By now we are all aware of Bernard Madoff and his fabulous Ponzi Scheme where he ripped off something like $50 billion. Some people lost their entire fortunes, while others lost their retirement funds. There were non-profit organizations that also lost everything. There were ramifications around the world. Definitely not a pretty picture.
Whether Madoff acted alone or had help from associates is still a matter of conjecture. I believe others did pitch in on the Ponzi plan. One elderly man could hardly have done so much damage all by himself. No matter, the questions that arise in the immediate sense are these. Didn’t anyone catch on to Madoff earlier in his scheme? And why did so many people put all of their proverbial eggs in one basket?
To the first question, the answer is yes, people did suspect foul play. In fact, experts and financial whizz kids could not see how Madoff offered consistent returns, even in volatile markets. As for the eggs and basket scenario, some investors led with blind faith and the rest never were aware their business managers were not diversifying portfolios but turning all the money over to Madoff.
We can go on about Madoff, but for the rest of us who weren’t victimized by him, we have to ask ourselves, in our business and investment situations, are we taking the necessary precautions. The short answer is no. People do not perform the due diligence or the business research necessary to keep themselves out of trouble.
There are many background checks that will service businesses that are looking to a new venture with another company or determining if a potential client is whole or not besieged by creditors, civil lawsuits and, in worst cases, criminal charges. With the economy as bad as it is, people and the companies they run can resort to desperate actions. These actions can make you the victim, if you do not perform adequate due diligence. At the very least a business credit report is advisable. A variety of civil searches is cost effective and can save you much loss and the embarrassment of trying to explain your sad story in the local paper.
Take a lesson from the Madoff debacle. Do your corporate research. Check out potential clients, or venture partners. With so much financial fraud and assorted chicanery going on out there, you can save yourself a lot of grief.
Check them out, before you invest your money.
