Madoff and Investment Schemes: “Tremendous Perversion” and “A Question of Ethics”/From Utah to Russia

WIDE OPEN SPACES

Rugged mountains, wide-open skies, and no problem with motorway noise. This is the life in the outback.

Life in places like the nature parks of Utah.

UNITING THE SOUL WITH NATURE

Lots of desk jockies like to head to the wilds to take the fresh air and detoxify their minds. And sometimes they get more adventure than they planned on:

"Between 2001 and 2005, there were more than 1,100 search and rescue operations at National Park Service units in the state, according to a new study.

...

HOSTILE ENVIRONMENT

The biggest sources of trouble? Take your pick from fatigue, heat, darkness, insufficient equipment and not wearing the proper clothing." (Mike Stark, Study: Bad judgment leads to peril in Utah parks, AP, 8 Jan 2009)

There are good reasons why these places have so much peace and quiet -- they're hostile environments for human life. The good land for crops gets taken first. Then the pasture land goes. And what's left tends to be "mountain property". Not too much water or food.

But lots of peace and quiet.

When the city boys get tired or overheated, they just may need a rescue. And such luck for them: the park staff generally have the time and helicopters to help them out!

Well, you can get hot almost anywhere in summer -- the beach, the city park, driving around. Tired -- make that sport or work. Not too unusual either.

But when you go far away from basic resources like water, food, and your wheels -- well, its a matter of judgment.

The most common culprit, though, was bad judgment or lack of good information, according to the study headed by Travis Heggie, an assistant professor at the University of North Dakota. (Stark, supra) (emphasis added)

These people go into dangerous, hostile environments with stylish outdoor clothing, but a certain lack of knowledge and experience.

EDUCATIONAL EFFORT NEEDED - WARN THE UNWARY

So what to do?

He's hoping the park service will do more — especially on the Web — to educate visitors about how to stay out of trouble in the parks.

"The best time to get people the safety message is before they leave the house," Heggie said. (Stark, supra) (emphasis added)

Where do people get their information these days? So often from the web. And when do people need the warning? Before they even get close to trouble!

MAYBE FATIGUE, OR HEAT?

Mr. Allan Goldstein used to be a Jewish investor. He trusted "Wall Street figure Bernard Madoff" with his money. (Marcy Gordon, Madoff scandal, SEC role under scrutiny, AP, 6 Jan 2009)

"Wall Street figure"? What does that mean?

Maybe this is a brave new breed. Say, the product of genetic engineering.

FINANCE TALENT OUT OF RUSSIA

Well, genetic engineering yes, but new? No. Been around for a while.

The processes that brought the Mr. Madoff to the pinnacle of his game started in Russia many years ago.

Before the Roman empire (globalization), there are no evidences of Jews being present in Central Europe. But when they did come, they could own ground, and worked as tax farmers, bankers, and merchants. (Arno Lustiger, Rotbuch: Stalin und die Juden, Aufbau, 1998, p. 21)

Owing to the peculiar ethics associated with their religion, the Roman Catholic church tried to keep them in check, but the Jews cultivated the princes. Charlemagne took them under his protection, and they got a lot of "schemes" going. (Lustiger, p. 21)

THEN AS NOW

Bernard Madoff is an "accused swindler" who "confessed last month to running a Ponzi scheme for many years in which early investors were paid with the money of new clients, piling up losses of $50 billion." (Grant McCool, U.S. presses to jail Madoff on diamonds, watches mail, Reuters, 7 Jan 2009)

AND THE INVESTORS SUFFERED

There were "thousands of investors who trusted Wall Street figure Bernard Madoff with their money while counting on federal regulators to protect the investing public from fraud." (Gordon, supra)

Since the princes so often were in debt to the Jews, the government regulation of the Ponzi schemes (and other assorted frauds) tended to be weak.

The Securities and Exchange Commission learned about what it describes as one of the largest securities frauds in history when Bernard L. Madoff volunteered his confession, raising questions about the agency's ability to police the financial marketplace.

The SEC had the authority to investigate Madoff's investment business, which managed billions of dollars for wealthy investors and philanthropies. Financial analysts raised concerns about Madoff's practices repeatedly over the past decade, including a 1999 letter to the SEC that accused Madoff of running a Ponzi scheme. But the agency did not conduct even a routine examination of the investment business until last week. (Binyamin Appelbaum and David S. Hilzenrath, SEC Didn't Act on Madoff Tips - Regulator Was Warned About Possible Fraud as Early as 1999, Washington Post, 16 Dec 2008 ) (emphasis added)

OUTBURSTS OF PUBLIC ANGER

From time to time, when the outrages were especially severe, the fleeced investors took it out on the "financiers" ("Wall Street figures"). For example, during the time of the first crusade, more than 10 000 Jews were executed in Central Europe (Lustiger, p. 21) on grounds of "schemes" (usury, fraud, vice, etc.).

Jewish merchants even set up shop in Kiev.

