Tuesday, December 23, 2008

The Human Cost of Madoff Investment Scandal

When the story broke last week, one could sense it would have far reaching consequences, perhaps on the scale of a Jonestown or major earthquake in terms of subsequent suffering. The former head of the Nasdaq Stock Exchange had allegedly built a Ponzi-style scheme into a fifty billion dollar black hole of other peoples’ money.

Many images come to mind when I read of this seventy year old scammer with so much credibility that he could lead armies of people to part with their hard earned cash. I mean, this Bernard Madoff was a respected man in the New York financial scene. He was trusted and looked up to.

Next I read this story of the fund manager who slit his wrists after losing more than a billion dollars of his clients’ money. Then I understood something. Madoff did not have to meet the eyeballs of the very human faces whose hearts would be crushed by this shameful crime. It would be the investment brokers and fund managers who took it on the chin. Those who still had a conscience, like Rene-Thierry Magon de la Villehuchet, suffered pain and humiliation. In his shame, as a result of failing to protect the best interests of those who trusted him, he took his life.

Investor who lost big to Madoff kills himself
Tuesday December 23, 8:45 pm ET
By Adam Goldman and Tom Hays, Associated Press Writers

Investor who lost more than $1 billion of client money in Madoff scandal commits suicide
NEW YORK (AP) -- A fund manager who lost more than $1 billion of his clients' money to Bernard Madoff was discovered dead Tuesday after committing suicide at his Manhattan office, marking a grim turn in a scandal that has left investors around the world in financial ruin.

Yesterday I spoke on the phone with a New York publisher who had aunts and uncles who were among those fleeced masses. She said they were devastated. They lost their life savings and it triggered a memory from my own family's history.

My grandmother grew up in West Virginia. Her father ran the hardware store in Cairo, a small rural town east of Parkersburg. At some point in her early teens, her father suffered losses in the business and the six children were separated to live with various cousins while he strove to get the family back on its feet. The splintered family was reunited in about a year, a considerable achievement requiring much labor and sacrifice.

After the kids were grown, and he had spent a lifetime saving for retirement, he was persuaded that rather than keeping his money in the bank he should invest it. The investment broker into whose hands he gave his life savings would take it to Philadelphia and the family would be secure for life on the yields or interest or whatever tale was told. I do not know those specific details. What I know is that the man never returned nor was ever heard from again.

When the truth dawned on him that he'd lost everything, Winfield Scott McGregor was devastated. It is said that till the day he died he was a hollowed out man who spent much of his time in a rocking chair on the porch, staring off into the distance. He never regained the spring in his step, never bounced back. He was a broken man.

The Madoff swindle might well be history's biggest, fifty billion dollars. A lot of those betrayed were common folk who trusted the investment community. Many will fight this in court, hoping to retain something of their dignity if not what is rightfully theirs. But many others will be broken, overcome with resignation, adrift on a roiling sea of sorrows. This is the human cost of the Madoff scandal.

2 comments:

Anonymous said...

You want to see suffering? Just wait the the Biggest Ponzi Scheme of all, collapses.............(aka. Social Security) WE invest in it with EVERY paycheck( with NO choice in the matter ) ...expecting it to be there when we retire.....But every Politician KNOWS that it's in Big Trouble....when the Baby Boomers start retiring in Full Force.......Why aren't they indicted ? I call it a double standard.......
Personally , I think we're heading down the road to Bankrupting this country....with all the runaway spending .........and the grandiose Plans that Obama has for us......

LEWagner said...

>>>>>>>and the grandiose Plans that Obama has for us......

Yeah, he should start another trillion dollar War with a 3rd World Nation, instead of having any Plans for the American people.
That'll show that America is STANDING TALL again.