In case you haven’t picked up a newspaper in the past few days—or if you have, but the number of huge scandals has grown too big to digest in one sitting—a certain elite hedge fund manager by the name of Bernie Madoff has been accused of running a Ponzi scheme that defrauded hordes of the world’s most elite investors out of a possible $50 billion. The level and depth of fraud, as well as the amount of money involved, could make this the single biggest scandal in financial history.
So what path of psychology could possess someone to steal so much, so blithely and brazenly, for so long? How can white-collar criminals, who typically lack the sociopathic personality that accompanies more violent crimes, lie so much and so well to the point where reality (and astronomical sums of money) are lost?
Lauren Cox at ABC News spoke to one such (reformed) white-collar criminal to find out. Barry Minkow, who spent seven years in federal prison for a multimillion-dollar Ponzi scheme (which, by comparison, looks like pennies next to Madoff), had the following insight about the psychology that lies behind this level of ongoing criminal activity:
“We all have a cure,” he explained. “The irony of white collar crime is we believe that we’re one good week in trading away and we’ll get enough to pay it all back.”
So there you have it! Justification, entrenched in narcissism, topped with a heavy dose of self-delusion. Mush these elements together with charisma, professional credibility, and access to investors like Steven Spielberg, and you wind up with Park Avenue schemes that boggle the mind. What eventually pops the bubble is not the criminal himself, but an outside variable, according to Minkow:
“We all get caught because of the unknown variable. It’s the thing that brings us down,” said Minkow. “For me, it was an investigative reporter. For Madoff, it was an economy that’s so bad people began asking for redemptions.”
On the good side, once the ax drops, the perpetrator (if not investors) can look forward to a rosy catharsis:
Ironically, Minkow said the end of a Ponzi scheme can be the most psychologically therapeutic.
“The first good night sleep I got was in prison,” said Minkow. “Because it was over, I didn’t have to lie anymore.”
Well thank goodness all this is good news for somebody.
Related:
RB: Advocacy Group May Have Registered Phony “Voters.” But Does It Matter?
December 15th, 2008 at 11:44 pm
The only redemption Bernie Made-Off could have is being tarred and feathered followed by being hung by his feet from George Washington’s statue, across the street from the NY Stock Exchange!
December 16th, 2008 at 12:13 am
I’m not too surprised by their “justification”. It’s pretty much the same as any other serial criminal. They’re convinced that they won’t get caught.
Throughout Minkow’s defense and incarceration he was consistently representing himself as an innocent victim. He was hardly a person overwhelmed with guilt or remorse. While this isn’t neccesarily sociopathy, his blatant disregard for the well-being of others would be an indicator of some deep-rooted psychological issues.
I would be suprised if this was common amongst Minkow, Madoff and most other scam artists of this scale.
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