Vincent Safuto’s Weblog

Notes and observations

Palm Beach takes another beating

The revelations about Bernard Madoff’s company and the gigantic amount of money allegedly lost have a lot of people quaking in their boots, and it’s no wonder.

It’s interesting, though, because this is the third time since around 2001 that someone has taken the glitterati of Palm Beach for patsies, and conned some of the island’s richest Richie Riches out of a portion of their golden nest eggs.

I guess you might say Palm Beach is a “target-rich” environment, with a large population of trust-fund types and old money folks who just can’t bear the thought of betting their life savings on FDIC-backed CDs and money market accounts, and believe that investing with their “pal” is the only way to fly.

The two incidents that preceded the Madoff revelations are:

  • Thomas Abrams’ Pheonix Financial Group, which according to Online Fraud magazine’s Fraud Digest took $33.9 million from 100 to 150 investors. “Abrams lured wealthy, elderly potential investors through his charity, Pheonix Foundation for Children. (Abrams purposely misspelled ‘Phoenix’ to attract attention to his organization.),” the site reports. He was sentenced to 25 years in prison in 2002.
  • The KL Financial Group fraud (see the Receiver’s final report in .pdf format, filed Dec. 10, 2008). “While in operation, the defendants defrauded approximately 200 investors out of nearly $194 million,” the report says. Among the principals’ activities was the setting of a fake trading room in a West Palm Beach office building to show potential investors.

And now Madoff.

Back when I worked for the Press Journal in Vero Beach, Fla., I read about someone who committed fraud against a retired man and took him for his entire life savings.

The retiree had worked his whole life for a railroad and had retired with a six-figure sum (and, I assume, a pension and Social Security). He had met a man at church who told him he could turn that nest egg into a lot more.

Well, the retiree (who admitted he was mostly illiterate) trusted the man because he met him at church, and handed the whole amount to the man, who proceeded to abscond with it. This poor, hard-working man now had nothing. The crook said he was sorry, and got a long prison term for his crime.

As for me, I was furious. They don’t make them much lower than those who steal from the elderly and the infirm. I felt than and now that the job of the media was and is to be a watchdog and alert people before – not after – if someone is not on the up and up.

It is astonishing to me, though, how many of the rich end up getting taken. I mean, if you’ve attended all the best schools, if not taken classes and learned anything there, something had to stick, right?

But it may be that the rich aren’t that much different from the rest of us. They’re suckers for a British accent or someone who donates to charities or attends religious services. The only thing left is to be aware that there are people out there who believe that your money is their money, and they’ll figure out a way to get you to part with it.

What’s that old saying: “A fool and his money are soon parted.”

I’ll be following the revelations in the Madoff affair, and thanking my lucky stars that my family has had the sense to avoid “sure things” and affinity frauds.

But for those on Palm Beach who are sitting in their mansions and wondering how much is left, it was an expensive lesson in how untrustworthy some people can be. For their sake, let’s hope the third time is the charm.

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December 18, 2008 - Posted by | Living in the modern age | , , , , , , , ,

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