THE BLOG
07/24/2009 05:12 am ET | Updated May 25, 2011

Bernie Madoff: The Man We Love To Hate Had Help

Bernie Madoff will be sentenced on June 29, 2009 by the Hon. Denny Chin, a judge notable for his legal probity as well as his general distaste for white collar crooks. In these difficult times, Madoff has become our ideal villain -- we hiss with hatred when he appears on our television screens, and cheer the anonymous photographer who, when shoved by Madoff, struck him in the chest so hard that it knocked him back two steps and briefly wiped the smirk from his face. Judge Chin's courtroom will be packed with Madoff's victims, a number of whom will be permitted to address the court and seek catharsis by describing the various ways in which Madoff ruined their lives. Many of Madoff's other victims have submitted letters to the court, comparing him with Hitler and Saddam Hussein. So look forward to some major hyperventilation.

It is easy, and fun, to hate Bernie Madoff. Watching his smug countenance as he went to and from from the courthouse to his penthouse (before his bail was revoked) inspired fury. The result of his wrongdoing has been financially catastrophic for many. His cheerful preying on people who trusted him is sociopathic. And watching the jail door slam behind him forever will provide most of us with some seriously needed schadenfruede. Even though Madoff's sentence will exceed the lifespan of even the eldest of the land tortoises, even if no one said another word, people want to go to the courthouse to participate in his punishment.

And yet.

Madoff could not have done most of this without the cooperation of his victims. Like all successful con-men, he did not try to sell his victims on his schemes. No, his victims came to him and begged him, sometimes literally begged him, to take their money. He appealed to people's greed--their desire to make even more money without actually working for it. He appealed to people's sense of exclusivity--"Oh, we have our money with Madoff" sniffed a member of the indolent rich over drinks. "Really!" said the wannabe. "He wouldn't take our investment. Said it was to small and he is only taking major clients." "Well, I'll speak to him about you, see if I can change his mind." Hence, the sheep recruit new sheep and amble them off to the abattoir. OK, so I made up the conversation, but I am pretty sure that is the way it went down. After a while, Madoff probably saw himself as an instrument of financial natural selection--his victims were just too dumb to be trusted with money.

And the greed has not stopped. A while back a woman filed a claim, asserting that Madoff had stolen two million dollars from her. A closer look at the claim revealed that she invested a million dollars with Madoff ten years ago. She received a return of 10% per year, which she drew out annually. Her totally bogus financial statement revealed that, even after receiving a million dollars in payouts, she had a balance of two million. When she discovered that the statement was phony, she claimed a two million dollar loss. Of course, by normal math, she lost nothing except the return she would have realized had she invested with someone legitimate--she put in a million and took out a million over a decade. It is through math like this that we arrive at the $50 billion dollars in loss figure. And when people say they lost "everything" to Madoff, they often have a very different view of "everything" than most of us. I know a couple who lost "everything" as part of the Madoff scam. "Everything" except a $7,000,000 townhouse in one Manhattan's most expensive neighborhoods. Most of Madoff's victims still have more money than you, my dear reader, will ever see in your life. Insert small violin music.

I know that some of his victims were really very nice and decent people, who ended up with Madoff through the advice of friends and family whom they trusted. And some of his victims actually worked for their money, rather than expecting their money to work for them. And these will probably be the victims who are showcased during the two minutes' hate on June 29th. But behind every little old lady who lost her life savings there are multiple, greedy, rich folk who cannot forgive Madoff for the unpardonable sin of showing them that they were not as smart as they thought they were.