Bernie Madoff hit the headlines again this week, because he has died in prison, aged 82.
Ironically, even though all journalists and their editors presumeably must now know that Madoff was a liar and a crook who hid in plain sight, a lot of media reports still keep repeating elements of Madoff's own '$65 billions' financial fairy story as though these are true. This absurd situation is probably because the truth requires a little bit of effort to determine, and also because elements of Madoff's fairy story make far better headlines.
The more-complex truth being that, over a period spanning 4 decades, Bernie Madoff persuaded a gradually-increasing flock of individual, and institutional, victims (eventually totalling around 8000) to entrust him with their money on the (almost) entirely-fictitious grounds that, he was a God-fearing, Jewish, financial genius who (out of the kindness of his heart and also for a fee) was prepared to invest capital for a select group of clients and that, because his investment-choices were based on his own superior knowledge and 100% successful track-record, he would never fail to generate steady profits for his lucky little following of chosen-investors, no matter what economic conditions prevailed.
It is also interesting to note how individual victims still talk about 'having opened account's with Madoff,' even though they, above all people, should know that these were fake accounts.
At the time immediately prior to his arrest (and his exposure as a dangerous manipulator and con-artist), Madoff was still pretending (and the unthinking financial media was still reporting) that Madoff was managing 'the world's largest hedge fund, totalling around $65 billions.'
When financial markets collapsed in 2008, there was no hiding place for Madoff, because many of his institutional victims suddenly needed to cash in their (fake) accounts. For a while, Madoff managed to keep reality at bay, by signing cheques, but when the money had almost run out, there was still a long queue of victims at his door. At this point, Madoff finally confessed to his sons that he had been running a Ponzi scheme and, on the advice of their attorney, they blew the whistle on their father. Interestingly, even the federal prosecutor who was handed the Madoff case, initially found it difficult to believe that Madoff's confession could be true.
As part of his confession and guilty plea, Madoff variously claimed to have started off by making profitable trades with his clients' money, and that he only started to lie to his clients in the 1990s to cover up his subsequent losses.
In reality, there is little evidence to prove that Madoff ever made any losing investments, let alone any profitable investments. Madoff's victims' money was merely paid into, and out of, a bank account controlled by Madoff. His fake hedge fund's only significant, and sustainable, source of revenue had always been his gradually-expanding flock of ill-informed victims, and they had entrusted him with no more than $20 billions. Despite what many media reports imply, Madoff never stole, or controlled, anything like $65 billions, because that impressive figure was a lie and his only real talents were lying and hiding the truth.
Perhaps the most-worrying aspect of the Madoff affair, is that his own bankers must have known that he wasn't making any trades and that, therefore, he was a dangerous criminal, but they remained silent. Indeed, Madoff's bank (JP. Morgan Chase) was later substantially-fined ($2.6 billions) for its senior employees' mysterious failure to invoke the bank's own internal controls and blow the whistle on Madoff's comic-book lies. As far as I'm aware, no individual at Madoff's Bank has ever faced even the suggestion of criminal charges, even though employees of his bank are known to have enabled a monumental fraud and, by remaining silent, effectively-participated in a conspiracy with Madoff to hide the evidence.
Apart from the facts that Madoff's bankers saw nothing, heard nothing and said nothing, and US regulators and financial journalists were evidently sound asleep on the job for decades, Madoff continued to dissimulate, and sustain, his outrageous closed-market swindle (commonly referred to as a Ponzi scheme) simply by issuing piles of fake financial statements and by paying victims some of their imaginary profits, but these payments had been financed with real money coming into his bank from his gradually-expanding flock of trusting new victims. Again, it cannot be stressed enough, that Madoff's bankers saw all this and remained silent.
Media reports also describe Bernie Madoff as having perpetrated (what will probably remain) the largest investment fraud in history, and that he not only stole from thousands of victims, but that he also destroyed many of his victims' lives (some of whom committed suicide). Madoff's wife claims that she and her husband made a failed attempt to commit suicide prior to his trial, by taking what they believed would be an overdose of sleeping pills.
