No, I’m not carrying Madoff’s love child. And I didn’t have money invested in his scheme. But, I was once scammed – big time – by a scoundrel masquerading as a friend. Madoff has forced me to dredge up that unpleasant episode, buried deep for over a decade.
A little background
My grandfather started Globe Feather and Down Co. in Chicago in early 20th century Chicago. It produced high quality pillows of feathers and down, as well as quilts, sleeping bags, and down coats. Merchandise was shipped to fine stores all over the country, including Marshall Field’s, May Co., Jordan Marsh, The Company Store, Eddie Bauer, and Burdine’s.
My grandfather also set up small trust funds for his grandchildren. They were for our children’s education and for our own retirement, if we were careful. Usually, funds become available when the beneficiary reaches the age of 21. My grandfather kept ours out of reach a lot longer. Perhaps he worried about our poor judgment or financial naïveté; he happened to be right – at least in my case.
Around fifteen years ago, a ‘friend’ we’ll call Max took a sudden interest in our finances. In a good way, of course. He told Rafi and me about his track record and brought along documentation to back up his claims. He earnestly promised that he could increase the size of our portfolio without added risk. Our blue-chip stocks were good, he said, but overly conservative. Please understand: Rafi and I were neither greedy nor particularly materialistic; we harbored no secret yen for fancy cars or a pumped-up lifestyle. And this was not ‘mad money.’ Max understood; he promised to treat our nest egg as if it were his own. How prophetic his words were.
Max kept in constant contact. I was at home with Mick, then a toddler. Max would bicycle over and work the phone from my kitchen table. I assumed this was kosher, because I trusted Max, and ‘knew’ he cared about my family and me. I reasoned, would he be stupid enough to do it right in front of me if it weren’t okay? Max needed to relocate to the East Coast, for personal reasons. Before he left, he assured us that he could work on our account from there. Within several years, our funds had dwindled alarmingly. But, each time a statement arrived, Max was poised with a perfectly logical explanation for the delayed upturn. He became ill and later died. Max knew that he was dying, yet he continued to do transactions that ill served us. I still find this astounding.
Once the dust settled and we got past the initial shock, we got mad. It’s always easier to spot red flags in retrospect. We paid a lawyer so that we could appear before the arbitration board. This was another exercise in futility. One of his office mates told me: “The way Max treated your portfolio, I was certain that you were independently wealthy.” I asked him to tell this to his bosses and/or the arbitration board. He declined. He mentioned in one of our conversations that the mayor had recently honored him for stepping up to help a stranger. He was very proud of that award. Yet, he felt no compunction to help me out by simply telling the truth. Clearly, his much-vaunted concern for the public stopped at his office door.
This whole period was packed with one humiliation after another. Initially, we felt stupid for trusting Max and not seeing what was going on. I had to go to my daughters’ school and explain about our financial difficulties. Luckily for us, my brother John stepped in with $6,000 for the remainder of that year’s tuition. During the arbitration proceedings, we were ridiculed and attacked. No one seemed too interested in our story; they were happy to side with their Wall St. colleagues.
Throughout this time, I was in a state of unremitting shock and disbelief. Yet, I was also sure that we would ultimately prevail. After all, we had been screwed. The way we were treated reminds me of what can happen to rape victims. The police and legal system often treat them disrespectfully, even accusing them of complicity in the crime. What were you wearing? What did you say? Why were you out? When Sarah Palin was Mayor of Wasilla, rape victims had to pay for their own rape kits, The Anchorage Daily News reported recently. Did victims of other crimes in Wasilla have to pick up the tab for any aspect of the ensuing investigation?
When something awful happens, it’s natural to look for reasons. A disturbing meme claims that Madoff’s victims were greedy; so, essentially, they got what they deserve. Or, the investors are blamed for being rich in the first place. Look at Madoff’s Willing Partners, an op-ed that appeared in the Washington Post over the weekend. I’m quite sure that there were many investment consultants who had to know that Madoff’s unvaryingly good returns were too good to be true.
But, there are also plenty of people out there who are not so fiscally savvy. They put their trust in someone they thought they knew, considered a friend. That argument worked for years with me regarding Max. And, in this case, many transactions went through third parties, so some victims didn’t even know about their own involvement until it was all over. Our country is so polarized that it’s now a crime to be successful. Is it irrelevant that many caught in Madoff’s web of deception were extremely philanthropic? We all lose when universities, hospitals, and the arts, as well as other worthy causes, stumble or fall.
Just two examples
The Fair Food Foundation was fast becoming a major force in the sustainable food sector. And JEHT Foundation focused on “hard to fund issues and populations that people are not very sympathetic to.” This included election reform, my personal favorite, as well as criminal and juvenile justice. Both foundations are shutting down entirely; their funding depended upon Madoff casualties, Jeanne and Ken Levy-Church.
My alma mater, Brandeis University, received generous donations from Carl and Ruth Shapiro, who also contributed heavily to a Boston hospital. The couple lost $145 million through Madoff’s scheme.
In short, Madoff was a major schmuck. As Wall St. tottered, Madoff dealt it a catastrophic blow. He single-handedly revved up more anti-Semitism, both here and abroad. And, he got me to talk publicly about something very personal and painful – my own economic meltdown.