'Ponzi Proofing'

Discussion in 'Life After the Academy' started by lotsofbooks, Jan 10, 2018.

  1. lotsofbooks

    lotsofbooks 5-Year Member

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    Thanks for the care package suggestions. One of the books I was sending was this one...
    No One Would Listen by Harry Markopolos

    This is a quick sort of easy read about Madoff and how the scheme was discovered (belatedly) by crunching numbers and using some math algorithms to check the yields. One of his points was that the government 'watch dog workers' in this area were too inexperienced and didn't have a good grasp of calculus.

    So you say, 'well, that is old news' but unfortunately these sort of scams are not going away and the book helps explain how you can judge for yourself. Just this past December we had some more news of this sort of thing...

    1. Our local Madoff escaped from prison..https://www.seattletimes.com/seattl...-ponzi-scheme-escapes-from-california-prison/

    This was of interest to us because we had some business dealings with him (he was sort of nasty) and his yacht at the time was the biggest and nicest around so it was very conspicuous. (of course we didn't realize how crooked he was, but it was apparent he was young and very very wealthy. ) We talked to his yacht captain who was a former AF pilot who also flew his Lear Jet . (nice guy) My husband knew people who were raving about the yields. And these were CPAs or other financially based professionals who were doing the raving .My husband was asked to evaluate a few of his investments on the behest of one of his clients. (after her own CPA recommended D. Berg) He said it was hard to be objective because of how obnoxious the guy was, but he said he was noncommittal and objectively steered her towards something else without going into a lot of details. He didn't know how extensive the scheme was, but when the news hit he was shocked to find a lot of his friends and coworkers- financially smart people were taken in. The documentary mentioned in the article was just done last year. The author at the end, JA Jance, was a very hard working local author who attended every book signing or author event she was invited to. I heard her speak once and she said she had struggled supporting her family for years ... How sad to hear she lost so much with this creep.

    2. And this guy.. the news broke in December
    http://fortune.com/2017/12/22/woodbridge-group-sec-ponzi-scheme/

    I think what is apparent is that the victims are brought in by someone they trust, and they are probably getting a little older (but not necessarily) We discussed this with our kids as someday they won't have us , they will be on their own. I think everyone needs to read a lot about investing so they are realistic about yields. They should be very cautious if something is a lot better than it should be. Our kids grew up with MS , Google, and other start ups making so much money so I don't know if they are skeptical enough. (compared to my parents who grew up during the depression) I think the one red flag is that a trusted friend brags about their investments and tries to include others. I just hope my kids will still sit down and do the math if they are ever in this situation....Talk to your kids...
     
  2. LineInTheSand

    LineInTheSand USCGA 2006 10-Year Member

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    There are materials available online too, at investor.gov