As you’ve probably heard, Bernie Madoff was the leader of the $50 billion Ponzi Scheme – the largest investor fraud ever attributed to a single individual.
Madoff started his firm in 1960 with an initial investment of $5,000. He has been active in the National Association of Securities Dealers, a self-regulatory organization for the U.S. securities industry. His firm was one of the five most active firms in the development of the NASDAQ, and he served as its chairman of the board of directors, and on its board of governors.
Sounds like Madoff had a well-defined personal brand that guided his actions and influenced the external world’s view of him. So how did such a successful figure fall so low?
Simple. Because he was well branded, people believed he would follow through on his brand promise of being an ethical businessman. His brand allowed him to take advantage of everyone who was impressed by his previous achievements and long lasting success. He was known for creating value and always delivering on his word. He had the trust of everyone. While this was a tragedy to everyone affected by it, perhaps we can learn something from it.
So, what can we learn from Madoff?
1. Working with friends: You have friends who are there for you. But once you start doing business with them, be careful to define what’s business and what’s pleasure. Depending on the terms of the business you’re conducting, you may need to conduct yourself in a more professional manner. There is always a sense of trust when working with your friends, which is exactly what happened in the scandal. Everyone trusted Madoff with their money because of his charisma and history. Make sure that the business side of things is always clean cut, transparent, and understood by both sides.
2. Ask questions and trust your gut instinct. Many of the people involved in the scandal were well aware that the returns they were receiving were way beyond anything they should have been getting. If someone seems to good to be true, it sometimes is. Be skeptical but be smart!
3. Always hold yourself and your colleagues accountable. A strong personal brand holds everyone accountable for their actions. Catching unethical behavior early could stop a catastrophe from happening down the road. In this case, everyone could be held accountable for not doing the proper due diligence that would have uncovered and unravel this scheme years ago.
4. “You either die a hero or live long enough to see yourself become the villain.” Call me corny but this Dark Knight quote has a lot of meaning behind it. Money can have a strange affect on some people, even when they have more then they could ever need. In this case, Madoff who is in his late seventies lived long enough to see himself become the villain, ripping off friends and people alike for upwards of hundreds of millions of dollars. Not only did a lot of families declare bankruptcy overnight, but numerous charitable organizations put their donations into the boiling pot as well. Life is all about the decisions we make, so please make the right one.
Now that we have learned a little from someone else’s mistake, I hope that something like this will never happen again. I’m curious though, now that most of the facts have come out, what will happen to Madoff and his conspirators? This obviously wasn’t a one-man show. Also, the billion dollar question remains: where did the $50 billion dollars go?
- Author: Trace Cohen
