American Consequences - May 2021

A FINANCIAL SERIAL KILLER “That idiot from Barron’s ...”

Erin later wrote Too Good to Be True: The Rise and Fall of Bernie Madoff , the definitive book about Bernie Madoff. She’s appeared on CNBC, Bloomberg Television, Fox Business News, C-SPAN, and National Public Radio, and presented her insight to asset management firms, law schools, and others. I met Erin in the late 1990s, when she was a reporter at the Moscow Times in Russia and I was a stock analyst at a local investment bank. We’d often swap gossip about Russian markets, stocks, and politics. Erin later went on to write for the Wall S treet Journal , the New York Times , and TheStreet.com. Today, she’s a personal finance and investing reporter and columnist at the Philadelphia Inquirer . When Madoff died in prison on April 14 at age 82 of kidney disease, I spoke with Erin about why Madoff did it, how being a journalist in Russia helped her, whether it could happen again, and what we can learn from it all. HOWDID MADOFF’S SCAMWORK? A Ponzi scheme, also known as a pyramid scheme, pays earlier “investors” with funds contributed by more recent victims. As it grows in scope and size, a Ponzi scheme requires ever-greater volumes of cash to continue – so that earlier investors, as well as later ones, can all be paid. Madoff started his scheme in the late 1960s, so over time he had a lot of people to pay off.

That’s how Bernie Madoff – the recently deceased psychotic mastermind behind the world’s biggest and most infamous Ponzi scheme – referred to my friend Erin Arvedlund. That insult, though, is a badge of honor... Madoff – whose body count ultimately amounted to more than 40,000 ripped-off investors who were deceived into thinking they’d accrued $65 billion in profits over more than 40 years – knew Erin was on to him. That insult, though, is a badge of honor... Madoff – whose body count ultimately amounted to more than 40,000 ripped-off investors who were deceived into thinking they’d accrued $65 billion in profits over more than 40 years – knew Erin was on to him. In May 2001 – a little less than eight years before Madoff’s insanely simple and deviously smart scheme was exposed and he was sentenced to 150 years in prison – Erin wrote an article for weekly finance and investment newspaper Barron’s that questioned Madoff’s practices and returns. It was the first time in a widely distributed forum that anyone had dared to question a man who – it’s easy to forget now – had for years been a prince of Wall Street.

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May 2021

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