Anatomy of a Con Artist: How Madoff Played the Trust Equation
The Trust Equation describes the components of trustworthiness. The equation is:
T = (Credibility + Reliability + Intimacy) / Self-orientation
Of course, any such recipe worth its salt will also serve as a template for reverse engineering—a “how-to” manual for a con man. Measuring Bernie Madoff by the trust equation shows just what an effective job he did at mimicking genuine trust.
So let’s do the numbers:
Credibility: Chairman of the Board of Nasdaq, for starters. Not to mention a Who’s Who client roster. But an especially nice touch: not just any old lamb could buy in—you had to be approved by the wolf. Exclusivity adds cache and credibility. 9 out of 10. Better than Alan Greenspan (hey, he used to be hot).
Reliability: Arguably Madoff’s greatest contribution to the con: don’t go for the jackpot, the Big Win. Become known for steadily hitting .335 in a league of .285 hitters. Always just over the average means always just under the radar. Another 9 out of 10.
Intimacy: courtesy of spoonfeedin, he was described as a gentleman, gregarious, generous, personable, charming, and so forth. Like a mass murderer, he appears to have been ‘the last person’ one would have suspected. Give him an 8 out of 10.
Self-orientation: who would suspect the motives of a philanthropist, a giver to religious causes, a man generous with his own (we thought) money? Not me, not you, that’s who. An apparent low score (low self-orientation is good, you see); maybe a 2.
That’s a Trust Quotient score of (9+9+8)/2, or a spectacular 13 out of a possible 15. (If you don’t think that’s spectacular, try it yourself: take your own Trust Quotient.
There is no such thing as trust without risk; Madoff was an awfully talented con man.
But he couldn’t have done it without his pigeons.
–A great many people may have suspected him, but felt glad to be in on the “fix.” No sympathy for them.
–I am astonished to hear that Fairfield Partners may sue PricewaterhouseCoopers—not Madoff’s accounting firm, but their own accountancy. Zero sympathy for that Madoffian level of chutzpah.
–Then there’s all the relatively innocent folks out there who thought they’d found something almost too good to be true. They learned the distance between “almost” and “definitely” is dangerously thin.
Wow. Such an insigful analysis it’s scary. Scary to realize that trust can be so minipulative in the wrong hands. I have built a very successful financial services sales career by getting people to trust me. Now, I feel even more of a duty to help erase the stain of Madoff.
James,
Thanks for the comment. Good intent doesn’t excuse incompetence; bad intent with great skills makes you a con man.
You clearly know the difference; if you’re good at what you do and have really good intent with your clients, you’ll do well for yourself and make the best argument possible against Madoff; namely providing an example of doing business in an ethical manner. It’s a win-win.
Looking at all the people Madoff harmed, he has to be asking: was it worth it? One hopes he knows the only possible answer is, ‘no way.’
It shows you how far trust can go. The problem is the guy everyone trusted, turned out to be a criminal!
Trip Allen
Egyii Singapore