Depending on the source you use or the math you prefer, Bernie Madoff swindled $13 Billion (funds directly invested), $30+ Billion (including feeder funds), or $65+ Billion (all of the above plus earnings) from investors worldwide.  That is Billion with a “B”.  Perhaps the magnitude of the crime is better put into perspective with some relative values.  $65 Billion is:

-          More than the entire annual household income of 1.5 Million American households

-          More than the GDP of the state of  New Hampshire

-          More than the GDP of the entire country of Belarus (about #60 of 200 countries)

-          Large enough to rank as #36 in the Fortune 500 list

-          Enough to buy 6 million mosquito nets in developing countries to fight malaria

-          Enough to put 2 million hybrid cars on the road to fight global warming or reduce oil dependence

-          Enough to put 2 million under-privileged students through 4 years of fully-paid tuition at a state university

Some people say that it matters less because so many of the funds lost belonged to wealthy investors who “should have known better.”  While that hits a populist nerve in many people, it is not the relevant point.  The relevant point is that Bernie Madoff lied.  He lied year after year after year.  People trusted him, and he led them on, living a lavish lifestyle and getting accolades every place he went.  And he devastated – destroyed really – thousands of lives.  It was all a sham.  One big lie.  Bernie Madoff was a thief.  Sure, he was clever, suave, and very well-connected, but he was a thief nonetheless.

The 150 years he was sentenced to only starts to send the right message to others who might contemplate similar schemes of any size (not just Madoff’s whale-sized Ponzi scheme).  They need to go after his assets.  They need to go after every place those assets went that can be traced and attached.  His wife and family, if they in any way benefited economically from his theft (salaries, bonuses, homes, gifts) should return every dollar plus interest and perhaps as a result be left penniless.  Take their homes too.  Future Bernie Madoffs should know that their families are exposed to their actions, so they cannot just be the fall guy in the end.

What bothers me most is that there is no chance that Bernie acted alone in all of this.  The only question is who else was involved and how do you prove it?  Bernie is being tight-lipped about all of his actions, allegedly refusing to cooperate in any meaningful manner with the authorities.  That tells me without a doubt that he is protecting someone.  Heck, the fact that there is no real paper trail, notes, or other documents suggests that at some point he brought one or more people into confidence on the scheme and offered to be the fall guy if it was exposed.  The safety of the others was provided by a 100% lack of anything in writing.  If you ask me, there is only one bond that is strong enough to weather the pressures of a fraud and a scheme and ongoing FBI pressures and not crack – family.   But that is merely uninformed speculation.  Maybe time will tell.

So, as I always bring it back to entrepreneurs; what does this mean to us?  I’ve writen about integrity in business.  Honesty with your investors.  Trust with your employees.  Bernie was the biggest and baddest of white collar criminals, but others exist all around us.  Heck, my first business partner embezzled from our company to invest in real estate options.  Different scale but the same concept.  Greed and money can take an honest person and make them do amazingly stupid, hurtful things.  And it all starts with one small act going over the edge.  One tweaked financial report.  One dishonest expense report.  One twisted fact or white lie.  Once the line is crossed, the next line becomes blurry, and before you know it, you’ve stolen $60 Billion.

So don’t just be an entrepreneur; be an honest entrepreneur.