Won’t Get Fooled Again

(Well … maybe just one more time.)

Brian Cook

In Decem­ber, the finan­cial world received its biggest shock yet, when Bernard Mad­off, for­mer Nas­daq chair and founder of Bernard L. Mad­off Invest­ment Secu­ri­ties, admit­ted to employ­ees (and, pre­sum­ably, to FBI agents who raid­ed his offices the fol­low­ing day) that his hedge fund busi­ness was just one big lie,” a giant Ponzi scheme” that had lost an esti­mat­ed $50 bil­lion in investments. 

‘The crow was found out and driven from the forest for its lies. But what of the foxes that desired blindly and wildly, and so were fooled? Should not they too learn a moral from the story?’

Among the numer­ous wor­thies tak­en in by Madoff’s scam were Oscar-win­ner Steven Spiel­berg, Nobel win­ner Elie Wiesel and pub­lish­ing mag­nate Mort Zuck­er­man. Non­prof­it insti­tu­tions such as the Rock­it Foun­da­tion and the JEHT Foun­da­tion, both large donors to civ­il rights orga­ni­za­tions and oth­er lib­er­al caus­es, were so heav­i­ly invest­ed with Mad­off that they were forced to close.

It is, of course, well and good that Mad­off will be tried and, most like­ly, pun­ished for this breath­tak­ing fraud. One also hopes Con­gress will make heads roll at the som­nam­bu­lant Secu­ri­ties and Exchange Com­mis­sion for its lax reg­u­la­tions that large­ly enabled the scam. But Paul Maliszewski’s excel­lent new book, Fak­ers: Hoax­ers, Con Artists, Coun­ter­feit­ers, and Oth­er Great Pre­tenders (New Press, Jan­u­ary) – writ­ten before the Mad­off sto­ry broke – sug­gests that our search for account­abil­i­ty should not end there. 

Con­sid­er that those work­ing in the hedge fund indus­try had long held seri­ous con­cerns over the per­for­mance of Madoff’s fund. Back in May 2001 (so, near­ly eight years ago), an arti­cle in the trade pub­li­ca­tion Mar/​Hedge–head­lined Mad­off tops charts; skep­tics ask how” – quot­ed observers who were baf­fled by the way the firm has obtained such con­sis­tent, non­volatile results month after month and year after year.” The skep­tics, it con­tin­ued, not­ed that oth­ers who use or have used [Madoff’s] same [invest­ment] strat­e­gy … are known to have had nowhere near the same degree of success.”

That nat­u­ral­ly leads to the ques­tion: If it was wide­ly known that some­thing was fishy about Madoff’s fund, how did it con­tin­ue to draw investors? The answer, accord­ing to the finan­cial blog­ger Hen­ry Blod­get, is that, the smart mon­ey KNEW Bernie [Mad­off] had to be cheat­ing, because the returns he was gen­er­at­ing were impos­si­bly good. Many Wall Streeters sus­pect­ed the wrong rigged game, though: They thought it was insid­er trad­ing, not a Ponzi scheme. And here’s the best part: That’s why they invest­ed with him.

In Fak­ers, Mal­iszews­ki calls this dynam­ic the unsus­pect­ing col­lab­o­ra­tion between the con artist and the conned,” and it’s one of the main themes tying togeth­er the book’s dis­parate essays, inter­views and pro­files on hoax­ers through­out his­to­ry. Mal­iszews­ki is inter­est­ed in the per­pe­tra­tors, mechan­ics and pur­pos­es (some­times noble, usu­al­ly less so) of fraud, and exam­ines them in fas­ci­nat­ing detail. But he also notes that with every sto­ry and every new hoax, [I became] more inter­est­ed in the faked, in those who believed.”

Or, as he explains in cre­at­ing an Aesopi­an-type fable about an art forgery scam (that could just as eas­i­ly apply to the Mad­off scandal): 

One day, the crow set the fox­es fight­ing for con­trol of an apple. The apple, the crow swore, was unlike any oth­er in the world, and the fox­es chose to believe him. But the apple was real­ly noth­ing spe­cial, and the crow, in the end, was found out and dri­ven from the for­est for its lies. But what of the fox­es that desired blind­ly and wild­ly, and so were fooled? Should not they too learn a moral from such a story?

