‘How Do I Know You’re Not Madoff?’Here’s how to build trust when prospective clients question the credibility of you and your firm.
We are just about far enough beyond America’s most recent major Ponzi scheme to wonder if there are people who aren’t aware of the scheme at all. But nearly two decades later, being prepared to answer for money manager Bernard Madoff’s sordid tale still remains important for all financial advisers. I was recently reminded of this when a client and professional peer asked me, “How do I know you’re not Madoff?”
First, a Brief Recap
In 2008, Madoff, former chairman of the Nasdaq Stock Market, was charged with running a longstanding Ponzi scheme after his two sons turned him in. Both sons worked for their dad’s money management company, on another floor, and claimed they knew nothing about the years-long fraud until then. After duping wealthy people worldwide, including a few celebrities, Madoff had nowhere to hide. In 2009, he pleaded guilty to 11 felony charges, including securities fraud, wire fraud, mail fraud and money laundering.
Madoff was caught when he could no longer “pay clients” their requested redemptions — not even by taking in money from newer customers. He was convicted in 2009 and sentenced at age 71 to the maximum penalty of 150 years in prison. His attempts at gaining a presidential pardon and early release all failed.
Read more: ‘How Do I Know You’re Not Madoff?’ – Rethinking65
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