Mike,
You are so right. How could he do this to his clients, friends, and family. The picture of his arrest shows a countenance depicting bemusement, not embarrassment. Perhaps it was just relief from no longer carrying this dirty secret of nearly 20 years. The man must be a sociopath. Though hardly satisfying to his former clients, I suspect that he will get his due.
John,
I learned early on as an apartment broker that commercial real estate owners kept three sets of books: one for investors and brokers which were generally available with proper confidentiality assurances; one for the IRS with extremely limited distribution; and the real ones which never saw the light of day. I am not a very sophisticated guy, but a rather cursory review of the rent roll, bank deposits, and monthly financial reports over a period of six to nine months gave a pretty good indication whether things were as they seemed or further due diligence was called for.
As the WSJ reports, the SEC, long before any of the alleged Bush/Gramm defunding of enforcement had occured, looked into Madoff's operation and found nothing of concern. The WSJ opines that the SEC can't be expected to detect all fraud, and I agree. However, in Madoff's case, I think that a relatively simple comparison of a sampling of his security holdings to his cooked financial statements would have revealed a problem. Somebody had to be holding those assets if they existed, and it is my understanding that he did not claim to be involved in exotic derivatives or other investments whose physical ownership and value would have been difficult to determine. Even if he was handling the backroom operations in-house, he had to have records which could be verified with second and third parties.
Others have said that the SEC is spread too thin and can't check each and every accusation of impropriety. I know for a fact that the SEC can and does look into accusations of relatively small, low seven figure insider trading gains, and will spend weeks deposing, analyzing, and investigating. Often, the targets and those who are subpoenaed are told that they can be recalled at any time and may never find out the conclusion of the investigation. If I was a defrauded investor, I would be asking for much more from the SEC including a full investigation by an independent party on its failure in this case.
There is an interesting, probably totally happenstance peculiarity here. There was a financial industry watchdog running rampant in NY during this time. You would think that AG Spitzer might have caught wind of the complaints against Madoff right in his backyard. At least during breaks in his frequent oil changes, he may have directed one of his pups to sniff out Bernie and see what he was up to. Might Mr. Spitzer been on the leash of Mr. Madoff's political largesse?
Now this is really OT- but in the age of Blago, the mind runs wild. Could Hank Greenberg still be running AIG and perhaps avoided the firm's financial meltdown if he provided the necessary lubricants to the powers that be? This is not a suggestion for controlling campaign contributions. Quite the opposite. In my opinion, there should be no limits on contributions, only that they be done in broad daylight for everyone to see.
If anyone sees Madoff's donee list please post the link. I suspect that it will be embarrasing and possibly enlightening.