoy cycling, get lots of exercise and save literally bucket loads of money.

On the rare occasions when I do need a car I hire one or take a taxi.

Steven,
Good for you. If only I could.
The point was not intended as a personal one rather as an example of a greater underlying malaise, specifically the systemic indoctrinated blurring of the consequential differences between want and need.
Consider “Judge Judy” and et al ‘Reality’ (sic) shows. I find that it is incomprehensible that any thinking person would willingly appear on TV to air their incompetences in such a manner. I therefore doubt that these people would be affected by public disgracing except to become further embittered.

After years in crisis management in both the personal and business sense I've learnt to accept that people are incredibly variable in what you or I would call “common sense” and focus on other solutions. (You can't make a silk purse from a sow’s ear)

stevenlmeyer: "I believe passionately that the best defence against [fraud] ... is an educated public."

Steven, the people conned in the Madoff fraud were almost certainly among the best educated in the land. Madoff conn'ed in excess of $1 billion off the 3rd largest bank on the planet for pete's sake.

A well executed con by-passes education. It tricks our "trust evaluation systems", for want of a better word. This is more of a left brain function:

http://blogs.psychologytoday.com/blog/the-moral-molecule/200811/how-run-a-con

rstuart,

I am well aware that Madoff ripped off some of the brightest and best. Some of the allegedly brightest people on the planet believed he could deliver super returns year after year.

One of the victims is Steven Spielberg's charitable foundation.

Now imagine the following scenario. Spielberg is made to be a laughing stock. Comedians crack jokes about him on national TV. Among the TV audience enjoying the fun is Bernard Madoff, now living in comfortable retirement in Florida.

I'll wager that the next wannabe Madoff is not going to find the next celebrity charitable foundation such an easy target. Do you think (say) Bill Gates would look kindly at the prospect of being made the butt of jokes?

stevenlmeyer: "Do you think (say) Bill Gates would look kindly at the prospect of being made the butt of jokes?"

No I don't. But then neither would the Santander bank, which is the one Madoff ripped off to the tune of $1 billion. It will hurt them far more than a little ridicule. Still it happened. And they have far more "education" in the matter than our government will ever be able to impart to its citizens. In fact I'd say the very news headline that gave rise to this topic imparts a better education than anything suggested here.

It would appear that the Securities and Exchange Commission (SEC) received a tip off about Madoff's Ponzi scheme back in 1999. The SEC inspected Madoff in 2005 and 2007 and apparently uncovered no fraud.

See:

http://www.washingtonpost.com/wp-dyn/content/article/2008/12/15/AR2008121502971.html?hpid=topnews

This raises an interesting question. Was the SEC merely incompetent or was it corrupt? With that much money in play Madoff could have bought off a few SEC inspectors as easily as narcotics dealers buy off police forces.

Could investors sue the SEC?

Stevenlmeyer “The SEC inspected Madoff in 2005 and 2007 and apparently uncovered no fraud . . .

This raises an interesting question. Was the SEC merely incompetent or was it corrupt? With that much money in play Madoff could have bought off a few SEC inspectors as easily as narcotics dealers buy off police forces.”

One also asks the question what sort of alternative regulation would have helped, particularly if the view is the regulators were corrupt?

Imho, in that instance, the best option for investors, be they big, small, commercial or private is to save the money expensed on government or industry-funded regulators and replace a false sense of wellbeing with a real sense of skepticism.

Skepticism, it is cheaper and improves with use,

rather than becoming jaded and cynical like many over-opinionated and over-powered regulators.

Approaching 30 years ago, I was a divisional manager for a Telford property. Each division was a seperate trust. Mine was the Marine division, running boats, in the Whitsundays.

Telford was a property trust company, guaranteeing 16% return to its investors. The managers knew nothing of the financing, except that we had to return 17% on capital to HO each year. I don't know if it was established as a scam, or became one, due to the pressure to maintain returns to investers, but a scam it ended up, paying returns from new investors money.

At a meeting of of managers 3 of us discovered that we were the only ones, of the 25 there, that could do that, & still remain profitable. Many managers complained, privately, that the properties they ran were not capable of making the returns required.

I became a little worried when there were no ideas to improve profitability, no pep talks, & no pressure on managers to improve their results. However, as a naive engineer, I assumed the regulators would be on top of all these trusts, & what they got up to, & stopped worrying.

18 months later, during the trials, that sent soms directors to prison, I realised that everything the damn regulators should have known, & acted upon, was there in open view, if they had only looked. They had not bothered, so thousands of investors, many of them retirees had lost most of their money. Funny, no regulator lost their job.

Since then, I would never invest, [if there was any money to do so, without selling the farm], in any trust, even if it were run by St Peter himself