The Banking and Strategy Initiative

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How I Got Screwed by Bernie Madoff – TIME

We didnt know it yet, but we had been playing in the Bernard Madoff Investment Securities LLC Fantasy Financial League. It began when we sold our home at the peak of the market, collected what was left from an old divorce, found other monies and then, with a combination of pleasure and trepidation, handed our bag of cash over to someone named Stanley Chais, the Los Angeles network organizer for a man named Bernard Madoff.

Of course, we never heard the name Madoff — which has a peculiarly Dickensian ring now — and had no idea how he achieved such fantastic returns over the past 40 years. All we knew was that my wifes entire family had been in the fund for decades and lived well on the returns, which ranged from 15% to 22%. It was all very secretive and tough to get into, which, looking back, was a brilliant strategy to lure suckers. Unlike the usual Ponzi mechanics, the fund even stopped investments into accounts a few years back, at least in our network. There were the usual warnings prior to investing — we all knew it was a risk, we were told to make sure we were diversified, blah-blah — but, my God, it had been going strong for so long and with such fantastic returns, we had to get in. The Securities and Exchange Commission even gave Madoff a clean bill of health several years ago, we now find out. Well, maybe not a clean bill, but it didnt shut him down either. In the topsy-turvy world of investment, we were quietly, richly safe. Until the call.

via How I Got Screwed by Bernie Madoff – TIME.


zyakaira notes: On the face of it the prognosis could not be simpler. The man bet on the larger index value ( Out of the Money Calls and Out of the Money Put Collars ) while he chose the stocks to select. He obviously had a few more days of losses but the strategy is one that any investor would employ at a simpler level and there are a lot of people who are finding enough to make money everyday. I think therefore the Ponzi scheme part is definitely someone just walking away with the money, without you knowing where the money is.


This entry was posted on December 16, 2008 by in Financial Markets, Global, India, Investments, Meltdown, Uncategorized, US and tagged , , , .


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