Now I'm not trying to down-play the seriousness of Madoff's crimes, or the damage he caused to everyone who trusted him (including his two disgraced sons who both died in tragic circumstances). However, I would suggest that Madoff's crimes, and the damage he caused, almost pales into insignificance when you consider the duration, and scale, of another variation of the dissimulated closed-market swindle that has been, and continues to be, perpetrated behind an adaptation of essentially the same pernicious financial fairy story as that peddled by the evil Mr. Madoff.
I am of course referring to the phenomenon of blame-the-victim 'Multi Level Marketing' cultic racketeering.
Behind a dense camouflage of 'All-American Compassionate Capitalism,' the acknowledged annual net-loss/churn rate for non-salaried 'Multi-Level Marketing' participation has always been way over 50% - meaning that the overall net-loss/churn rate for non-salaried 'MLM' participation has been quietly building-up exponentially for decades, to the point where it is effectively 100%.
Thus, if the precisely-worded published boasts of 'MLM' representatives are to be believed, then currently more than 125 millions persons are under contract to 'MLM' companies world-wide. However, common-sense (and basic maths) reveals that these demonstrably-ill-informed non-salaried contractors are being churned at the rate of way more than 60 millions per year, or way more than 600 millions per decade.
Indeed, there seems to be an effectively complete absence of 'MLM' participants who have managed to self-finance their non-salaried activities for more than 5 years and who have generated an overall net-income lawfully - solely via the regular retailing of 'MLM' supplied goods/services to the general public for a profit (based on value and demand). The real activity of the minority of longer-term non-salaried 'MLM' contractors has been a financially, psychologically and socially suicidal attempt to recruit further ill-informed temporary non-salaried losing contractors in order to keep replacing all those who are constantly, and quietly, being churned.
The global spread of the 'MLM' phenomenon has relied on the maintenence of a cruel (constantly-shifting) illusion of economic viablity and stability.
There is absolutely no doubt that it has been the never-ending chains of ill-informed, losing, non-salaried contractors of 'MLM' companies who have been the only significant, and sustainable, source of revenue for the same 'MLM' companies. These unwitting de facto slaves have been taught to duplicate exactly what have been touted as 'proven plans to achieve total financial freedom.' These 'plans' exhort constant attempts at recruitment coupled with regular self-consumption of effectively-unsaleable products/services.
This dangerous non-rational economic pseudo-science misleadingly entitled 'MLM' can be simplified to a comic-book formula:
Never-ending 'MLM' recruitment + never-ending payments by the 'MLM' recruiters and their recruits = never-ending profits for the 'MLM' recruiters and their recruits.
Today, it is difficult to calculate how many people's lives have been destroyed by their own (or their loved-ones') chronic belief in the pernicious 'MLM' fairy story.
I opened this article by stating that, ironically, even though all journalists and their editors presumeably must now know that Madoff was a liar and a crook, a lot of media reports still keep repeating elements of Madoff's own '$65 billions' financial fairy story as though these are true. This absurd situation is probably because the truth requires a little bit of effort to determine, and also because elements of Madoff's financial fairy story make far better headlines.
Meanwhile, even though an increasing number of journalists and their editors now know that 'MLM' groups are mind-bending frauds and cults, a lot of media reports still keep repeating elements of the '$ multi-billion MLM' financial fairy story as though these are true. This absurd situation is probably because the truth requires a considerable effort to determine, but also because 'MLM' racketeers have bought extensive political protection and are notoriously litigious.
David Brear (copyright 2021)
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The following deconstructed analysis has been formulated to sharpen the critical and evaluative faculties of all unwary persons approaching so-called 'Multi-Level Marketing' from the dangerous (subjective) point of view that it must be a business/industry, rather than from the safe (purely-objective) point of view that they don't really know what it is.
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- the widely-misunderstood phenomenon that has become popularly-known as 'Multi-Level Marketing' (a.k.a. 'Network Marketing') is nothing more than an absurd, non-rational, cultic, economic pseudo-science maliciously-designed to lure unwary persons into de facto servitude, dissociate them from external reality and not only steal their money, but also deceive them into unconsciously acting the role of bait to lure other unwary persons (particularly their friends and family members) into the same trap.
