Can people ever be sure they won’t be swindled by the next Bernie Madoff?
Never. But we overestimate our ability to recognize risk, and to make gut judgments about who’s trustworthy. If we’re going to invest on trust, then invest in an arena that’s as tightly regulated as possible. Remember: Madoff ran an unregistered secret hedge fund.
You’ve always felt that Ruth Madoff and her sons had no knowledge of Madoff’s Ponzi scheme. Why?
When her husband confessed [in Dec. 2008], ‘I’m running a Ponzi scheme,’ her stunned reaction was, ‘What’s a Ponzi scheme?’ Neither son ever believed their mother knew anything about it. It’s inconceivable Madoff would have relied on them.
Why is that?
The emotional logic did not make sense to me from the start. The circumstantial evidence never added up to guilty knowledge. What we’ve learned about their personalities and their memories of those days bears that out.
So you feel their new denials are completely credible?
Their task is very difficult: People expect them to prove a negative – prove you didn’t know then something you do know now. None of us could do that! I don’t know that they’ll ever win the public’s agreement with that.
So you want to say to skeptics?
If you think they’re guilty, then prove it. Ask any dumped spouse: Every family has secrets. There are tons of examples of people who have kept remarkable secrets from their nearest and dearest, out of shame, embarrassment, conventionality.