Maddoff: Rotten as Well as Filthy

The Bernard Maddoff scandal didn't shock me. Ponzi schemes go way back, and they'll be with us forever. Regarding the dynamics of this particular case, J.K. Galbraith nailed it when he wrote, years ago, of the tendency to confuse good manners and good tailoring with integrity and intelligence (thanks, Economist). Maddoff made hay with his reputation, but I've known people - been people - with reputation for certain expertise, and noticed that there are no rigorous sanctioning bodies for such things. The reputation-making system can be played (see this Slog entry where I speculate that I could have invented every restaurant in my first book and garnered the same good reviews). In fact, the foundational credo of Chowhound is that one mustn't trust so-called authorities, who are so often naked emperors. Better to go out and do one's own diligence. A skeptical, intrepid attitude helps a person avoid Ponzi schemes as well as bad pizza.

My take was that Maddoff was, at some point, a guy too proud to admit that his vaunted fund was sinking, and who went Ponzi to keep up appearances. This is how many Ponzi schemes come to be, when managers scramble to hide apparent losses under new money as a temporary measure until luck improves and tides turn. It can't work - it never works - but desperate people and shnooks sometimes try. I figured Maddoff had gotten sucked in, and figured he could keep the wheels turning forever...as he nearly did. It wasn't villainous greed or a heart full of larceny so much as an egotistical need to save face and remain The Great Maddoff: big shot, at any expense. I guess the baleful tone of Maddoff's reported confession led me to this interpretation.

But this shocked me. Apparently, when it was all over, and his friends knew they'd lost their life savings and dozens of charities (some of whose boards Maddoff sat on) had gone bust, he was desperately scribbling out $173 million in checks to family members. If the guy had a mustache, he'd have twirled it.