I thought you might be interested in the thoughts of Larry Rosenthal, a law professor and white collar crime expert at Chapman University’s School of Law (You can find Prof. Rosenthal’s bio here: http://www.chapman.edu/law/faculty/rosenthal.asp):
“The high-end securities business places a great deal of emphasis on personal relationships and trust. For that reason, it is unsurprising that Mr. Madoff was able to raise enormous amounts of money from investors. Moreover, given his reputation, it would not have occurred to anyone that he was running a Ponzi scheme,” Prof. Rosenthal states. “The defining feature of a Ponzi scheme, of course, is that it always is discovered. Most criminals who run Ponzi schemes run them as what prosecutors call “bust outs”, in which, just before the scheme unravels, the schemer flees with the money and cannot thereafter be found. That, of course, is the only rational way to run a Ponzi scheme. No one would have suspected Mr. Madoff of running such a scheme, which is precisely why he could have gotten away with it for so long. And, of course, Mr. Madoff did not run his scheme as a bust-out – it just unraveled, . One can only speculate, but in cases like this, typically there is some factor at play that impairs the judgment of the person running the scheme – drug or alcohol dependency, family problems, or mental illness. I suspect some sort of extraordinary personal stress was at play here.”
“The high-end securities business places a great deal of emphasis on personal relationships and trust. For that reason, it is unsurprising that Mr. Madoff was able to raise enormous amounts of money from investors. Moreover, given his reputation, it would not have occurred to anyone that he was running a Ponzi scheme,” Prof. Rosenthal states. “The defining feature of a Ponzi scheme, of course, is that it always is discovered. Most criminals who run Ponzi schemes run them as what prosecutors call “bust outs”, in which, just before the scheme unravels, the schemer flees with the money and cannot thereafter be found. That, of course, is the only rational way to run a Ponzi scheme. No one would have suspected Mr. Madoff of running such a scheme, which is precisely why he could have gotten away with it for so long. And, of course, Mr. Madoff did not run his scheme as a bust-out – it just unraveled, . One can only speculate, but in cases like this, typically there is some factor at play that impairs the judgment of the person running the scheme – drug or alcohol dependency, family problems, or mental illness. I suspect some sort of extraordinary personal stress was at play here.”
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