Madoff In Prison Interview states that Banks and Funds Knew of Fraud

[Selene]

Madoff in his first interview, certain banks and hedge funds were complicit :

"But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow 'complicit' in his elaborate fraud, an about-face from earlier claims that he was the only person involved in the fraud."

Now this raises a whole grand jury load of ethical, legal and criminal questions.

Adam

[syrakusos]

It is complicated. We need to separate out the actual law from our own theoretical analysis. I mean, for myself, his Ponzi scheme worked for 16 years, so should the people who profited from it earlier be tapped to pay the losers who came in later?

I point to the due diligence of the fund managers who were "taken in" by this. When it all broke out in the news, it was pretty clear that no one wanted to know. I cannot remember the one manager, a woman, who saw it coming and saved her own assets. The facts need to be established, but I got it then that she was just a revolving door person who was working for this firm for a couple of years and when she looked at the Madoff engagement, she took her company out of it. She did her job. So, why did not the others? According to the NYT article, some did. So, to me, the others that did not bear their own losses.

Also, I don't know about you, but I still carry this residual govern-mentality from childhood, where we expect leaders such as Nobel Prize winners and Secretaries of State and such to be smarter than us, better than us. That is the root of the republican argument, that we choose the better sort of person for high office. It is hard to see these people as idiots who lucked out into a stream that pulled them into fertile grounds. There but for my own misfortune would I have gone. Etc. Maybe you accept total free will of a praxeological marketplace and think that Madoff and the fund managers all successfully competed their ways to their positions based on perfect information?

Optimist: "I know a lot."

Pessimist: "It is not what you know, but who you know."

Realist: "It is not who you know, but who you blow."

The way I see it, Madoff's money was not in his vault where he porpoised around like Scrooge McDuck. It was all being employed at the highest levels of efficiency according to the immutable laws of the universe.

The fund managers who chose to ignore their jobs handed him their money and walked away from it.

End of story.

Edited February 16, 2011 by Michael E. Marotta