Who Helped Bernard Madoff?

Jim Hamilton
Dec 28, 2008

The possible investor loss of up to $50 billion in Bernard Madoff’s massive Ponzi scheme raises questions about how he managed to fool his investors for so long. These people (and institutions) were investing huge amounts of money and yet many sophisticated investors were totally fooled. Madoff’s main tool of deception must have been the statements, in print and/or digital form. Madoff’s senior executives appeared not to know about his fraudulent intentions but without their help, how was he able to manage multiple sets of books and produce convincing statements? Outside of accountants, who else could have been his accomplices (willing or otherwise)?

There is an amazing story here about an unimaginable crime that may have been made possible by someone with a lifetime of experience with AFP, IPDS, and production digital print. In what will become our industry’s version of CSI New York, the FBI investigators will focus on who could have aided and abetted Madoff. Transaction service bureaus, digital print service providers, and statement experts could all find themselves under suspicion. I don’t know who produced the statements for Madoff’s firm. In all fairness to them, they could have been an unwitting accomplice. I believe, however, that somewhere there is a mastermind who helped Madoff, and he or she pulled it off through a knowledge of creating convincing statements.

Whatever the investigators ultimately discover, in the aftermath of this debacle we need to consider how such a massive fraud could be executed with such apparent ease.

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