How did Bernie Madoff fool so many people?

[_19disnA]

The MLM scam. Barely legal but it pretty much operates the same as a pyramid scheme. It's just they have a product.

I agree, these should all be illegal. They sell something (diet drinks, cleaning supplies....etc.) just to make them look legit, but any of these schemes where you make more money signing up other people as 'sales reps' or whatever they call them, should be a huge red flag. Eventually they all collapse since there run out gullible people to sign up after you.

A lot of people probably don't realize your donation to a 'non profit' also pays the (sometimes excessive) salaries of those who work there. Nothing wrong with having paid employes, but see what % of your donation actually benefits those in need. Read the fine print to see how they categorize their expenses. Some are clever at burying the salaries as part of the mission to solicit more donations. Many probably think being a 'non profit' means the workers are all volunteers and that is totally incorrect. In many cases, being incorporated as a non profit is simply a way to skirt the tax laws.

 

[longboard55]

I own some Pimco funds, that pay very high divis such as 9%. Not sure how they do it, maybe I am a sucker, but PIMCO is one of the most trusted names out there. Easy to see how a MaDOFF could happen, diversity is a good idea. I would not put all my money with any one person. l rec some a mix of index funds, some wide range etfs, Berkshire B shares and some fang stocks. Spread it around for the best safety

 

[kdonnel]

I would bet that not all his early investors were fooled. They fully understand it was fraudulent and were smart enough to get in and out early.

The SEC was contacted several times early on but ignored the reports because he was so well known and respected. If they had just done their job many people would not have been defrauded.

 

[Cubbiecakes]

In many cases, being incorporated as a non profit is simply a way to skirt the tax laws.

Likewise, churches that masquerade as charities, like the Salvation Army.

 

[MillauFr]

I own some Pimco funds, that pay very high divis such as 9%. Not sure how they do it, maybe I am a sucker, but PIMCO is one of the most trusted names out there. Easy to see how a MaDOFF could happen, diversity is a good idea. I would not put all my money with any one person. l rec some a mix of index funds, some wide range etfs, Berkshire B shares and some fang stocks. Spread it around for the best safety

What Pimco fund currently has a 9% yield? Only way they can offer that is if they are investing in junk bonds. Plus many of the Pimco bond funds have high fees (> 0.5%)

 

[QueenIsabella]

Likewise, churches that masquerade as charities, like the Salvation Army.

You know that the Salvation Army actually has churches, right?

Also, their employees make minimum wage--even their CEO. Sure, they get perks--the married couple we knew got free housing and a van. But, they still earned minimum wage. They also weren't allowed to accept any donations that would directly benefit their children, versus the Salvation Army. In this case, they were asked to share the use of their building for a day camp, which their children could attend. They couldn't accept, because the deal wouldn't help the SA.

There are plenty of groups to rag on for being crappy charities--look into Goodwill, if you're so inclined--but, the Salvation Army is one of the good guys.

 

[_19disnA]

What Pimco fund currently has a 9% yield? Only way they can offer that is if they are investing in junk bonds.

I agree and someone stating they made X% is NOT the same thing as the fund providing a GUARANTEE of Y% in some future horizon. Any fund GUARANTEEING returns much in excess of the current prime rate should always be viewed with suspicion. Think about it, where are THEY investing to get a return greater then their guarantee in order to provide an overall profit? During market downturns, most funds will likely have a NEGATIVE return. No legit fund I know of can possibly guarantee there won't be down years, investing just does NOT work that way.

 

[Cubbiecakes]

You know that the Salvation Army actually has churches, right?

There are plenty of groups to rag on for being crappy charities--look into Goodwill, if you're so inclined--but, the Salvation Army is one of the good guys.

We'll have to agree to disagree. Ask a stranger off the street what the think the SA is, and they'll say "a charity". But they're not, and because they are a church there are a whole lot of tax benefits that an actual charity wouldn't and couldn't take advantage of.

 

[kdonnel]

We'll have to agree to disagree. Ask a stranger off the street what the think the SA is, and they'll say "a charity". But they're not, and because they are a church there are a whole lot of tax benefits that an actual charity wouldn't and couldn't take advantage of.

My father had a very positive experience with SA, whether they are a church or a church masquerading as a charity.

My fathers parents were good Catholics. They had 18 kids. As a result they could in no way afford to pay for their family. They became a burden to society by refusing to use birth control.

My father credits the SA for the majority of his meals as a kid. Without the SA he says he would have gone many days without anything to eat. The SA asked for nothing in return.

 

[DopeyDame]

We'll have to agree to disagree. Ask a stranger off the street what the think the SA is, and they'll say "a charity". But they're not, and because they are a church there are a whole lot of tax benefits that an actual charity wouldn't and couldn't take advantage of.

The word "Salvation" is right there in their name. If someone doesn't realize they are a church-based mission, then that's really not SA's fault.

 

[longboard55]

What Pimco fund currently has a 9% yield? Only way they can offer that is if they are investing in junk bonds. Plus many of the Pimco bond funds have high fees (> 0.5%)

PTY same dividend since 2010. That is the challenge, being overally conservative is not always the best choice.

 

[MillauFr]

PTY same dividend since 2010. That is the challenge, being overally conservative is not always the best choice.

Nothing wrong with that. You do understand that this closed end fund is far more risky than most stocks. The fund lost 60 - 70% of its value back in 2009. Also they are charging very high fees and it is highly leveraged. The managers are borrowing heavily to maintain returns.

 

[_19disnA]

^^ Similar to my earlier comments. AVERAGE returns is NOT the same thing as GUARANTEED future returns. Prior performance doesn't insure similar future returns.

 

[longboard55]

If you want a guaranteed return and also full access to your money you are looking at banks with rates so low a lot of those years they do not even cover fees. So are we saying anyone who does not put money in a back is greedy. What I said is you need a balance of investments. If I own 20 investments and one goes Madoff I lose 5%.

 

[_19disnA]

^^ Not sure who the comment is addressed to. What some of us are saying is NO legit investment firm currently guarantees 9-10% annual returns.

 

[longboard55]

I said the only guaranteed return is a federally insured bank. If that is your criteria do not expect to make much on your investments