Madoff – “no reputation risk”?

madoffsBernie Madoff has pretty much replaced Paris Hilton and Britney Spears as a source of celebrity scandal news. Amid the pervasive chatter, an ironic anecdote comes out today in a Yahoo! TechTicker interview with James Altucher, managing partner of Formula Capital.

Altucher describes making a pitch in 2005 to try to get Madoff and his son Mark to put money into Altucher’s fund of hedge funds:

I went through the whole pitch, my returns were great, they were very excited. But, they said, James we love you, but we cannot invest in your fund of hedge funds. And I said, Why not? They said, Bernie and Mark both said … Here at Madoff Securities reputation is the most important thing. And to have that money go out there, and you’re sending that money out there, we have no idea about the hedge funds you’re in. We cannot take any reputation risk. There is no Wall Street headline risk here. Reputation is the most important thing.

Well, there’s reputation risk – and then there’s reputation risk. Most people would never flirt with the dishonesty Madoff embraced, much less tempt fate by making pious comments about reputation. But sometimes the biggest liars start believing their own tales.

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