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Bernie Madoff or Other Ponzi Scheme Question
Posted on 1/15/24 at 9:44 am
Posted on 1/15/24 at 9:44 am
I have watched a couple information series on Bernie Madoff recently as well as a couple other Ponzi Schemes as I find it very interesting and it is an ultimate fear of mine to be a victim. I do not invest with “sketchy” investors, I do have an investment account with a financial advisor (large international firm) as well as a Fidelity Account.
Do others on the Moneyboard let their mind wonder on money they have with a Financial Advisor / Investment Advisor?
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
Thanks.
Do others on the Moneyboard let their mind wonder on money they have with a Financial Advisor / Investment Advisor?
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
Thanks.
7
Posted on 1/15/24 at 9:48 am to tigerforever7
quote:
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
They find a new investor. When the new investors dry up that is when it ends.
Posted on 1/15/24 at 11:02 am to tigerforever7
With Madoff, there were no assets.
It was all completely fabricated.
So if you exited early before the collapse, he would have had to cut you a check on your fictitious assets.
It was all completely fabricated.
So if you exited early before the collapse, he would have had to cut you a check on your fictitious assets.
Posted on 1/15/24 at 11:29 am to tigerforever7
Madoff was a well respected leader in the financial community
He was as legit but fell into a trap where his ego would not allow him to show negative returns so he tried to mask his way out and it fell apart.
The Stanford guy was worse as he was a Ponzi scheme from the beginning. He had bad intentions from the outset. The difference though was not in fabricating trades but in utilizing an offshore bank to hide from regulators and the bank CD’s he was using to run the scheme.
Smart investors should have known that his rates were sketchy tho.
He was as legit but fell into a trap where his ego would not allow him to show negative returns so he tried to mask his way out and it fell apart.
The Stanford guy was worse as he was a Ponzi scheme from the beginning. He had bad intentions from the outset. The difference though was not in fabricating trades but in utilizing an offshore bank to hide from regulators and the bank CD’s he was using to run the scheme.
Smart investors should have known that his rates were sketchy tho.
This post was edited on 1/15/24 at 12:13 pm
Posted on 1/15/24 at 11:47 am to tigerforever7
quote:
ultimate fear of mine to be a victim
I mean, just don't be stupid. If they are promising >10% a year returns, run.
Posted on 1/15/24 at 3:07 pm to tigerforever7
quote:
Bernie Madoff should have been caught
When your returns are out of whack with every one else’s and history there’s usually something fishy going on.
Posted on 1/15/24 at 4:04 pm to tigerforever7
You should feel absolutely fine with any advisor who works for a broker dealer (ed jones, NY life, etc). They aren’t the boss and have no say-so in what is available or how it’s reported to you.
For RIAs, anyone using a well known custodian should be ok too (Schwab, fidelity, vanguard). They also have no say-so in how it is reported to you or the paperwork involved.
The only thing that would make me nervous is if I hadn’t heard of the place my money was actually to be held, and the advisor had some type of ownership or authority in that firm.
Otherwise, you’re just worrying over almost nothing. Not saying the advisor isn’t going to put you in some crappy annuity and suck at their job or whatever, but you can be pretty sure he’s not taking it to the Bahamas with him.
For RIAs, anyone using a well known custodian should be ok too (Schwab, fidelity, vanguard). They also have no say-so in how it is reported to you or the paperwork involved.
The only thing that would make me nervous is if I hadn’t heard of the place my money was actually to be held, and the advisor had some type of ownership or authority in that firm.
Otherwise, you’re just worrying over almost nothing. Not saying the advisor isn’t going to put you in some crappy annuity and suck at their job or whatever, but you can be pretty sure he’s not taking it to the Bahamas with him.
Posted on 1/16/24 at 8:54 am to tigerforever7
quote:
Lastly, I run through scenarios of how a Ponzi Schemer should be caught and how Bernie Madoff should have been caught. When a client decided to move assets to a different financial advisor (I understand probably did not happen often with positive paper returns but had to have happened at some point) , if there are no assets, how are they transferred?
Read the book No One Would Listen by Harry Markopolos.
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