Just when the press had some downtime in covering the Madoff scandal, comes another story of financial misdeeds, this one involving the almost-mythical character of one "Sir" Robert Allen Stanford. Apparently, Mr. Stanford has swindled investors out of around $8 billion. Now, about the only thing the press loves more than a good Ponzi-scheme story is covering the poor, poor victims of these alleged frauds. The Stanford story is ripe with "victims."
A Reuters article on Stanford had this to say:
Investors such as Kelly Dehay, a realtor, showed up at the office in Houston on Tuesday to ask about their funds, only to be turned away at the door.
Dehay said his Stanford broker sold him a CD held by SIB, promising returns above 8 percent. "I started planning for my retirement a long time ago," Dehay said. "I feel very betrayed."
Now, I'm not simply a nihilist (well, not simply), but it's pretty hard to feel any sympathy for the people who've invested with Stanford, Madoff, and others to be named later (thanks, George W. Bush and Republicans for ramming deregulation down our throats!). Why did these people choose to invest their money with the disreputable financial wunderkinds? Likely, Ms. Dehayand probably everyone else who invested in Stanford's insanely high-yield certificates of depositbelieved that investing her money with SIB would get her even more profit than going with a traditional bank or investment firm. Thus, what we see at the root of these "victims" is greed, plain and simple.
Instead of following a conservative business model and investing their money with solid returns over a finite period of time, the "victims" thought they could usurp traditional rules of investing and thereby make more money; they thought they knew more than the average person, that they were savvier than their neighbors who were investing with TD Ameritrade or JP Morgan Chase.
Rather than doing their homework and looking at Stanford's returns and realizing the yield was totally out of whack with typical CDs, they decided to put blinders on and make as much cash as possible out of their investment, rules and legality be damned. Why make 3 percent when you can make 8 percent illegally?
Now, is Stanford to blame? Sure he is. He's nothing but a common thug (oops, "allegedly" a common thug). But let's not fall all over ourselves weeping about the "victims" of this Ponzi scheme, or any other. If Standford's investors weren't aware of the illegal activities going on, they should have. Some hints? Uh, his claim that he's related to the founder of Stanford University; the school has denied that he's of the same family.
Personally, I'm the grandson of famous artist Louise Bourgeois, so all of you out there, please kiss my ass.
All these investors really needed to do to avoid being swindled was to look at SIB's rate of return.
"Hmmm. Wow, Mr. Stanford, dude, this chart looks like it was made by Wile E. Coyote. The rate of return just goes up and up. Whatever. Seems awesome to me. Where do I sign?"
The poor saps were lured into this Ponzi scheme with the elixir of unrealistic riches; their thirst for off-the-charts financial gains blinded them to the obvious scam going on right under their noses.
If we really want to weep for victims of financial chicanery, how about we start with the thousand of workers losing their jobs due to extreme financial mismanagement?