This is a book about Harry Markopolos, who is the author of this book. He talks about how he attempted for years to expose the fraud that was Bernie Madoff.
The book takes the following form (from my view of how the author sees it):
- How he came to a quick conclusion that Bernie Madoff was a fraud.
- How he tried to convince others of that view, especially those that were feeding more money to Madoff.
- Two journalists took his side and wrote about Madoff in 2001 or so, but to no avail.
- Trying to come up with a similar strategy that would work, though it would return much less than Madoff’s supposed returns, and finding few would invest in it.
- Fruitless wranglings with the clueless SEC.
- Finally, in 2009, Madoff blows up.
- Vindicated, he talks to the media, Congress, and anyone who will listen.
- He excoriates the toothless SEC, and proposes better ways to root out financial fraud.
That’s the book in a nutshell. But stylistically, the book harps on how no one would listen. Well, duh. No one did listen, or the book would have been over sooner.
People are not Vulcans. They aren’t logical. Most don’t think; instead, they mimic. “If it works for him, it will work for me also.”
That was the case with Madoff. He maneuvered many sheep into position to be fleeced, and worse, they begged for the privilege to be his clients.
There were many red flags flying:
- No independent custodian
- No independent Trustee
- Small Auditor, incapable of auditing such an enterprise.
- Returns were too smooth for being so high.
- The asset size was to large for the markets supposedly employed.
- Even front-running profits would not be enough, were Madoff to do that.
- No profit motive. Other managers with lesser track records charged more.
- Marketing was by invitation.
- Investors were sworn to secrecy.
- And more, read the book. (more…)