WHEN A PONZI SCHEME GOES SOUR

The power of the Jews was great, but when the Mongols came in the 1200s, they liquidated the Jewish settlements in their way. (Lustiger, p. 22)

ALL A QUESTION OF ETHICS

"One has to see what this guy has done as a tremendous perversion of doing justice," said John R. Fishel, president of the Jewish Federation of Greater Los Angeles, which lost $6.4 million of its endowment. "This is a question of ethics." (Duke Helfand, Madoff's alleged misdeeds spark feelings of betrayal, outrage in L.A.'s Jewish community, Los Angeles Times, 24 Dec 2008 )(emphasis added)

Russian Tsar Ivan III stopped the Mongols. When the Jewish "Wall Street figures" heard it was safe to go back to their old feeding grounds, they wasted no time. However, they discovered that the Russian princes had no interest in letting Jews back in. As Mr. Fishel puts it, there had been "tremendous perversion". Something the Russian tsars didn't want in their empire.

A "QUESTION OF ETHICS"

Ivan IV was a real Russian. He didn’t allow Christians to judaize, and, of course, didn’t allow Jews into the country. (Lustiger, p. 22)

Needless to say, these great Russian princes had no problems with “revolutions”, or “communists”.

But after a while, princes came to power in Russia who had big problems with "bad judgment or lack of good information" (per Stark, supra)

A DANGEROUS ENVIRONMENT

They were operating in a hostile environment. And they "ran into problems" (Stark, supra) which resulted in the bloody end of the Empire.

"Often, though, visitors don't fully understand that they're entering a largely uncontrolled environment — out of cell phone range and away from city amenities — where they're responsible for their own safety." (Stark, supra)(emphasis added)

WARNING FLAGS PUSHED ASIDE

"Somewhere inside of me was the thought that this was a regulated industry. It wasn't. The warning flags were just pushed aside" (Gordon, supra)(emphasis added)

"SURELY WE CAN DO BUSINESS WITH THESE PEOPLE"

The Russian princes had endless wealth, and ruled a huge empire. They had even stopped the Mongols.

"One of the common themes is people overestimate their ability," said Loren Greenway, director of the Salt Lake City-based Academy of Wilderness Medicine (Stark, supra)(emphasis added)

LOTS OF ABILITY

Like, say, experienced investors. Example: Rene-Thierry Magon de la Villehuchet.

"The French financier who killed himself after losing more than $1 billion of his clients' investments to Bernard Madoff's alleged fraud also saw his own family's money disappear, his older brother told The Associated Press on Friday.

Rene-Thierry Magon de la Villehuchet and his business partner Patrick Littaye were "totally ruined," Bertrand Magon de la Villehuchet said in a telephone interview from his home on Paris' chic Place des Vosges.

BUT IGNORED THE WARNING SIGNS AND DID BUSINESS WITH JEW

Bertrand, 74, said his brother had "invested his own fortune" with Madoff - up to several tens of millions of dollars - along with money from friends and family.

Rene-Thierry, 65, was found dead at his desk in the New York office of Access International Advisors on Tuesday, both of his wrists slashed. A box cutter and a bottle of sleeping pills lay nearby. Police say it was a suicide.

Rene-Thierry had begun investing with Madoff three or four years ago and had a total of $1.4 billion invested with him when the scandal came crashing down, according to his brother.

"At first he thought he'd be able to get the money back. He was very determined. Gradually he realized he wouldn't be able to," Bertrand said.

HE TRUSTED THE JEW

"He trusted Madoff completely," he said.

...

AND HE PAID THE PRICE

Rene-Thierry's fund was among the biggest losers in the scheme, and one of a handful to get taken for more than $1 billion.

LIKE OTHER PEOPLE HAVE IN THE PAST, AND WILL IN THE FUTURE

Famous names reported to have lost their investment with him include L'Oreal cosmetic empire heiress Lilliane Bettencourt, listed by Forbes as the world's richest woman. Bertrand declined to identify any of his brother's investors outside the family." (Madoff Suicide Investor Lost Own Money Too / Rene-Thierry Magon de la Villehuchet's Brother Says Family Was Also Bilked, CBS, 26 Dec 2008 )(emphasis added)

GET PREPARED AND RESPOND PROPERLY

Other common problems are people becoming disoriented and not responding properly, hikers leaving too late and getting caught in the dark, and equipment failures. He said those going into the wild need to be better prepared in wilderness medicine and better educated about where they're going.

"If you don't even appreciate the risks, then there's no way for you to prepare," Greenway said. (Stark, supra)(emphasis added)

NOW HEAR THIS

There were a lot of investors out there. They saw the warning signs, but got disoriented.

"He trusted Madoff completely," (CBS, supra)

"The warning flags were just pushed aside" (Gordon, supra)(emphasis added)

Even after people made the first mistake of trusting the Jew and doing business with him, it still wasn't a total catastrophe.

But then they had the problem of "leaving too late". (Stark, supra) A problem which so often leads to "getting caught in the dark". (id.)

""If you don't even appreciate the risks, then there's no way for you to prepare," Greenway said." (Stark, supra)(emphasis added)

So read this story, and read it twice.

Not neglecting to read all the other fine articles at this site.

"We do our best to give them the most information as we can on the front end," said Schwartz

Bonnie Schwartz is Zion's chief ranger. (Stark, supra)