Spit When You Say, "Madoff"; How Palm Beach's ultrarich are recovering

Palm Beach people are defined as much by the company they keep as by the companies they own. To really be somebody, it's not enough simply to have a fat wallet. You have to donate to the right charities, belong to the right club, and, then, to the exclusive club within the club. Just so, to be one of Madoff's marks, you first had to be one of his investors—which wasn't easy.

Many of the fraudster's biggest investors—European industrialists, South American socialites, well-connected American businesspeople—believed that getting Madoff to manage their money was like gaining admittance to a hoity-toity club. They knew that money and social cachet could afford them access to exclusive services and experiences—private jets, club seats at sporting events, personal shoppers, invitations to state dinners. Similarly, many believed a high fabulousness quotient entitled them to Madoff's too-good-to-be-true service—consistent market-beating returns without volatility and, astonishingly, without big charges. On the beach a few miles south of Palm Beach, I ran into a hedge-fund manager who was mystified that nobody caught on—not because of the steady returns but because of the apparently low cost. "Madoff didn't charge any fees!" he practically yelled, piercing the calm of the gentle waves. And nobody on Wall Street—from shoe-shiners to CEOs of investment banks—does anything without collecting a fee. Mutual funds, which try to beat the market but mostly fall short, charge 1 percent to 2 percent management fees. Hedge funds, which are supposed to beat the market but usually end up matching it, take management fees of 2 percent plus 20 percent of the profits. Madoff charged nada. (The theory was that he paid himself by executing clients' trades through his own brokerage firm.)

As a result, in Palm Beach people are defined as much by the company they keep as by the companies they own. To really be somebody, it's not enough simply to have a fat wallet. You have to donate to the right charities, belong to the right club, and, then, to the exclusive club within the club.

Poor saps might have saved billions by reading C.S Lewis' short essay "The Inner Ring ( www.geocities.com/bigcslewisfan ):

"If you want to be made free of a certain circle for some wholesome reason-if, say, you want to join a musical society because you really like music-then there is a possibility of satisfaction. You may find yourself playing in a quartet and you may enjoy it. But if all you want is to be in the know, your pleasure will be short-lived. The circle cannot have from within the charm it had from outside. By the very act of admitting you it has lost its magic. Once the first novelty is worn off the members of this circle will be no more interesting than your old friends. Why should they be? You were not looking for virtue or kindness or loyalty or humor or learning or wit or any of the things that can be really enjoyed. You merely wanted to be "in." And that is a pleasure that cannot last. As soon as your new associates have been staled to you by custom, you will be looking for another Ring. The rainbow's end will still be ahead of you. The old Ring will now be only the drab background for your endeavor to enter the new one.

"And you will always find them hard to enter, for a reason you very well know. You yourself once you are in, want to make it hard for the next entrant, just as those who are already in made it hard for you. Naturally. In any wholesome group of people which holds together for a good purpose, the exclusions are in a sense accidental. Three or four people who are together for the sake of some piece of work exclude others because there is work only for so many or because the others can't in fact do it. Your little musical group limits its numbers because the rooms they meet in are only so big. But your genuine Inner Ring exists for exclusion. There'd be no fun if there were no outsiders. The invisible line would have no meaning unless most people were on the wrong side of it. Exclusion is no accident: it is the essence.

The quest of the Inner Ring will break your hearts unless you break it."

Madoff's investors who obstructed and delayed US justice played a huge role in assigning guilt in this scam. L/E is looking at the legal parameters of prosecutable crimes including collusion, making false statements to federal officials, obstructing proceedings before federal agencies, conspiracy, and obstructing and delaying US justice.........all felonies.

Ironically, the very same wealthy people he was scamming rushed to Madoff's defense whenever fraud issues were raised. One financier (of Jewish heritage) who sounded the alarm about Madoff was accused of being anti-Semitic..... by Madoff's investors.

BGRND The 2005 Markopolis Report to the SEC raised the fraud issues and yet the SEC turned a blind eye.... The SEC backed-off investigating Madoff b/c SEC investigators risked losing their jobs if they zeroed in on Madoff.

In the ranks of L/E, it is NOT advisable to imply people of Jewish heritage are doing something illegal---even moreso, it is a career killer to suggest it. FBI agents have been lacerated and condemned----even losing their jobs.

Madoff's concentrating his efforts on religious-affinity investors certainly validates this---Madoff seemed to know L/E dared not suggest he was doing something illegal.

BTW, this applies to all facets of government. Cascading stories of mega-wealthy Madoff investors living lives of luxury inside posh gated communities coast-to-coast, must be especially painful---b/c the US Census Bureau was asked to stop reporting its findings that Jewish-Americans are the nation's wealthiest.

Our cowardly politicians also defended the scam---fearful of losing big buck campaign donations and voting blocs they assiduously court.

News clips of supremely confident Madoff’s smug, smirking face as he languidly strolls to his penthouse from the courthouse, fitted with an ankle monitor----speak volumes. Even after being nailed as a crook, Madoff gets kid glove treatment; confinement to his luxe penthouse rather than being locked-up behind bars, where he belongs.

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Those of us forced to cleanup Madoff's mess demand L/E release all records detailing the number of times and places his investors played the anti-Semitic card to wave off investigations of Madoff. We demand to know how many times Madoffians caused L/E investigators to lose their jobs for going after Madoff. Investors who colluded to obstruct and delay US justice played a huge role in assigning guilt in this scam.

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