Bernard Madoff is a Reason to Conduct Your Business Research

In recent news broadcasts, it was announced that Bernard Madoff admitted his guilt and told he world he was sorry for what he did.   Of course, most of his victims didn’t find his apology of any great value, especially since a good number of them lost millions and millions of dollars.   Their lingering anger is most understandable.   As you watch them testify on the various news programs I think of two things.   The first is what a pity that a sick thief like Madoff could walk off with so much money.  The second is, why didn’t these people check him out more thoroughly before giving him their life savings?

Now I realize that Madoff’s perceived value was so great that someone had to recommend the investor to the great man.   You had to seek him out and ask that he deign to represent you and your money.    Which is either a gaff all to itself,  an easy way to bait the hook.   Of course there were money managers, complicit or not who took their clients’ investment money and turned it over to Madoff,  never asking just what in fact he planned to do with it.   I would suppose the issue of diversification never came  up among business managers and the great Madoff.  Too bad.

So Madoff is ssaid to have stolen some $50 billion in his Ponzi scheme, leaving people to suffer emotional and financial distress, some of whom didn’t mind displaying it on national television.   But then you have to vent it somewhere.

The moral of the story is not that there are people without consciences who will steal from anyone, including charity groups and non-profits.  The fact is that before you put your hard earned money or business reputation in the hands of someone else, do your due diligence.   In this economy, especially, people will make all kinds of desperate moves.   Normally reputable people may decide to cross a line.   Those without scruples will prey on those who are having difficulties due to the economy and are increasingly desperate.

If you are doing business, conduct business research on potential business partners.  conduct corporate research and business credit reports on potential new clients.   they may be coming to you because they have nowhere else to go.  They have burned their other bridges, and now you are their port in the storm.   becuase you are so happy to get a new client, you may overlook the more obvious or subtle red flags.

If you are an individual and someone is making a pitch for your money, don’t be afraid tocheck him out.   Remember the old but tried and true axiom–if a proposition sounds too good to be true, then it probably is.