The financial world is still reeling from the discovery of Bernie Madoff’s fraud, the Ponzi scheme that vanished as much as 50 billion dollars as if by magic.
An estimated 400 charities were taken to the cleaners, as well many celebrities, from Steven Speilberg and Kevin Bacon to sports team owners and Alicia Koplowitz, named as the richest woman in Spain. Also on the losing side were Japanese, European and U.S. banks, private fund managers, and Madoff’s own friends and family.
Bernard Madoff’s accountant Jerry Horowitz lost his retirement in the scheme, and even his own sons, Mark and Andrew Madoff, who turned their father in to the authorities after his confession that his investment firm was “a big lie,” were taken.
As someone who studies how people relate to their money, I am fascinated.
What started the slippery slope that led the once well-respected Madoff to pull off the largest single case of fraud in history? (Daniel Finkelstein couldn’t help but point out the irony of the name “Madoff” – he literally “made off” with his clients, friends, and family’s money.)
While Madoff has lived in luxury, enjoying lavish homes, yachts, and the best of everything, I believe that under the gilded surface lurks the dark face of Scarcity itself.
There had to have been a moment in time (probably following a few disastrous market moves) in which Madoff was faced with a choice – a choice to either admit the loss of his clients’ money, or to cover it up. He chose to cover it up, compounding mistakes instead of interest.
It’s easy for us to point our fingers and say, “What an awful man!” “What a crook!” “How could he do that – rip people off for billions of dollars!?” “Stealing from charities – shame on him!” It’s harder to look in the mirror and see small or “insignificant” ways that our own behavior might reflect Madoff’s.
A friend of mine started just such a rant about Madoff last week. I stopped him to ask how this behavior might show up in his own life, perhaps on some barely-detectable level. (Or perhaps not so barely detectable.)
You see, this friend owes me a little money, money that was earmarked for one purpose, but he used it for a different purpose, thinking more money would come in to “cover” what he thought would be only a brief and unnoticed misappropriation. I never would have even noticed it, had the “replacement money” come as expected.
Then the lies started. “We just ran out of checks, but I’ll have the money wired tomorrow!” Two weeks later, “Oh, I’m sorry, I thought you already got paid!” Two weeks after that, it was another excuse, someone else’s fault. A week after that, no calls at all.
I asked myself the same question – where does this show up in my life? I am also not blameless.
Where have I not been my word? How have I failed myself or others? When have I told a white lie to cover up a mistake that I hoped no one would notice? And why would I do such things?
Simple… for the same reasons that my friend did. For the same reason that likely started Madoff’s mad descent.
We’re afraid to face the truth. (Or worse, the lies that we mistake for the truth.)
Are we good enough? What if we’re not? What will others think if we tell it to them straight?
Will people still like us if they knew the truth? Will they trust us? Respect us? Do business with us? Will we still be loved?
When the numbers don’t add up, it’s a shortage of money. When we forget that we have the power to overcome adversity, face the truth and rise above it, we short-change our real worth and buy into Scarcity.
It’s fundamentally a Scarcity of Spirit. It’s an illusion, a lie that tells us we are finished if we let down our guard (so we’re better off covering one mistake with another). It’s a lie that equates our financial worth with our self-worth, and tells us it is better to be dishonest (but admired) than honest (and scorned).
“As within, so without,” states an ancient Hermetic text. Madoff’s Scarcity of Spirit has led to a very real physical Scarcity – a financial loss of historic proportions.
The man who was once afraid to admit to investors that their money had been poorly invested started a ripple that impacted thousands of people. The man who tried to save face, hoping to cover his mistakes later, now faces the judgment of the world, and life behind bars.
And what did Bernie Madoff do after his arrest?
He packaged up a million dollars worth of jewelry, watches, and other family heirlooms and mailed them to family members. Here he is, fully exposed, still trying to save face, cover for mistakes, preserve what little love he feels might be left for him on this earth by buying it off with assets that should technically belong to somebody else (like one of the families stolen from).
He created a monsterous scheme that ultimately devoured not only his investors’ savings and the dreams of many, but Madoff himself.
Although it was Madoff’s horrified sons who blew the whistle on him, another player in this story has been urging the SEC to investigate Madoff since 1999. Harry Markopolos noted irregularities and “impossible returns,” given the strategies that Madoff claimed to be using.
Markopolos worked for another investment firm. They didn’t have Madoff’s high returns or high-profile client list. What they did have was Harry, a man whose own mother describes as “unfailingly honest.”
Harry Markoplous had a mischeivous streak a a child. One day, he pelted his elementary school with eggs. No one saw him, and no one suspected. It could have been the start of a slippery slope. But Harry decided his own honesty was more valuable than what other people thought of him. He finally stepped forward, admitted the deed, and cleaned the school up himself.
When I see pictures of Madoff, I don’t see a monster. I see a sad man grappling (much too late) with the weight of his choices. I see grandfather, a father and a husband, once highly thought of by many, who found a long series of ever-expanding lies preferable to a truth he could not face. I see someone who stole money from others in an attempt to conceal his own fear of scarcity, his own terror of having to give up his status, lifestyle, or the respect of others.
Fearing his own inadequacy, Madoff created a monster. He created a monsterous scheme that ultimately devoured not only his investors’ savings and the dreams of many, but Madoff himself.
May you and I have the wisdom to spare ourselves from such a fate. May we face our fears head on so that they do not grow into monsters, fed by scarcity and concealed in the dark. And may we come to know ourselves as powerful, abundant, and courageous, even when tempted by choices that appear to offer an “easy way out”.