Kevin Bacon landed in a huge financial mess in 2008-09. He and Kyra Sedgwick, his wife, are among the host of Hollywood stars cheated by disgraced money manager Bernard Madoff, who admitted to bilking his wealthy clients out of billions of dollars. Madoff ran a $50 billion Ponzi scheme, but was arrested in December of 2008. Some famous names who lost money included Steven Speilberg, John Malkovich, Zsa Zsa Gabor, Elie Wiesel, Larry King Sandy Koufax, Eric Roth, Jeffrey Katzenberg, and Eliot Spitzer.
Bernie Madoff, an financier from the US, performed the biggest Ponzi scheme in the country, defrauded scores of investors, making off with billions of their funds, over a 17 year period, and possibly even longer.
In 2009, Madoff (aged 71) pleaded guilty to a total of 11 federal felony counts, which include securities fraud, mail fraud, perjury, wire fraud, and money laundering. Bernie Madoff was condemned to a 150 year prison term and ordered to forfeit $170 million in assets. The Ponzi scheme was a classic symbol of the greed and dishonesty which has seeped into the culture of Wall Street, even as people languished during the 2008 financial crisis. Madoff’s stature in the industry made it difficult for even the most sophisticated investors to detect his fraud.
The Madoff fraud offers some important lessons. Keep good records, is the moral of the story to be able to provide the forensic accountants with historic records which can always be verified. Investors must diversify but not only in the traditional sense. Diversify among different brokers. Everybody who had invested with Madoff thought that their investments were diversified because there were tech stocks. These were actually commodities stocks. Investors should spread their investments among more than one advisor. It’s never wise to put all your eggs in one basket, to use a time-tested saying. Finally, you can never ask too many questions. Your broker must explain all statements, how he chooses his stocks, and how he invests. Be very careful of whomsoever you allow to manage your hard-earned money.
