Too Good to Check

One interesting fact of the Madoff story is that while the fact that his so-called hedge fund was a fraud wasn’t exactly common knowledge, it wasn’t much of a secret either:

Harry Markopolos, an independent fraud investigator and derivatives expert, made it his hobby for nine years to uncover Madoff’s fraud. “Madoff was our fantasy sport,” he tells the Journal. “We wanted him nailed.” [...] It features no fewer than 29 “red flags.” Those ranged from his inability to replicate Madoff’s returns to statements like “I have also spoken to the heads of various Wall Street equity derivative trading desks and every single one of the senior managers I spoke with told me that Bernie Madoff was a fraud.”

It seems that he wasn’t alone. A few other individuals or groups who looked into what was happening decided that Madoff’s operation was super-fishy.

This reminds me of Nora Ephron and Deep Throat in some ways:

For many years, I have lived with the secret of Deep Throat’s identity. It has been hell, and I have dealt with the situation by telling pretty much anyone who asked me, including total strangers, who Deep Throat was. Not for nothing is indiscretion my middle name.

I knew that Deep Throat was Mark Felt because I figured it out. Carl Bernstein, to whom I was married for a brief time, certainly would never have told me; he was far too intelligent to tell me a secret like that. He refused to tell his children too, who are also my children, so I told them, and they told others [I was in high school with one of the children in question], and even so, years passed and no one really listened to any of us. Years passed while unbelievably idiotic ideas of who Deep Throat was were floated by otherwise intelligent people. There were theories about John Dean, and David Gergen, and Alexander Haig, and L. Patrick Gray and Diane Sawyer and Ron Ziegler (Ron Ziegler!), and I’m pretty sure even Henry Kissinger’s name came up. I mean, really. Why these people with these ludicrous theories didn’t call me I cannot imagine. I am listed.

Sometimes people want to believe. As long as Madoff’s scam was working, nobody was really interested in the truth.