Investor's Watchdog.com: Stock, finance and investment protection for investors

It will be hard for Bernard Madoff to think of himself as smart when he’s sitting in a cell in a federal penitentiary.  And no one who has a heart for the victms of schemes like his can admire anything about his fraud.  But, among the community of scam artists, his scheme has, no doubt, attracted admirers who will learn from Madoff’s example. 

A scheme that lasts for perhaps two decades is extraordinary.  The SEC or state regulators usually catch Ponzi operators within two to three years, and often stop them while there is still money left that can be returned to investors.  Twenty years is, indeed, an accomplishment that should guarantee Madoff’s induction into the Scam Operators Hall of Shame.  This post is not intended to praise Madoff, but to point out one aspect of why he was so “successful” for so long, so that investors can better appreciate the risk they run in investing with anyone - whether a stockbroker, investment adviser, or hedge fund manager - without first employing a private investor protection company to do a thorough pre-investment investigation. 

Investor’s Watchdog has blogged on how savvy scam artists promise returns within the realm of reason, rather than the outlandish returns associated with some Ponzi schemes.  That is important for the success of the scheme for two reasons.  First, promising steady returns of between 10 and 12 percent won’t scare away investors who hold to the very dangerous adage, “If it’ sounds too good to be true, it probably is.”  Whereas, promising 30% per year will scare away those people. 

More importantly for the scam operator, advertising a reasonable rate of return allows the scam artist to keep the scam alive for much longer than a scam promising 30% per year.  The scam artist knows that attracting a steady inflow of new investors is his only means of producing the returns he promised.  The scam artist who promises 30% per year puts himself under tremendous pressure to attract new investors at an unsustainable rate, whereas the ‘smart’ scamster promises something that he can deliver through a sustainable inflow of new money.  Madoff is proof of what a ‘smart’ scam artist can do.    

Investors Watchdog helps its clients avoid the nightmare that all of Madoff’s victims are living now.  By putting a pair of SEC-trained eyes on the offering documents and on the people running the ‘investment’ Investor’s Watchdog helps baby boomers and seniors keep what they have worked so hard to save.