Predictably, Bernie Madoff exerts an irresistible pull for columnists of all stripes – this one included. Since the scandal of history’s largest Ponzi scheme broke, he has become an all-purpose metaphor for virtually everything wrong in the world.
Unfortunately, most of those metaphors have proven about as successful as the interpretations of Pharoah’s dream offered by his necromancers: They rest on superficial parallels and could have been written about hundreds of lesser criminals.
For instance, I have seen a number of sermons circulating by modern Orthodox rabbis asking: What has become of us? Have we made wealth the measure of the Jew and turned money into in indispensable entry ticket into the fraternity of “good Jews”? Good questions, no doubt. But the Madoff scandal is not about communal greed.
Though he palled around with lots of modern Orthodox Jews – enough to rip off the community to the tune of several billion dollars – and sat on the board of Yeshiva University’s business school, Madoff never pretended to be Orthodox. Nor were those who invested with him any greedier than the rest of us.
Very few rich people sleep with their money under the pillow, and we would look at them askance if they did. It was the illusion of a conservative, safe investment, rather than the promise of huge profits, that was Madoff’s lure.
At most, Madoff shows how a wily con man can take advantage of the desire to be a member of an exclusive club. Madoff did not take just anybody’s money. You had to be very rich and willing to hand him huge sums before he would even deign to deal with you.
And Madoff demonstrates, if any such proof were still needed, the power of human beings to ignore all countervailing evidence if they want to believe badly enough. Uncle Bernie did not deal with naïve kolleleit gambling their chasanah gelt on promises too good to be true. He fleeced some very savvy and experienced investors.
And yet the warning signs were there, beginning with the guarantee of a 10% annual return, something no responsible investor will ever give and which is probably illegal. Already in 2001, Barron’s one of the most widely read business magazines and a widely circulated industry newletter MAR/Hedge speculated that Madoff’s operation was a Ponzi scheme. His results could not be duplicated. Nor was the number of his employees commensurate with the claimed scope of his operation. And the single superannuated accountant responsible for his financial statements was clearly out of his league handling a multi-billion dollar business.
Rav Hai Gaon’s offers a parable of a lion and fox. In order to distract the lion from eating him for lunch, the fox redirects the lion’s attention to a well-fed man nearby. But the lion notices a camouflaged trap set between him and the man. The fox assures him that he need not fear to the trap because there is a tradition that the trap has no power over lions for at least three generations. The lion jumps and plunges into the trap. Looking over the ledge, the fox adds one crucial fact he forgot to mention earlier: Your ancestors have already been relying on that promise for three generations.
The Madoff affair was nothing but a modern updating of Rav Hai Gaon’s parable: Veteran investors walked out of half hour meetings with Madoff with all their questions answered and their qualms stilled. The hunger for what he was offering overcame what was in front of their eyes.
My own interest in Madoff is largely with the man himself. My questions are the same I have every time certain types of scandals break in our own community: What could he have been thinking? Did he really imagine he could get away with it forever? Didn’t he worry that his children would never be able to make a shidduch or hold up their heads in public?
Madoff is obviously both very charming and very bright. His investors showed fierce loyalty whenever his bona fides were questioned. And in his earlier years, he revolutionized the nature of modern day trading from computer terminals. So he must have known that no Ponzi scheme can last forever without collapsing under its own weight. In his best case scenario, his perfidy would not been discovered until he died, but at that point, his offspring would be left to live with the humiliation of having a father who knowingly dealt a crippling blow to the world of Jewish philanthropy by duping those who considered him a close friend for decades.
But the problem with Madoff, both as metaphor and as a subject for arm chair psychologists, is that we still don’t know the real story. Did he start off as a successful trader, who at some point suffered losses, which rather than admit he tried to cover-up by taking in ever escalating amounts of new money? If that’s the case, his is a cautionary tale about the danger of pride.
Or was he a bad apple from day one, who without compunction set out to rob anyone with enough money to come onto his radar screen, be they rich widows or large charitable foundations. In which case, he is just a psychopath in Gucci loafers. To date we really don’t know, and there is evidence in both directions.
The Madoff scandal diverted our attention, for all but a day, from the terrible accident near Eilat, in which a bus driver playing road tag on an unfamiliar, windy mountain road plunged 24 tourists to their deaths. Few of us imagine ourselves as bus drivers, or dream that we might ever so wantonly put our own and others lives at risk for no reason.
Yet I doubt there is any driver who talks on a cell phone in the car, especially while holding it in hand, who has not, at some point, almost killed a child who darted in front of his car while he was distracted. And anyone who has ever been passed at high speed on the highway, by a car full of laughing yeshiva bochurim, in a rented car during bein hazemanim, knows that we frum Jews also do not always weigh the potential dangers of our actions.
The Bernie Madoff scandal provides grist for endless speculation and conversation, but if we are looking for useful metaphors, there may be better ones at hand.
This article appeared in the Mishpacha, 30 December 2008.