- the impressive-sounding made-up jargon term, 'MLM,' is therefore, the misleading title for an enticing structured-scenario of control which has been developed, and constantly acted out as reality, by the instigators, and associates, of various copy-cat, major and minor, ongoing organised crime groups (hiding behind labyrinths of legally-registered corporate structures) to shut-down the critical, and evaluative, faculties of victims, and of casual observers, in order to perpetrate, and dissimulate, a series of blame-the-victim 'Long Cons*' - comprising self-perpetuating rigged-market swindles**, a.k.a. pyramid scams (dressed up as 'legitimate direct selling income opportunites') and related advance-fee frauds (dressed up as 'legitimate: training and motivation, self-betterment, programs, recruitment leads, lead generation systems,' etc.).
- Apart from an insignificant minority of shills (whose leading-role in the 'Long Con' has been to pretend that anyone can achieve financial freedom simply by following their unquestioning example and exactly-duplicating a step-by-step-plan of recruitment and self-consumption), the hidden overall net-loss/churn rate for participation in so-called 'MLM income opportunities,' has always been effectively 100%.
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*A 'Long Con' is a form of fraud maliciously designed to exploit victims' existing beliefs and instinctual desires and make them falsely-believe that they are exercising a completely free-choice. 'Long Cons' comprise an enticing structured-scenario of control acted out as reality over an extended period. Like theatrical plays, 'Long Cons' are written, directed and produced. They involve leading players and supporting players as well as props, sets, extras, costumes, script, etc. The hidden objective of 'Long Cons' is to convince unwary persons that fiction is fact and fact is fiction, progressively cutting them off from external reality. In this way, victims begin unconsciously to play along with the controlling-scenario and (in the false-expectation of future reward) large sums of money or valuables can be stolen from them. Classically, the victims of 'Long Cons' can become deluded to such an extent that they will abandon their education, jobs, careers, etc., empty their bank accounts, and/or beg, steal, borrow from friends, family members, etc.
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** The enticing structured-scenario of control fundamental to all 'rigged-market swindles' is that people can earn income by first contributing their own money to participate in a profitable commercial opportunity, but which is secretly an economically-unviable fake due to the fact that the (alleged) opportunity has been rigged so that it generates no significant, or sustainable, revenue other than that deriving from its own ill-informed participants. For more than 50 years, 'Multi-Level Marketing' racketeers have been allowed to dissimulate rigged-market swindles by offering endless-chains of victims various banal, but over-priced, products, and/or services, in exchange for unlawful losing-investment payments, on the pretext that 'MLM' products/services can then be regularly re-sold for a profit in significant quantities via expanding networks of distributors. However, since 'MLM' products/services cannot be regularly re-sold to the general public for a profit in significant quantities (based on value and demand), 'MLM' participants have, in fact, been peddled infinite shares of their own finite money (in the false expectation of future reward).
Thus, in 'MLM' rackets, the innocent looking products/sevices' function has been to hide what is really occurring - i.e The operation of an unlawful, intrinsically fraudulent, rigged-market where effectively no non-salaried (transient) participant can generate an overall net-profit, because, unknown to the non-salaried (transient) participants, the market is in a permanent state of collapse and requires its non-salaried (transient) participants to keep finding further (temporary) de facto slaves to sustain the enticing illusion of stability and viability.
Meanwhile an insignificant (permanent) minority direct the 'Long Con' - raking in vast profits by selling into the rigged-market and by controlling/withholding all key-information concerning the rigged-market's actual catastrophic, ever-shifting results from its never-ending chain of (temporary) de facto slaves.
Although cure-all pills potions and vitamin/dietary supplements, household and beauty, products have been most-prevalent, it is possible to use any product, and/or service, to dissimulate a rigged-market swindle. There are even some 'MLM' rackets that have been hidden behind well-known traditional brands (albeit offered at fixed high prices). Some 'MLM' rackets have included 'cash-back/discount shopping cards, travel products, insurance, energy/communications services' and 'crypto-currencies' in their controlling scenarios.
No matter what bedazzling product/service has been dangled as bait, in 'MLM' rackets, there has been no significant or sustainable source of revenue other than never-ending chains of persons under contract to the 'MLM' front companies. These front-companies always pretend that their products/services are high quality and reasonably-priced and that for anyone prepared to put in some effort, the products/services can be sold on for a profit via expanding networks of distributors based on value and demand. In reality, the underlying reason why it has mainly only been (transient) 'MLM' contractors who have bought the various products /services (and not the general public) is because they have been tricked into unconsciously playing along with the controlling scenario which constantly says that via regular self-consumption and the recruitment of others to do the same, etc. ad infinitum, anyone can receive a future (unlimited) reward.
