Critical Christian
keyword search
home
Home Page
Reviews
Book: The Effective Pastor
Essays
Prayers
Memorials & Celebrations
Personal Matters
Williams Connections
Methodist Connections
Betsy's Gallery
Electronic Congregation
Lent 2011 and 2012
Reviews 2011 Forward
Two Blossoms
Ponzis

Ponzis and Me

    I've just finished reading the CNN online version of the rip-off perpetrated by Bernie Madoff.  It stirs up memories of my own brushes with financial geniuses who turned out to be frauds.

    Beginning with my father and mother who invested a thousand dollars with a recently-arrived-in-town do-gooder.  He proposed a drug and alcohol rehabilitation program emphasizing the spiritual.  He convinced my parents and others in their church to give him start-up money, which would be returned tenfold once enough investors had been found.  He purveyed an enticing blend of altruism and greed; and he managed to dupe several families before leaving town without a trace.  Shades of River City, only the river was Connecticut's Rippowam.  Mom and Dad's one thousand dollars constituted their entire life's savings beyond housing equity. 

    In June 1971 I was elected to the Board of Trustees of the New York Annual Conference.  It was a position I had not sought or even thought to aspire to, but the church patriarchs apparently wanted young blood (yes, I was young once) on an agency otherwise populated with senior clergy, lawyers, and businessmen.  Among my duties as a trustee was oversight of the sale of a church building on Ocean Parkway in Brooklyn.  I later discovered that principals in the purchasing company had family members in the Family.  But that enlightenment was just a titillating footnote compared with the cascading reams of information which followed on another issue.  That issue was the pension fund investments for retired clergy.  $5.5 million in blue chip stock had been liquidated to invest in start-up companies, two of which were involved in salad oil.  Salad oil!  Sound familiar?  Think Tino DeAngelis.  He introduced me to Charles Ponzi, of Ponzi Scheme notoriety. 

    The church wasn't exactly complicit in a Ponzi strategy.  There was secrecy.  There was throwing good money after bad.  There was a lot of weeping and wailing.  There was hell to pay.  Yes, $4.5 million was recovered from insurance and court-ordered payments; but more than $2 million of that recovery went to pay lawyers and auditors.  The ecclesiastical superior defended the person responsible for the fraud as having "overreached" in his desire to increase funds for pensioners.  Notwithstanding the fact that the "person" was a principal in some of the firms into which liquefied blue chip stock equity was poured.

    A pattern was emerging for me, the previously cited enticing blend of altruism and greed.

    So when a few years later a young couple sat in my office and proposed that the church invest some of its endowment in a worthy cause that would pay dividends not only of gratification but of many dollars, my fraud antennae perked up immediately.  I didn't want to tell the couple what I was really thinking.  I had officiated at their wedding.  His parents were loyal church members.  I suspected they weren't duping as much as they were being duped.  I did what any compassionate member of the cloth would do, and usually does: I equivocated.  Sorry, but as much as I might want to help you, the church funds were all tied up at the present moment. 

    I never saw the couple again. 

    If it's too good to be true, it probably is... too good to be true.  Some simple life lessons, this one especially, are hard to learn... and costly.  I checked the Wall Street Journal list of Madoff's victims.  Most of them, considering their financial sophistication, should have known better.  Bernie was an equal-opportunity duper, bilking the well-heeled and the eleemosynary, and banks of every ethnic origin. The CNN article convinced me that, as a certain ecclesiastical superior once opined in my hearing about someone else, that he overreached, that what began for Bernie as "I can do it for you" became "I'll do it to you," in a failed attempt to shore up his reputation as a Wall Street wizard.

    What lessons I learned from my experience in the Ponzi world are:

        1. When responsible for other people's money, dot every "i," cross every "t," square every corner, figure it out down to the penny; and, with finances at least, always make sure the right hand knows what the left is doing.   Then you'll get duped only half the time.

        2. Fraud depends on trust.  Too much trust.  Which is the saddest part of it... and the greatest casualty.  Trust facilitates human interaction.  As my father-in-law, the preacher, often pointed out, without trust that other drivers would stick to their side of the road no one would venture out of the garage.  Allen Funt of Candid Camera fame was quoted in the newspaper in the aftermath of embezzlement by his right hand man that, of course, grand larceny right under your nose can only happen when there is implicit trust.  Five hundred clergy in the Methodist Church will say "Amen."

        3. Ponzi schemes need suckers.  Suckers (a fraternity from which I would not exempt myself) want to believe the Deuteronomic contract, that virtue is rewarded, if by other things, then by money too.  The dupers never appeal blatantly to our greed.  They seduce us with the promise of helping a worthy cause. They prey upon our desire to do good: like multiplying funds for pensioners, or stabilizing the financial underpinnings of the Elie Wiesel Foundation for Humanity.  Like the fellow who pulled up in front of our parsonage in Valley Stream, got out of his late model Mercedes, and pleaded with me for a few dollars to tide him over, because I was a pastor and, though he didn't say it, I was obliged to be compassionate and generous.  I was inclined to point to my body-rotting Volare and send him away empty-handed; instead I did what any compassionate member of the cloth would do: I equivocated and, when pressed further, claimed I hadn't a dime on me. 

    Of course, it will all happen again.  Trust reigns eternal.  And I wouldn't have it otherwise.  I wish, however, that we might take to heart the words of a certain rabbi who advised his disciples to be as wise as serpents if as innocent as doves. 'Tis a tough bill to fill; but I'm trying. 

 

   



< Back to Essays Archive


1990 - 2017 Bob Howard