Madoff Teaches Lessons in Due Diligence

I can remember when Bernard Madoff would approach me in Palm Beach, Florida, about investing some money with him. He’d say “Why don’t you invest in my fund?” I didn’t know much about him and I’m not a fund guy so I said no. I had enough going on in my own businesses that I didn’t need to be associated or involved with his. Madoff was a frequent visitor at my Mar-a-Lago Club and he was a respected guy.

I know several people who have been victims of his unscrupulous scheme and what’s happened to them is dreadful. He is without a doubt a sleazebag and a scoundrel without par. The sad thing is that so many people trusted him, and unfortunately some of them trusted him completely. Some people gave 100 percent of their money to this guy, and now they’re literally selling their houses in order to live. It’s a great lesson in doing your due diligence. Some very smart people were taken in by him. Just because someone is well established doesn’t mean they’re not above being a total crook. He was a Svengali for rich people, and after one phone call they had $100 million and more just wiped out.

Even the people in his own organization supposedly didn’t know about it, or his sons, he claims. He had three floors in a major office building. How could one man be manipulating that much money without at least some of the people knowing about it, including his sons? The word here is greed. He certainly ‘made off’ with some big bucks from people hoping to make a quick buck.

He was a swindler, and even the SEC can’t be blamed. It’s true they did not investigate accusations from a decade ago, but apparently he maneuvered his way with everyone. I know people are stunned by their losses, and rightly so. I think we would all do well to pay heed to all of our transactions, no matter how much we might respect or like someone. But the main lesson is never invest 100 percent of your money with one person or entity. Even if someone or something is great, you can’t bet the ranch on it, especially a person--they can become dishonest or they can become sick. In Madoff’s case I think it was a combination of both. But you’ve got to spread your money around with numerous people, at least three or four. You can’t have your well being determined by one person.