We use cookies to improve your experience and optimize user-friendliness. Read our cookie policy for more information on the cookies we use and how to delete or block them. To continue browsing our site, please click accept.

Mad About Madoff: How Much of the Family Business Did This Family Know About?

You would have to be living in a cave to not know about the Bernie Madoff controversy and its results. Or perhaps you are living in the cave because you lost all your money in his Ponzi scheme, and you had to go to the public library to read this blog posting on one of their computers. Either way, there’s no point in this blog discussing how horrible this scam was, or how it affected countless victims, with more discovered daily. But as with most thieves and other ethically-challenged individuals, there usually exists a more personal story, and a family. Especially when several family members work for the criminal in question.

It is unlikely your family business is generating the billions of dollars involved in Madoff’s empire. But being profitable is important to you, your business and your family. Likely important decisions and the running of the business are discussed and handled by more than one family member. When the well-being of your family rests entirely on your business, there is much at stake and much to lose. Is it plausible that an intelligent, educated and wealthy woman like Ruth Madoff would not have known, suspected, or even been curious about any dealings of the business? And does removing $15 million in assets a day before Madoff’s arrest appear to be the act of someone not in-the-know? If she is not guilty as a co-conspirator, there is no doubt she is guilty of being hopelessly unaware.

But what about the Madoff sons – Mark and Andrew? They both were active members of Bernard L. Madoff Investment Securities for their entire careers. Both have also proclaimed their ignorance of the entire scam, and have claimed to have been betrayed by their father, just as wife Ruth publicly stated. This is entirely possible, and there has not yet surfaced any supporting evidence that the sons knew about any of the running of the scam. Yet the question surfaces again – how could they not know anything, how could one person perform such an intricate swindle of $65 billion that no one else participated in or knew about?

The idea of family loyalty is not new, nor is it a bad thing. One of the reasons to have a family business is to spend more time with your family, to help ensure the financial security of all members. Most family enterprises, especially those that have a family name as part of the corporate identity, work hard to have that name associated with quality, respect, and a great product or service. Bilking thousands of clients out of billions of dollars wouldn’t likely allow that family name to ever again be uttered in any positive way. Madoff could be protecting his family either from their being caught, to their being thought of poorly, but the general public likely will always associate the entire family with this theft of grand proportions.

Everyone on death row had a mother at one point, most everyone can find someone in their family to defend them in the worst of circumstances. But why put yourself and your family in a position to become as legendary and lamentable as the Madoff Greek tragedy? As has always been recommended in a family business, establish a dialogue about the business with your family on a personal level, and have a Board or other body to review your company business, in order to operate in a legal, profitable, ethical manner – to ensure both the financial and historical value of your family.

If you have any questions or concerns regarding a family business, fill out the form below and one of our specialists will be in touch,

How Can We Help?

Previous Post
Next Post
Article Sidebar Logo Stay Informed with Withum Subscribe
X

Get news updates and event information from Withum

Subscribe