NORB VONNEGUT

Acrimoney ran a post last October about reloading—that’s hitting the same Ponzi victim twice. Now with some Madoff victims losing the spread between a twenty and fifty cents recovery, I wonder if we’re seeing more of the same. Is it savvy investing or is there a functional equivalent of expert networks in the Ponzi world?

Acrimoney ran a post last October about reloading—that’s hitting the same Ponzi victim twice. Now with some Madoff victims losing the spread between a twenty and fifty cents recovery, I wonder if we’re seeing more of the same. Is it savvy investing or is there a functional equivalent of expert networks in the Ponzi world?

During my years in wealth management, I kept my eyes and ears open for financial fraud. Protecting clients was the name of the game. And many of my professional observations about fraud now appear in Top Producer—a novel about a Ponzi scheme I sold to my publisher twelve months before Madoff confessed in December 2008.

So how can we spot Ponzi schemes before getting sucked in?

Here are the red flags I published on The Huffington Post last year. My top ten list won’t make Letterman. But the purpose isn’t to be funny. It’s to help you identify the bad guys through “touch and feel” rather than in-depth knowledge of the capital markets.

Step One: Don’t ask questions.

Step Two: Wire $100 million to outside bank account.

Step Three: Repeat as necessary.

60 Minutes: “Do you have any friends?”
Marc Dreier: “Now? It doesn’t seem so.”