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Don't forget Madoff's helpers

Disgraced financier Bernard Madoff contends that his $50 billion scam was a psychodrama of his making alone.

You might think of this as an attempt to protect his family and friends from the wrath of the government. But really, it is one more act of hubris from a man whose ability to inflate his own importance while deflating investors' net worth knows no bounds.

Most important, his pronouncement isn't true. No one person is skilled enough to pull off a financial fraud of this magnitude. Even the most accomplished scammers employ a cadre of professional enablers to accomplish their robbery.

For every Enron, for example, there is an enabler like the now-defunct accounting/consulting firm Arthur Andersen, vouching for the scammer's methods, certifying their numbers and shredding incriminating documents.

Con men know that victims are more easily fleeced when well-known firms stand behind the scam, and they use the enabler's credibility to make themselves appear legitimate. The most common enablers are law firms, accounting firms and brokerage houses.

In Madoff's case, you can add the credit reporting agencies and even federal regulators, who apparently had been warned about this scammer for years.

The motivations of these enablers can vary. Often, they are simply providing their normal services to the scammer, oblivious to the misdeeds. Of course, this may also be a case of not wanting to know what's going on so they can plausibly deny any intent to help in the fraud.

Right now, the entire country is stricken with Madoff fever, wondering how a respected Wall Street guru could accomplish such crimes. That will wear off as victims start looking for the money, and they will learn the sad truth. You don't hear about Ponzi schemes until all the money is gone.

The enablers are the only ones left to pursue because Madoff's money will never be found. These enablers will, for the most part, be able to avoid criminal charges. But they should be held accountable. While the lawyers and accountants will cry that it is unfair to make them pay for Madoff's crimes, it is by far the best way to stop criminals of all kinds.

That is how authorities finally stopped Pablo Escobar and his cocaine cartel. Colombia went after every lawyer, banker, accountant, barber, dentist and waitress who helped Escobar, and in the end he was alone.

Remember, if you stop the enablers, you stop the scammers.

Randy Johnston is an attorney in Dallas and the author of Robbed at Pen Point.

Don't forget Madoff's helpers 02/07/09 [Last modified: Saturday, February 7, 2009 3:31am]
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