Week 6, Fadhil's Blog #3 - Bernard Madoff A Legendary Ponzi Scheme Mastermind.

Having a great weekend with my friends then I remember about making a weekly blog which kinda ruin everything but yeah.... alright. Anyways, back with Fadhil's weekly blog, this week I am going to talk about a legendary "financial criminal" Bernard Madoff. By the way, do you remember your parents telling you not to take something from strangers because it can be dangerous for us and we need to be smarter? It is obvious tho if someone gave you free or offer you at really cheap price of something that we need, it is hard for us to reject right? However, for the smarter ones, they tends to ask to the person that give them free stuffs about "what do they want?" and "is there anything they wanted from us that is bad for us?". Well this thing is related to the world of finance and investment, we have to be the smart ones, that could not be persuaded easily by others with negative intention. 

A bit of Madoff background, he is... 79 years old, like wow thats quite old for a "criminal". Anyway, he is the master con man who stole money from his investors by operating the multinational Ponzi scheme. Based on the news I read,  he took the total number of $64.8 billions from the scheme. Basically he has been offering low risk of investment with satisfying amount of returns to his victims where it is quite appealing and tasty, but the question is where did the returns come from? Is it from the investment gain or profit? The answer is no. He basically gave back the invested money to investor and cut it for the fee and put into his own pocket. As He is also did not  care about the person money that he stole, as most of the money came from his close friends, partners, and even family. 

In my opinion, what makes him more special and legendary is that he showed the world that his strategy can be the longest. It is no longer a secret that this man is a genius but not in a good way. Most of us might question how did he do that in a very long period of time. At the end, when he is caught by the officials, he was given two choice of 150 years of jail or share his strategy or tactic to financial experts, As I guess it from criminal movies, he chose 150 years of jail than telling it. The most surprising part is that his clients did not expect him to still their money at all due to his good reputation and gold classification with investors and from Wall Street society. 

From this amazing criminal minds, I remember a propaganda quote which say "if you tell a big enough lie and tell it frequently enough, it will be believed" that mostly answered reason why so many people invest and trusts him. He has been playing role in his Ponzi scheme for a long time and like a good wine, the longer it takes, the better it taste for the investors. Apart from the business terms, surpassingly Bernie is known as very nice to people and put his family first over everything. I think that is how he gained trust from his surroundings as well as investors. For instance, if I am an investor, with the reputation he has and personality he made, I would likely to invest my money with him without thinking twice. From the documentary, I also see Bernard convince his clients that he only took 1% from the investment which is very low for high-class investors.

Moreover, he told the clients that he has a secret buying and selling strategy that he is the only one who can do it and the founder of it. Surely, the investors appealed and most likely one to invest their money with him as curiosity. My question is that how come this guy is always over-looked by the authorities and not questionable, I guess it is due to his connections, experience, reputations and the people that he closes with. Well I think everyone should be very careful when they put their money in someone else hand from now since we can't trust anybody right now.

At the end, as it is clear, no matter how genius a bad guy is, they will always loose and eventually caught at the end. The legendary ponzi scheme collapse by the exact same cause every time. Bernard Madoff's collapsed because how was not able to gather enough amount of money in the time that are given by authorities in order to fulfil his obligation towards his numerous investors at the time, which is to provide the return of their investments. Surprisingly, I still amaze with how well Bernard can manage and hide this thing for a very long time, I must admit he surely got talent and skills to achieve it without doubt.