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Does Bernie Madoff Have Victims or Accomplices?

Everyone acted surprised when Bernie Madoff's hedge fund was exposed as a Ponzi scheme.  The evidence now suggests that many of Madoff's supposed victims were really co-conspirators.  They weren't victims, they were crooks.  When you invest money in a Ponzi scheme, you reap a return on your investment from subsequent investors.  If you invest $1,000,000 in a Ponzi scheme, you'll earn a 10% return on your investment only if people invest after you.  Old money cheats new money.  If you know that you are earning a profit on your investment because you've invested in a Ponzi scheme, you are a crook.  In this Tech Ticker report, Madoff investors admit that they invested with him because they assumed he was cheating:[W]e're hearing that the smart money KNEW Bernie had to be cheating, because the returns he was generating were impossibly good...continue to full post

Full post as published by Crime & Federalism on December 15, 2008 (boomark / email).