Post-Madoff, why aren't governments more vigilant?
Confidence tricksters all use variations of essentially the same old techniques to shut down their victims' critical, and evaluative, faculties in order to part them from their money and avoid being held to account. Hardened grifters practise the dark (theatrical) art of preventing their marks from facing reality and complaining. Unfortunately, unless significant numbers of victims complain, then a grifter can remain at large almost indefinitely. Currently, the US Dept. of Justice estimates that (largely due to fear, and/or shame, and/or embarrassment) 85% of all frauds perpetrated in America are not reported to law enforcement agencies. However, when you look at what happened in the Bernie Madoff affair, even this shocking figure cannot be trusted.
The US Securities Exchange Commission was approached no less than 5 times during 7 years by Harry Markopolos http://www.youtube.com/watch?v=_D8asfMtx1o with not just an isolated complaint about, but a comprehensive explanation of, what Madoff was actually doing, but senior federal officials did precisely nothing. Yet, it would have been as simple task for these dunces with diplomas to discover that the grinning 'Exclusive Investment Opportunity' guru's claimed permanently-profitable, multi-billion dollar, stock-market trading activities were part of a comic-book controlling scenario being acted out as total reality; for Madoff had no independent evidence (in the form of audited accounts) to prove that his company was active on the stock-market and, thus, trading legally. His only source of revenue was his marks, to whom he sent endless reams of paper on which he arbitrarily and falsely defined them as 'Investors'. These impressive-looking documents were replete with the names of some of the largest public companies in the world, but they were the equivalent of counterfeit bank statements which were maliciously designed to deceive marks into believing that they owned a piece of the miraculous 'Madoff Hedge Fund' which, contrary to overall trading conditions, had been constantly expanding at a rate of around 10% per year during several decades. So long as more and more new unquestioning participants kept playing along with Madoff's addictive controlling scenario, he was able to sustain his fraud by using their authentic cash to pay out some fictious profits to the rest.
After being allowed to expand his pernicious game of make-believe for decades without any rigorous official challenge, the current world economic crisis hit and too many of Madoff's so-called 'investors' all demanded their fictious profits at the same time. Even then, he still tried to sustain the fraud, but he soon ran out of authentic cash. Only at that point, was Madoff forced to confess to what he had really been doing - i.e. running a vast ponzi, or money circulation, scheme (which is exactly what Harry Markopolos had explained to the SEC dunces almost a decade previously). When Madoff was finally held to account, the FBI discovered that, on paper, his so-called 'Hedge Fund' had more than $50 billions of liabilities, but, in reality, he controlled only around $1 billion of assets.
After being allowed to expand their pernicious game of make believe for decades without any rigorous challenge, it would still be a simple task for US law enforcement agents to discover that numerous grinning 'Exclusive Business Opportunity' gurus' claimed, permanently-profitable multi-billion dollar, direct selling activities have been part of a comic-book controlling scenario being acted out as total reality; for they have no independent evidence (in the form of audited accounts) to prove that a significant percentage of their constantly-churning, non-salaried commission agents have been actively retailing profitably and, thus, trading legally. For countless copy-cat 'MLM' grifters, their only significant source of revenue has been their marks to whom they have sent endless reams of paper on which they arbitrarily and falsely defined them as 'Independent Business Owners' in order to prevent them from facing reality and complaining.