Charles H. Green

Shorting Madoff's Stocks

[sorry, I hit enter too soon]
Holdings, my a**. By now we all know he was holding nothing.

On January 17, 5 weeks ago, I predicted this, saying:

"It’s beginning to look like Bernie Madoff’s business model had less in common with a hedge fund or investment management firm than it did with an online virtual reality game. Sort of a Sim City for investors. The money sent in was real: everything thereafter was from Oz.

But that was bupkus. Virtual reality money. Sim City money. Monopoly money. In the real world, it didn’t exist except in Bernie’s bank account and a computer program."

Read the full post at
trustedadvisor.com/tru...

This is in fact much scarier than previously thought. It's one thing for the regulators to get outsmarted by smart fraudsters with massive millions and terabytes. It's quite another to flunk Auditing 101.

Ask the IRS. Ask the GAO. Ask a regional accounting firm. You take a transaction, and you follow it upstream.

Madoff's genius lay in knowing precisely where the gray areas were, where no one had jurisdiction. But even that would not have worked if someone simply had the instincts of a gumshoe, a basic auditor, the innate suspicion of a good auditor.

He played us all for fools, knowing we had created institutions that were trapped by their own checklist procedural approach to "regulation."

Shorting Madoff's Stocks

Holdings my a**. By now we all know he was holding nothing.

On January 17, 5 weeks ago and 5 days after this post, I predicted his vapor-portfolio, saying:

It’s beginning to look like Bernie Madoff’s business model had less in common with a hedge fund or investment management firm than it did with an online virtual reality game. Sort of a Sim City for investors. The money sent in was real: everything thereafter was from Oz.

But that was bupkus. Virtual reality money. Sim City money. Monopoly money. In the real world, it didn’t exist except in Bernie’s bank account and a computer program.