Madoff’s Ponzi Scheme
Apparently, there were those who raised concerns or were otherwise avoided the lure of easy money presented by Madoff’s Hedge Fund Ponzi scheme:
“Jake Walthour, a principal at the hedge fund consulting firm Aksia LLC, said his firm was hired to investigate Madoff’s business dealings by a potential investor several years ago.The probe raised several red flags, he said. Madoff’s returns were “abnormally smooth” from month to month and had none of the volatility usually associated with stock investments. It seemed impossible to replicate his investment strategy or verify his track record. Madoff claimed to be moving as much as $13 billion in and out of the market every month but “no one on the street could verify it or even see his footprints,” Walthour said. “That organization was incredibly secretive.”
He only issued simple paper reports to investors, not detailed electronic data streams that indicate how those investments are doing. There were few if any outsiders involved in his business. His auditor was a tiny accounting firm in Rockland County that no one had ever heard of before. “We decided there are several scenarios here, one of which is, this could be a Ponzi scheme,” Walthour said. “None of our clients invested.”
One of the oldest rules involving money: If it sounds too good to be true, it probably is.
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