Mal­iszews­ki is care­ful to note, how­ev­er, that while such wild and blind desire might be some­thing of a con­stant in frauds across time, the object of that desire – and the ends to which the fak­er manip­u­lates it – can vary from case to case. Indeed, the dif­fer­ence of those ends is what sep­a­rates the mere fak­ers from those who Mal­iszews­ki endors­es as the great pretenders.”

To wit, in a shrewd chap­ter dis­sect­ing the fab­ri­ca­tions of the noto­ri­ous New Repub­lic jour­nal­ist” Stephen Glass, Mal­iszews­ki skew­ers the wide­ly held notion that Glass suc­ceed­ed large­ly because he was a bril­liant sto­ry­teller … [whose] arti­cles burst with the sort of fever­ish, anx­ious inven­tion that can some­times seem like life.” Rather, Mal­iszews­ki demon­strates through close read­ings that Glass’ imag­i­na­tion was crush­ing­ly banal” and that his tal­ent lay less in the orig­i­nal­i­ty of his imag­i­na­tion than in his solic­i­tous abil­i­ty to seize on what­ev­er the con­ven­tion­al­ly wise were chat­ting about at cock­tail par­ties and repack­age it in bright new con­tain­ers, sell­ing the palaver right back to them.”

Iron­i­cal­ly enough, that palaver often con­sist­ed of mock­ing var­i­ous ide­al­ists for hold­ing dis­sent­ing beliefs out­side of the main­stream. The mock­ery, Mal­iszews­ki writes, confirm[ed] the con­tin­ued valid­i­ty of his assump­tions: the resis­tance remains small … [and] the real busi­ness of pol­i­tics march­es on with­out them.” And thus, by flat­ter­ing his edi­tors’ and read­ers’ beliefs in them­selves as wised-up cyn­ics, hip to the fol­lies of mar­gin­al ide­al­ism, Glass exploit­ed the naivety of their cyn­i­cism, play­ing them for fools. 

Not, Mal­iszews­ki wise­ly cau­tions, that it is nec­es­sar­i­ly fool­ish to be fooled. In one chap­ter, he details the wild­ly suc­cess­ful hoax that the New York Sun–look­ing to increase its cir­cu­la­tion – pulled on its read­ers in 1835, in which it sober­ly announced that an Edenic par­adise on the moon (inhab­it­ed by strange crea­tures, liv­ing in bliss­ful har­mo­ny) had been dis­cov­ered via a pow­er­ful, new tele­scope. Part of the hoax’s suc­cess, Mal­iszews­ki notes, stemmed from the desires of Sun read­ers to escape the grim, painful real­i­ties of 1830s New York, which was beset by crime, pover­ty, inequal­i­ty, dis­ease and racial and reli­gious strife. Their gulli­bil­i­ty and opti­mism, Mal­iszews­ki writes, may have excused – or made it all too sim­ple to ignore – the squalid con­di­tions in the country’s young cities and the loom­ing polit­i­cal cri­sis over slav­ery, among many oth­er wrongs in dire need of fixing.”

But Mal­iszews­ki refus­es that sole read­ing. He rec­og­nizes that the New York­ers’ opti­mism and belief in the out­ra­geous sto­ry might be under­stood instead as a crit­i­cal impulse – call it a utopi­an urge … to form in the future a soci­ety that more close­ly match­es [the Sun’s] bucol­ic vision; to make lives bet­ter; and to improve, final­ly, on what is here and what is known for real.”

To rise to the sta­tus of a great pre­tender,” one must com­bine this utopi­an urge to make lives bet­ter with a skep­ti­cal intel­li­gence about the bedrock cer­tain­ties of one’s own soci­ety. For Mal­iszews­ki, the mod­el is, still, Jonathan Swift, whose satire, he writes, doesn’t just enter­tain … [but] reach[es] out to read­ers and demand[s] from them great intel­li­gence and imag­i­na­tion and rigor.”

Fak­ers is a fine exam­ple of intel­li­gence, imag­i­na­tion, and rig­or, as well as a time­ly reminder that these qual­i­ties must always be used in tan­dem with hope, which, no mat­ter how auda­cious, is nec­es­sary, but not sufficient.

Bri­an Cook was an edi­tor at In These Times from 2003 to 2009. He now works on the edi­to­r­i­al staff of Play­boy magazine.
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