Is the Madoff Scandal Paradigmatic?

The current TOO article by John Graham and me, “Is the Madoff Scandal Paradigmatic?,” reviews 8 books on the Bernie Madoff scandal. From the beginning, there was a pronounced Jewish angle to the media coverage of the scandal—mainly emphasizing that Madoff was a Jew who stole from other Jews. However, this review (for which the lion’s share of the credit goes to Mr. Graham), explores the far greater depth of Jewishness apparent in the incident. Here I review several important themes.

Contrary to the image in the media, the scandal in fact was a large scale transfer of wealth from non-Jews to Jews. The big money that entered the fund beginning in the 1990s was predominantly from non-Jews, and especially from Europe. In the end, according to whistle blower Henry Markopolos,the European losses were “substantially more than losses in the United States.” We suggest that the attraction of wealthy, aristocratic Europeans may have been an example of the “court Jew” phenomenon: “For centuries it was customary for aristocratic landowners, particularly in Eastern Europe, to delegate the task of managing the businesses operations on their estates to Jews, sometimes using the same families for generations.”

Madoff succeeded for so long because he had become a classic Jewish rabbi/guru who was idolized as God-like by the Jewish community. The Jewish community “regarded Bernie like a messiah. He was spoken of as if godlike.” This is a common feature of Jewish social structure generally—and much emphasized in The Culture of Critique. Just as people who questioned the Oedipal Complex were expelled from psychoanalytic societies and labeled as having various character flaws, an Israeli woman who questioned Madoff’s genius was called an “anti-Semite.”

Interestingly, quite a few of Madoff’s Jewish clients seem to have believed that it was a fraud or at least based on illegal activity such as “front-running” (trading ahead of client orders). “Many Madoff accounts thought they were safely benefitting from illegal activity — and did not care.” They seem to have thought of themselves as benefiting from Jewish ethnic networking where there has been a long tradition of failing to report illegal activities of other Jews— an offence known as Mesirah (informing).

Perhaps most explosively, we suggest that Madoff was protected because of the power of the Jewish community:

The Bernard Madoff matter was one about which a significant segment of Jewish America cared very much — some for financial reasons, others, perhaps, because of community pride and loyalty. Challenging this group was well known to be extremely dangerous. As in other matters, they awarded themselves a veto, and they used it — as it happened in this case, to their cost. All in all, the Madoff affair and the cover-up is another indication of Jewish power in America.

For example, Henry Markopolos, in his aptly titled No One Would Listen, comments

In my mind, at least, I was convinced that someone high up at the [Wall Street] Journal had decided it was too dangerous to go after Bernie Madoff. … I was finally beginning to consider the possibility that Bernie Madoff was untouchable — that he was simply too powerful to be brought down.

Madoff was investigated eight times by the SEC, but each investigation was inexplicably stopped. Sen. Charles Schumer seems to have been part of the power structure protecting Madoff. Madoff and his sons maxed out their contributions to Schumer. Schumer phoned the SEC on Madoff’s  behalf,  and he treated Markopolos with incredible rudeness during Senate hearings — not exactly the expected treatment toward someone who was right all along.

What has been portrayed as SEC incompetence now looks quite a bit like corruption. “We submit that the SEC failed to stop Madoff not because it was incompetent, but because it was afraid — of the Jewish Establishment.” It seems likely that even greater corruption was involved in the financial collapse that has been such an ongoing disaster for the country. The fact that Goldman Sachs managed to settle its involvement in one particular deal with a slap on the wrist.

Consistent  with the corruption thesis, it appears that Madoff’s accomplices will get off easy. Amazingly, an article that appeared too late to include in the print version questioned whether anyone will be criminally charged with being an accomplice to the fraud. Bernie is taking the fall all by himself, but it wouldn’t be too surprising if there’s lots of money stashed for his family members.

Perhaps in the back of Madoff’s mind was the idea — possibly the instinct — that after a few years, perhaps in a different country, maybe speaking a different language, his family would live on, possibly with a new name (surname changes are under way among the Madoff kin) and perhaps with some portion of the loot.