Category Archives: bernard madoff

Downside of trust: vulnerability to frauds

House of Cards - Flickr photo by tjflex2

Both Bernie Madoff and now Monroe Beachy (a 77-year old Amish man) were helped in perpetrating their fraud by utilizing high levels of trust within the Jewish and Amish communities respectively.  [Unlike the Madoff and Beachy examples were the perpetrators came from within the Jewish and Amish religions respectively, various people have posed as Mormons to perpetrate fraud within the LDS community, which is also very trusting.]

The Washington Post article asserts that Beachy raised $33 million over the last quarter century from Amish investors. Along the way, “Beachy became treasurer of the Amish Helping Fund, a nonprofit that takes in money from investors and makes real estate loans ‘in an effort to preserve the Amish way of life,’ the group said in a court filing. Beachy put some money in the Amish Helping Fund, which entrusted him with an even larger sum of $2.6 million.”

Beachy further undermined his standing in the Amish community by violating their norms of social capital: working things out among themselves rather than bringing in courts. “Much of the sour taste in Sugarcreek over the scandal has resulted because Beachy took the matter to bankruptcy court, contrary to religious precepts, instead of resolving it within the community. In piles of form letters, investors have asked the court to let them address Beachy’s debts in their own way because ‘participation as a creditor is abhorrent to deeply held spiritual principles.’ ”

I recently wrote on the American Grace blog about the evidence that the religious are more vulnerable to being scammed since they are deemed as more trustworthy and are also more trusting.  Read it here.

See “In an Amish village, the SEC alleges a Madoff-like fraud” (Washington Post, 2/17/11, by David S. Hilzenrath)

Interesting links: Obama 2.0, craigslist for service, trust and voter turnout

(photo by remolacha)

(photo by remolacha)

I previously posted on how the economy depends so heavily on our trust.  Slate’s Anne Applebaum has a recent post on how the fraud of Bernard Madoff threatens to return us more to the creaky workings of the Polish economy c. 1990.

It is amazing the range of sophisticated and prominent investors brought down by Madoff’s $50 billion Ponzi scheme, including Stephen Spielberg, Dreamwork’s Jeffrey Katzenberg, ex-Sen. Frank Lautenberg, Elie Wiesel, Mort Zuckerman, and $3 billion invested by the Spanish bank Santander.

Obama 2.0: I was at an interesting roundtable yesterday on the Internet and Democracy where many in the group felt that as dramatic a role that the Internet played in the election of Obama, the potential for the Obama administration to take us to an entirely new level of citizen participation in governance, transparency and accountability is much higher.  One of the participants was Beth Noveck, pioneer of the innovative Peer-to-Patent system, who is on the Technology, Innovation and Government Reform policy working group helping to advise Obama on transparency and accountability.

– TechPresident also had this interesting post on the reports from the PA Field Director for Obama (Paulette Aniskoff) on feedback that the Obama campaign was hearing from their volunteer troops.

Craigslist for Service:  The Obama campaign has been advocating during the campaign that we need a craigslist for service and it is even in the Obama platform.  Craig Newmark, self-described customer service representative, and founder of craigslist partly says we have it already and it’s called VolunteerMatch, but he also talks about his vision of other ways people can serve.

Voter Turnout:  I previously posted updated turnout figures here, but Michael McDonald of GMU has slightly revised upward his turnout estimate to 61.6% to 131 million.  This still makes it the highest for 40 years, since 1968.   McDonald notes that these “preliminary” numbers could creep slightly higher but are essentially settled.  [See McDonald’s blog post here.]  Curtis Gans, the other major scholar in this field, has not revised his earlier estimates, and McDonald continues to believe that 2008 represented more of an increase in voter turnout than Gans.  By Spring we’ll get Americans’ self-reports of voting on the CPS November supplement.  The Associated Press reports that early voting hit a new high, with about 41 million people, or over 31%, voting before Election Day (vs. 22% in 2004). Voter turnout increased substantially in newly competitive states like Virginia, Indiana and North Carolina, which all went for Obama for the first time in decades and turnout also rose in Republican states with large black populations, such as Mississippi, South Carolina and Georgia.  North Carolina saw the biggest increase in turnout, rising from 57.8% in 2004 to 65.8% in 2008, driven by a large African American population, and competitive elections at the gubernatorial, Senatorial and presidential levels.