(Heavy sigh)

Yet to safeguard the laws and constitution of the United States of America, laws meant to protect ordinary people, those same resources provided by law have to be made available to persons we dislike.

Thats part of what led so many to take a chance homesteading, and, in Florida, doing it despite hurricanes, malaria, and yellow fever.

Fallen Lehman Brothers Chief Executive Richard Fuld reportedly sold his $13.3 million mansion to his wife for just $100 last November.

Whether this falls within the rules of evidence as being nothing more than a perfectly normal real estate transaction remains to be seen.

See Google search results here,as of January 29:

http://www.google.com/search?hl=en&ie=ISO-8859-1&q=fuld+lehman+mansion&btnG=Google+Search

One of the San Mateo County (California) Supervisors had something to say about it.

http://www.mercurynews.com/peninsula/ci_11570728

http://www.nytimes.com/2008/12/28/business/28every.html?em

(quote)By BEN STEIN
Published: December 26, 2008

ABOUT two years ago, a little delegation from a major investment bank arrived at my home in Beverly Hills. These nice young people were from the bank’s “wealth management division.” I told them straight away that I didn’t have anywhere near enough wealth to make their trip worth their time, but they smilingly insisted that we could help each other….(unquote)

Who were the ‘nice young people’ in this little delegation?

Is it even kosher for investment professionals to send outreach teams, unsolicited, to someone’s home, as Mr Stein describes?

This sounds yet more like the behavior of a cult rather than a professional investment firm.

(It would be especially good to get the names of these nice young people so that we can get ‘em into a room one by one, and depose them. How were they selected for this job? Who selected them? Who trained them? Who provided the room and training materials? Inquiring minds need to know.

Also…how did they select their targets? How is it that Mr Stein was selected and not other people? Were the nice young people working door to door, or did they work from membership lists from country clubs? Did any of them work for a bank, covertly list clients who had large accounts and then pass that information on to Madoff? We need to identify them and subpoena them and depose them. DB)

Mr Stein’s entire article is worth reading. He makes this choice comment:

“By the same token, I belong to a number of country and town clubs. In all of my years at them, I have never gotten an investing tip that made money. In fact, as far as I can recall, I have never gotten a tip from any source that made me money, except for my former agent’s wife mentioning Berkshire Hathaway, Mr. Buffett’s company, 30 years ago.”

Additional commentary on Mr Stein’s article is available here:

http://www.google.com/search?hl=en&ie=ISO-8859-1&as_q=madoff+genius&as_epq=ben+stein&as_oq=&as_eq=&num=10&lr=&as_filetype=&ft=i&as_sitesearch=&as_qdr=all&as_rights=&as_occt=any&cr=&as_nlo=&as_nhi=&safe=images

I’m sure we will learn much more about Madoff’s ability to garner trust in years to come. He obviously had lots of charisma. I imagine the first book about him will be out early next summer and we will learn much, much more.

‘Trust but verify’–this seems like such an obvious thing to do.

The problem is that we humans are social animals and this is both our glory and our danger.

There are persons who know how to forge emotional bonds with us long, long before the question of money and investment even comes up.

When that emotional bond is forged, and it is often forged with the utmost finesse, fact checking becomes then becomes unthinkable.

Or the mere thought of doing a background check makes a person feel shitty for even imagining it.

Someone needs to do a study on folie a deux or codependence within investment and business relations.

Again, some of these set ups seem similar to personality cults. The passion of belief makes persons like Bernie Madoff seem more like cult gurus than businessmen.

So that is the thing to explore–what it is about some persons and certain kinds of social networking that lead us to go unconscious, regress and not fact check?

For fact checking is done at the adult cognitive level. When someone get get us to regress to a more childlike cognitive and emotional state, we cannot access the skills and awareness needed to remember there is such a thing as fact checking.

They have identified factors that cause psychotherapists to be at risk of committing boundary violations with clients.

The working alliance between therapist and counselee takes place within a boundaried relationship–aka ‘the container.’ This allows the client to regress safetly and then regain autonomy at the end of the 50 minute hour and resume normal adult function after leaving the session.

It might be necessary for financial advisors to learn from Madoff by giving attention to boundary issues–it might be a good subject to add to business school curricula.

For after a lot of messy situations, psychotherapists have learned that what are termed ‘dual relationships’–are an important risk factor for boundary blurring and therapist malfeasance.

Examples of dual relationships are becoming friends with clients outside of the consulting room, or a therapist getting into business a relationship with a clients, or worse yet, having an intimate relationship with a client.

This kind of boundary blurring creates such high risk of provider malfeasance that some dual relationships between therapists and clients are forbidden by law, or are at least frowned upon by wise colleagues.

Therapists who are heedless of boundaries and who deny the actual power imbalance between themselves and clients, are the ones most apt to get into trouble.

It may be that Mr Madoff had a history of seeking out dual relationships and that he was unwilling to see himself as a fiduciary accountable to an ethos of care. This attitude requires a stable adult ego—very difficult for someone so ego involved that he reportedly did not even record his own golfing performance in a realistic manner.

One might identify similar risk factors amongst investment relations that go sour.

Just muttering to myself. This is an area that is wide open for future researchers.

We would need an interdisciplinary approach between research psychologists and financial experts.

C

I think the Madoff scandal will resonate for decades within those groups that were affected most. Certainly, misplaced trust was an issue, but I suspect the guy knew how to play on people as you suggested. People thought he had magic so they did not want to rock the boat by asking too many questions. Trust, but verify is still a solid rule to follow.

http://www.google.com/search?hl=en&ie=ISO-8859-1&q=madoff+golf&btnG=Google+Search

The guy’s ego couldnt tolerate even the humbling discipline of honestly recording fluctuations in his own performance at golf.

The Victorians may have been wiser than we give them credit for when they linked sports with character.

(quote)Mr. Madoff actually kicked people out his fund if they asked too many questions…(unquote)

This resembles how personality cults operate. Am not kidding. For a hobby, I study such groups.

One trick used by some scamster gurus or cult leaders is at times to refuse donations, saying that the donor ‘isnt ready yet’ or doesnt meet some mysterious standard set by the cult leader.

This makes it seem a rare honor to give the person money. Later, the scamster guru may allow the eager donor give an even *larger* sum of money then before!

In one news article a comment was made that investors must beware of what are termed ‘affinity networks’ and Mr Madoff functioned within such a context, making it seem a rare honor and a source of prestige to invest with him.

The same reporter quoted someone as saying that all too often similar such scams are floated via trust basted networks such as church congregations, situations where one feels shameful even to have doubts about such a person, a situation where one thinks of it as ‘family.’