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The Asset Protection Society has alerted you to some of the more infamous supposed asset protection experts who many in the industry saw as more scammers than anything else.  We have written about: Bill Reed, , Robert Vesco, Troy Titus, and Samuel Israel, III.Now we are writing to tell you about Bernard Madoff in an effort to remind you that “it can happen to you (or your clients) too.   This story reminds us that we always need to keep a cautious eye on the advisors we work with and if it “sounds too good to be true,” it probably is.  In Mr. Madoff’s case, he apparently never had a losing year and always earned 8% or more on the money he managed.  NO ONE over time can generate these types of returns and so again, this is a good story remind us to watch our backs and be cautious with our money. 

Mr. Madoff is alleged to have orchestrated a Ponzi Scheme of historical significance.  At a time when the economy is already fragile and people are losing huge portions of their retirement nest eggs due to the radical market it is sad to think that there are advisors out there who are seeking to steal ours and our clients’ wealth.

Mr. Madoff, arrested on December 11, 2008, is said to have defrauded investors of all sorts out of nearly $50 billion dollars, said to be the most devastating scheme in the history of Wall Street.  His victims range from the individual investor who was looking for a way to build wealth for or enhance their retirement to the huge international lender.  Madoff is set to appear in Manhattan on December 19, 2008 for a hearing in the Securities and Exchange Commission (SEC).  If you would like to read Bernard Madoff’s arrest warrant, follow this link.

The APS™ has written articles about Ponzi Schemes in the past but in case you do not know what a Ponzi Scheme is, it is a pyramid scheme where an advisor defrauds multiple investors with inflated returns and “cooked” books.  What the schemer, Madoff, will do is take money from an investor and give them a return, he will then need another investor to account for those funds, and so on.  The schemer uses each successive investor’s money to appear as if they are turning the investment into profit.  In reality, what is happening is that the investor is getting deeper and deeper into debt and then needs to defraud more and more investors to keep us with his scheme until he eventually runs out of investors and goes broke.  You can read an article Ponzi Schemes here: .

Again, I took the time to tell you about Madoff because it is the goal of the APS™ to keep our readers abreast of the recent scams on the industry and because we believe that education and information will protect you and your clients from falling prey to schemes like these.  Of course, a good con-man is not transparent but if you have taken the steps to protect your assets and have structured your assets wisely (in protective structures) then you should be protected and not devastated in the event that you do fall prey to one of these schemes.

Also, I wanted to alert you to this so you could counsel your clients on the subject and importance of asset protection.  You should also know, whether it be of any consolation to your clients, should you have any that fell prey to this scheme, there are some avenues of redress.  The defrauded investors may be able to seek redress under a federal statute that was created to help investors when a brokerage firm goes under or funds go missing.  You can read about it at the Securities Investor Protector Corporation .   Also, there may redress under the federal bankruptcy laws as Madoff and his firm have been forced into bankruptcy.

Again, I wanted to alert our readers to yet another scam in the industry and educate you on what a Ponzi scheme is, and how you can protect your clients from these types of scams in the future.  Part of being a competent advisor is being educated and informed; part of that is knowing what is happening in the industry, how to structure your clients’ estates, and where to send them for redress.  So, I would like to wish you all a Safe and Happy Holiday season.


Jason K. Ruggerio, J.D.