The Biggest Ponzi Scheme

Bernard Madoff admitted yesterday to running a $50B ponzi scheme for a very long time. Basically, what he would do is take money from you or your organization and pay out some money each year, so-called returns on the investment. Anyone who is even remotely intelligent should have noticed something, as his returns were about equal and increased by an equal amount each year. He never had a loss in 10 years.

It seems he made most of his money off his own people, the Jews. He cultivated relationships with Palm Beach and Long Island society and used his contacts at Yeshiva university to get to the money. Several Jewish charities are now going out of business because they had entrusted him with their endowments, which are now gone.

Overall a very strange case, but it brings us back to the maxims:

• If it sounds too good to be true, it probably is.
• Don't put all your eggs in one basket.