I've been pondering why alleged mega-swindler Bernard L. Madoff had such a smirk on his face as he left the Manhattan federal court last week. If you've seen the picture in the newspaper or seen the tape on television news, you know the expression to which I'm referring. The man who allegedly stole from the rich, but neglected to give to the poor - thus failing the Robin Hood test - has been nabbed. Why the arrogance from an accused master con man who is now wearing an electronic monitor ankle bracelet, under house arrest in his $7 million East 64th Street penthouse while waiting for trial on charges that he bilked legions of investors of something in the neighborhood of $50 billion?
Mr. Madoff has to be somewhat humiliated to be put in this position. Who would ever want his own sons ratting their father out to the authorities? He surely must be sorry to have embarrassed his wife, Ruth, who had to agree to put up their three multimillion-dollar residences for his $10 million bond and turn over her passport as well as his. He's 70 years old, and if the markets hadn't turned sour, he could have kept this up the rest of his life. At least he's not in the slammer, elbow to elbow with other accused felons at Rikers Island. They don't treat big-shot white-collar criminals like that.
Congress is going to investigate why the Securities and Exchange Commission never caught on to the Ponzi scheme Mr. Madoff reportedly concocted, even though it had been tipped off as to what was going on. What a waste of taxpayer dollars those people are. All those government accountants and not one of them blew the whistle on one of the biggest scams in history. Ha. Of course, as Bernie himself joked in a meeting last year, "I've enjoyed a very close relationship with the SEC brass. In fact, my niece even married one."
That niece, Shana Madoff Swanson, lost a bundle, too. You'd think she'd have been more careful with her family money since she was in charge of compliance at her uncle's firm. Her husband, Eric Swanson, was a top official at the SEC until 2006. The federal agency, which employs more than 3,000 people, is supposed to regulate financial firms, but as we've seen in this case and others, it does an incredibly bad job of doing so. SEC Chairman Christopher Cox has ordered a review of the agency's handling of Mr. Madoff's firm, but says "thus far" no wrongdoing by SEC personnel has been uncovered. Count me among the reassured.
The secret to pulling off any kind of scam is to appeal to greed. People will believe all sorts of preposterous things. Think of all the people without much income at all who were tricked into buying toxic mortgages on the premise that house prices would do nothing in the future except go up. Wall Street sharpies then bundled these things up, called them "securities" and sold them to banks all over the world. How are they any more moral than Bernie?
The trick he mastered was to promise relatively little, a guaranteed 10 percent a year from stocks. Even though that's not actually possible, people like to think they're dealing with somebody with real "inside" knowledge who can accomplish the impossible. Another key was to turn away people without several millions to "invest." This gave the illusion of membership in an exclusive club. To get the "Madoff bond," as it came to be known, you needed to pony up a lot of money.
Thinking about that picture and his expressions, I believe Mr. Madoff is saying, in effect, "I am what I am, and I've done what I've done, and all those cameras shoved in my face and questions yelled in my ears won't change a thing."
Maybe that's why he's smirking. You want to avoid getting scammed? Here's my advice, something your father might have told you: If something seems too good to be true, it probably - indeed, almost certainly - is.
Ron Smith can be heard weekdays, 3 p.m. to 6 p.m., on 1090 WBAL-AM and WBAL.com. His column appears Wednesdays in The Baltimore Sun. His e-mail is firstname.lastname@example.org.