This open letter, from David Zeiger (the producer/director od Sir! No Sir! and founder/creative force of Displaced Films) was originally posted to the Rag Blog, May 11, 2009
Dear Mike,
I read with much interest your piece "Bernie Madoff, Scapegoat" for Time Magazine. While I welcomed your main premise -- that Madoff is a scapegoat and not more than a scab on the open, puss-filled, legal wound called the "American Financial System" -- I was stunned to see you take a broad, uninformed swipe at everyone who invested money with Madoff. You say he "stole $65 billion from some already quite wealthy people," referring to his victims as his "own kind." Then you go on to make the incredible claim that most of these supposedly very rich people knew full well (or at least suspected) that they were part of a fraud and, essentially, hoped it would just go on forever. So they should stop their whining and just give all their stolen luchre back.
That's quite an argument. Let me say first of all, for full disclosure, that most of my family was among those supposedly "already quite wealthy people" who lost everything to Madoff. In our case, it was Stan Chais, one of his top "feeders," who gave over all of our life savings to him. But somehow I don't quite see us fitting your definition of people on his "side of the tracks," as you so casually claim. Yes, like the vast majority of the thousands of Madoff's investors, we weren't poor. Far from it. My father was a businessman who manufactured parts for airplanes and did quite well with his small company that he started in the fifties (as I always joked, he was the white man for the white time). He was a lifelong progressive liberal, who took great pride in hiring blacklisted writer friends in the fifties, fighting against the Vietnam War in the sixties, and leading the campaign for Pete Seeger to receive the Kennedy Center Honor in the nineties.
And yes, back in the late eighties he quite willingly joined Stan Chais's "investment" group-seeking stability and good, not massive profits. And that's what he got for over twenty years, in the hands of a man who he, a smart businessman, trusted completely. And he brought all of his family and many of his friends into the fold because it was just too good to pass up. That included school teachers, artists, writers, doctors, lawyers, and one struggling documentary filmmaker (you remember what that was like). Maybe not the salt of the earth, but a far cry from the "one percenters" you have thrown us in with.
And if you go to the New York Times web site, you will find the letters from several hundred of Madoff's victims to the judge hearing the case -- all with very similar stories, often with quite progressive backgrounds, mostly elderly people who had invested all of their retirement savings with him, many now penniless.
But, you claim, it should have been obvious to all of these supposedly intelligent people that the interest they were receiving was impossibly high and they were part of a fraud. Why, according to you, "Some have admitted they did have an inkling 'something was up.'" But you fail to mention that the people who didn't have an inkling "something was up" were the very ones most "intelligent" people look to for guidance-the SEC, who as recently as 2006 were telling the world that Madoff was right as raindespite the compelling evidence that they alone were privy to. Blaming Madoff's victims for not seeing what was being denied by every available source is absurd.
But whether they knew or not, if they took any money out they should give it back, right? "If I buy a stolen car from the guy down the street, the police will take that car from me regardless of whether I knew it was stolen." That's logical, but what if that guy was in my garage stealing my other car at the same time? That's how Ponzi schemes work, and the relatively few who made huge profits from it don't negate that reality.
Let's be honest and take your argument a step further. Hundreds of thousands of people over the last 20 years were conned into buying homes with sub-prime mortgages, all of which were pumped up and turned into massive boondoggles by the schemes called derivatives and credit default swaps (which make Madoff look like a rank amateur). They were, in essence, built on stolen "profits." So now should the people who bought those houses be made to give them back? You know full well that there are those making that argument, and in fact thousands are today being forced out of their houses by foreclosure. Are they getting their just deserts?
Of course you would never say that, but what's the difference here? Yes, there is an economic gap between people who invested with Madoff and people who bought houses with sub-prime mortgages, but the con is essentially the same, is it not?Here's a thought: Given the quite liberal bent of many of Madoff's investors, I'd be willing to bet the little money I have left that somewhere, somehow, funds that had gone through Bernie's hands and came out bigger helped finance one of your films. I'm not being facetious here. I'm a big fan. But as you so cogently point out, in the Alice in Wonderland world of American finance the veil between "legal" and illegal is infinitely porous. And after all, if you buy a stolen car!
In hindsight, every argument my father made in defense of this fund was glaringly and horrendously wrong. But that's easy to say now. I think I'm a pretty smart guy, and I wasn't even the one who got us into this thing, but even after Madoff was exposed I was still claiming it was impossible for Stan Chais to be part of such a scheme. Stan, and the man he was serving, turned out to be con men of the highest order, and my dad had huge blinders on that led him to the slaughter. Yes, we all "benefited" -- for a while and to varying degrees -- from this scheme (that is, before we lost everything). But putting us up there with the head of Goldman Sachs and Bank of America? Please!
Yours in the spirit of healthy debate,
David Zeiger
P.S. I am producing a film about my family's situation, titled Ponzi & Me (catchy title, don't you think?). If you would like to invest in it, I can guarantee a return of 15-20%.