What we can learn from Bernie Madoff (aside from how to illegally bilk billions)

Friday, January 02, 2009

What lessons have investors learned from Bernie Madoff? And what repercussions are still to come in the largest Ponzi scheme in history? Diana Henriques is the senior financial writer for the New York Times. She talks with John and Adaora about the state of the disgrace, the global finance markets, and how one gets away with global fraud.

Guests:

Diana Henriques

Contributors:

Kent DePinto

Comments [1]

Joel Friedland

This type of fraud could be perpetrated with little assistance. He didn't keep the records of all the individual accounts, but only of the total invested. From that original false balance sheet, done by Madoff alone, with no assistance from anybody else working for him, everything else could then be generated. Employees were not likely to realize they were helping to perpetrate a fraud. Frauds over $1 billion are easier to perpetrate than frauds of $10,000 to $10,000,000. That's because for very large dollar amounts, what auditors rely upon is not independent third party documents of original entry, but the word of the CEO and CFO. Bernard Madoff's word was gold: his brokerage firm had been a reputable market maker for decades. When he entered another line of business, being an investment manager with discretion, his reputation followed him. Somewhere along the line, he gave into temptation and just kept on giving and giving into it.

Jan. 02 2009 08:46 AM

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