Bernie Madoff, the architect of the most extensive formal Ponzi scheme in American history, has died in federal prison at the age of 82. I’m not going to do a full obituary — I need you Erik. This is a bad one — the worst one yet. I need my old obit man: I need your magic — but will limit myself to a few observations:
(1) Madoff ran an affinity fraud that was so cleverly constructed that most of his victims had to literally beg him to take their money. As grifters go, he’s definitely first ballot Hall of Fame.
(2) The extent to which Madoff’s marks were complicit in the fraud is something that no doubt varied a great deal from person to person, but surely the more sophisticated among them must have known that either he was at a minimum front running, or more likely the whole thing was what it turned to be, a straight pyramid scheme.
(3) Madoff’s scheme collapsed in the fall of 2008 for the same reason that much of Wall Street melted down at the same time: because enormous fortunes of various sorts had been leveraged upon the rickety twin towers of greed and wishful thinking. The difference between Madoff’s grift and the financial racket described so well in Michael Lewis’s The Big Short was ultimately one more of degree than kind.
Madoff went to prison for the rest of his life, which was certainly a just punishment in his particular case. What was a travesty of justice was that so many other people simply walked away to scam another day.