Did Madoff Have Help?

by Dual Income No Kids on December 16, 2008 · 0 comments

For the past week, Wall Street and the press have been riveted by the Madoff scandal. The scale and scope of the 50 billion dollar Ponzi fraud is shocking and astounding. The initial press reports are that Madoff acted alone. However, on critical reflection this seems problematic.

Consider the following:

1) Staffing: A legitimate investment fund with billions of dollars under management would have necessitated a staff of at least 50 to 70. There is a great deal of clerical and administrative work that goes into managing funds of that size. The reports and distributions of Madoffs fake “investment gains” alone would have necessitated work for several co-conspirators.

2) Madoff’s Busy Personal Life: By all accounts, Madoff lead an active personal life. He was a frequent attendant at several country clubs and was a board member of at least two prestigious universities. In addition, he was head of his brokerage firm Madoff Investment Securities, LLC and acted as a consultant to the SEC on transparency issues. In short, Madoff was a busy guy. Busy to the point that it would have been difficult for him to produce all the false paperwork and manage all the fraudulent accounts on his own.

In the view of this humble blogger, the sheer amount of work it would take to carry out a fraud of this scale and the competing demands on Madoff’s time strongly indicate he was aided in perpetrating the fraud.

But wait you might say, the press said Madoff acted alone?! Well, while the New York Times is reporting that he acted alone and has been cooperative with investigators (1), however its clear from his past conduct that his statements are not trustworthy.  Right now most of whats know comes from Madoffs own admission to FBI investigators.  When all the details on this sad affair are brought to light, its entirely possible that Madoff will have had accomplices.



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