I've been examining the 'MLM' phenomenon for around 20 years. During this time, I've yet to find one so-called 'MLM' company that has voluntarily made key-information available to the public concerning the quantifiable results of its so-called 'income opportunity'.
Part of the key-information that all 'MLM' bosses seek to hide concerns the overall number of persons who have signed contracts since the front companies were instigated and the retention rates of these persons.
When rigorously investigated, the overall hidden net-loss churn rates for so-called 'MLM income opportunites' has turned out to have been effectively 100%. Thus, anyone claiming (or implying) that it is possible for anyone to make a penny of net-profit, let alone a living, in an 'MLM,' cannot be telling the truth and will not provide quantifiable evidence to back up his/her anecdotal claims.
** The enticing structured-scenario of control fundamental to all 'rigged-market swindles' is that people can earn income by first contributing their own money to participate in a profitable commercial opportunity, but which is secretly an economically-unviable fake due to the fact that the (alleged) opportunity has been rigged so that it generates no significant, or sustainable, revenue other than that deriving from its own ill-informed participants. For more than 50 years, 'Multi-Level Marketing' racketeers have been allowed to dissimulate rigged-market swindles by offering endless-chains of victims various banal, but over-priced, products, and/or services, in exchange for unlawful losing-investment payments, on the pretext that 'MLM' products/services can then be regularly re-sold for a profit in significant quantities via expanding networks of distributors. However, since 'MLM' products/services cannot be regularly re-sold to the general public for a profit in significant quantities (based on value and demand), 'MLM' participants have, in fact, been peddled infinite shares of their own finite money (in the false expectation of future reward).
Thus, in 'MLM' rackets, the innocent looking products/sevices' function has been to hide what is really occurring - i.e The operation of an unlawful, intrinsically fraudulent, rigged-market where effectively no non-salaried (transient) participant can generate an overall net-profit, because, unknown to the non-salaried (transient) participants, the market is in a permanent state of collapse and requires its non-salaried (transient) participants to keep finding further (temporary) de facto slaves to sustain the enticing illusion of stability and viability.
No matter what bedazzling product/service has been dangled as bait, in 'MLM' rackets, there has been no significant or sustainable source of revenue other than never-ending chains of persons under contract to the 'MLM' front companies. These front-companies always pretend that their products/services are high quality and reasonably-priced and that for anyone prepared to put in some effort, the products/services can be sold on for a profit via expanding networks of distributors based on value and demand. In reality, the underlying reason why it has mainly only been (transient) 'MLM' contractors who have bought the various products /services (and not the general public) is because they have been tricked into unconsciously playing along with the controlling scenario which constantly says that via regular self-consumption and the recruitment of others to do the same, etc. ad infinitum, anyone can receive a future (unlimited) reward.
I've been examining the 'MLM' phenomenon for around 20 years. During this time, I've yet to find one so-called 'MLM' company that has voluntarily made key-information available to the public concerning the quantifiable results of its so-called 'income opportunity'.
When rigorously investigated, the overall hidden net-loss churn rates for so-called 'MLM income opportunites' has turned out to have been effectively 100%. Thus, anyone claiming (or implying) that it is possible for anyone to make a penny of net-profit, let alone a living, in an 'MLM,' cannot be telling the truth and will not provide quantifiable evidence to back up his/her anecdotal claims.
Chronic victims of blame-the-victim cultic rackets who have managed to escape and confront the ego-destroying reality that they’ve been systematically deceived and exploited, are invariably destitute and dissociated from all their previous social contacts. For years afterwards, recovering cult victims can suffer from psychological problems (which are also generally indicative of the victims of abuse):
depression; overwhelming feelings (guilt, grief, shame, fear, anger, embarrassment, etc.); dependency/ inability to make decisions; retarded psychological/ intellectual development; suicidal thoughts; panic/ anxiety attacks; extreme identity confusion; Post-Traumatic Stress Disorder; insomnia/ nightmares; eating disorders; psychosomatic illness, fear of forming intimate relationships; inability to trust; etc.
David Brear (copyright 2021)
