For Madoff, Reputation Is Apparently a One-Way Street

Our friend James Altucher, in an interview at Yahoo!’s Tech Ticker, talks about visiting Bernie Madoff and his son Mark back in early 2005 to pitch them his fund of funds:

I had a fund of what’s called PIPE [private investment in public equity] hedge funds. And I went through the whole pitch. My returns were great, they were very excited, but they said, “James, we love you but we cannot invest in your fund of hedge funds.”

And I said, “Why not?” And they said, “Here at Madoff Securities, reputation is the most important thing, and to have that money go out there, you’re sending that money out there, we have no idea about the hedge funds you’re in. We cannot take any reputation risk. … I’m sorry, it’s just our policy. No reputation risk at all.’”

Just a tad ironic, no? The rest of the interview, by Aaron Task, is also interesting.

Among the highlights:

Task:

What is your sense about whether Madoff was really working alone as he has claimed?

Altucher:

No, clearly he wasn’t, because you know there were printed statements being sent out to people. You know, even Mark Cuban wrote on his blog: Who wrote the software to process all these statements? There’s some weird thing that’s going on that we don’t know about.

You know that saying, like if you owe $10,000 to the bank, they own you, but if you owe $50 billion to the bank, you own them? Bernie Madoff owns the country basically, because where is the $50 billion? And there’s a lot of unanswered questions here while he’s just running around.

I mean, I got a call the other day from somebody I knew, she had a million and a half invested with him and now she has $100,000 left to her name. She’s about 60 years old and her question was: what do I do?

There’s no more pep talks, there’s no more optimism for her. My answer was basically this: You’ve got to sell your house, you have to figure out what skills you have, and get a job. You’re going to have to do it. And then the optimism is, it’s not so bad to work. It’s not a bad thing. Like, trust whatever higher power you believe in and try to do good in the world.

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  1. jeff b. says:

    It’s not really ironic since it sounds like madoff didn’t invest in anyone. It was a ponzi scheme, not an investment house. I’m sure he had a bunch of different excuses ready for anyone that pitched to him.

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  2. anonymous says:

    “Not FDIC Insured – No Bank Guarantee – May Lose Value”

    Need we say more?

    “Invest” at your own risk.

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  3. JoseAngelCMS says:

    It is totally immoral to do what Madoff is doing. Even though the economic times are hard for everyone in the moment, he is just making it even harder for some people. He is going over others to get what he wants. He is making people hopeless by disappearing with all their money; he owes people an incredible sum of money, but it seems that he doesn’t plan on giving it back. The post goes on saying that he even owns the country for not giving people the 50 billion dollars he owes.

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  4. SkepMod says:

    I have no sympathy for the sixty-year-old who had 80-100% of her money tied up with one single manager. She is either lying about how poor she is now, or she was greedy – like REALLY GREEDY.

    The Madoff’s of the world are evil, but they do good by reallocating capital away from people like her.

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  5. P says:

    Madoff’s real crime was not being the government. They’re allowed to do exactly what he did, and the only difference is that when their scheme falls apart, they can use either their army of thugs to expropriate the funds necessary or fire up the printing press.

    Can anyone explain how Madoff’s scheme is morally any different than social security?

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  6. Tim says:

    I now truly understand- for the first time in my life- why old timers around here buried their cash in Ball jars and hid it in mattresses for years and years.

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  7. Donnie says:

    @SkepMod #4

    Maybe she was just had no clue what she was doing. You can’t exactly say that it is her fault for trusting someone with her money.

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  8. pelayo@cms says:

    It has not only been the 60 year-old woman who has faced, loosing huge amounts of money to thin air. James Altucher said the best thing to do is get a job; thousands out there are trying to do the same thing. However it is easier said than done

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