Bernard “Bernie” Madoff, the infamous Wall Street investor who stole $20 billion in principal funds from investors, broke his silence in an interview published yesterday. Mr. Madoff, often painted as the worst offender of so-called Ponzi schemes in American history, took the time to express his views on the increasingly corrupt White House and a Wall Street trading environment that is continuously primed for another shark — like him — to get away with fattened pockets.
Madoff went on a detailed, if quite lengthy, diatribe on the never-ending cycle of fundraising that goes on in the White House. Specifically, Mr. Madoff highlighted the issues that come from mixing huge capital donations with the favors that too many politicians are giving in return. Even President Barack Obama, whom Bernie voted for in the 2008 election, didn’t escape being eviscerated by this Wolf of Wall Street’s spiel. Madoff admits to himself giving $372,000 to political candidates, the majority of which went to the Democratic party.
Wielding wolves’ teeth against the White House wasn’t the end of Mr. Madoff’s views on the financial environment in the United States. As for his $20 billion magic act — the number is often ballooned to $65 billion as a result of Madoff’s deception — Madoff says he was just the one to get caught. Speaking of Wall Street in general, Madoff note that “bad players like myself” are not uncommon in the ranks of the American financial elite. The far-fallen crook even went so far as to warn investors away from the stock market completely.
Madoff’s Views on Wall Street May Not Be That Far Off
First, let’s get this out of the way: not every financial investor is looking to scam you out of your hard-earned dollars. In fact, we’d go so far as saying that 99.9% of investors are looking to have a mutually beneficial, not to mention legal, relationship with their clients. However, that doesn’t take the weight out of Madoff’s words.
Since 2000, there have been a number of high-profile Ponzi schemes on which investors have lost billions of dollars. Madoff’s $65 billion stunt is memorable because of its scope and many of the socio-political undertones working into his plan, but that doesn’t make his a singular case. Luis Felippe scammed investors in South Florida out of $40 million in 2010; Guy Albert de Chimay was indicted in Manhattan over a $7 million scam in 2010; and Scott Rothstein was sentenced to 50-years in prison after running a racket worth $1.2 billion. Madoff’s statements about the financial world, while no doubt crafted to say, “but everybody does it,” are not inaccurate. Investors need to be careful.
“I think there is one key thing that everyone should avoid to make sure that they don’t make investment mistakes, which is track-record investing,” explains Craig Slayen, Principal at Winship Wealth Partners. “Track-record investing is solely picking an investment advisor based on their track record. People fell in with him based on his track record. Past performance is not an indicator of future results.
“He was picking individual stocks, and the reality is that it’s become extremely difficult to beat the market,” continues Slayen. “I would run away from someone who says that their portfolio will be up when the market is down. You should be not walking out the door, but running out the door.”
Nor His Views on the White House
Likewise, Madoff’s take on the financial system that powers Washington are not exactly pulled from a fantasy world. Despite calls from the Obama administration that would see campaign financing, bill earmarking, and the like become transparent and more ethical, scandals continue to rock the capital. Most famously, perhaps, is the case of Representative Charles Rangel (D-NY), who was investigated in 2008 after using congressional stationery to solicit funds for a personal foundation. The funds being collected were from businesses brought before the House Ways and Means Committee, which Rangel chaired. It’s political corruption at it’s finest, but this case is by no means singular.
What do you think of Madoff’s interview? Were his statements about Wall Street and the White House accurate?