Scandal Scarred Holiday Season

2008 appears to be ending with more audacity than hope. From Illinois came word Gov. Rod Blagojevich was attempting to sell the Senate seat being vacated by Barack Obama to the highest bidder. Apparently the feds have the governor on tape making it clear no good government types need apply…strictly cash and carry. One of the many unintended consequences has been to shine an uncomfortable light on President-elect Obama as he prepares for his coronation on January 20th.
It would appear Obama was not born in a manger but rather the product of the often seamy world of Chicago politics. The fact that Obama’s initial claim that no one from his team was talking to the foul mouthed Governor about a Senate successor now appears in doubt. Former Bill Clinton apologist and current Obama chief of staff, Rahm Emanuel, is evidently heard on tape talking to Blagojevich about potential successors and has suddenly developed an aversion to speaking to the press. It sure didn’t take a Clintonista long to gin up some controversy, did it?
None of this in any way diminishes Obama’s integrity but he spent the campaign extolling the virtues of transparency and accountability. He can’t put on the blinders a month before inauguration. My guess is Emmanuel coughs up a story about “miscommunication” at three in the morning Christmas Eve.
Then we have my favorite scandal of this or maybe any year, the Bernie Madoff story. It appears Mr. Madoff vaporized $50 billion in a ponzi scheme rooted in his ability to persuade the super rich he could beat the stock market year after year. Well he did, sort of. You see old Bernie reported or paid his investors handsome returns every year by paying them out with new investor’s money. That usually works well until something occurs causing a substantial number of clients to cash in their chips at the same time. In this case it was the colossal collapse of the financial markets that exposed Mr. Madoff. There simply wasn’t enough money coming in to pay those heading for the door.
In the small world department, it turns out an old friend of mine, Bob Jaffe, is in the thick of this story. Bob and I were friends and worked together at E.F. Hutton in the 70’s and he forever endeared himself to me by arranging to have me play golf with my boyhood hero, Willie Mays. Bob married a lovely girl, Ellen Shapiro, whose parents were apparently much wealthier than I knew at the time.
In the intervening years, Bob became more involved with his in-laws and their philanthropic causes and through the elder Shapiro’s came to know Bernie Madoff. According to published reports the Shapiro’s and their charitable trust lost over $500 million with Madoff. What makes this worse is it appears my old buddy Bob was very instrumental in recruiting clients for Mr. Madoff and was well compensated for it.
Knowing Bob, I’m sure he thought he was doing the right thing and getting paid for it. Madoff convinced people he had the secret sauce and becoming one of his investors was a social and financial windfall. Madoff delivered steady if unspectacular returns and seemed impervious to market downturns. But as my friend Bob is finding out, when something or someone looks too good to be true, they usually are.
So, we head into the holiday season chastened by political and financial scandal. Let’s hope the New Year puts an end to them both for a while. Merry Christmas everyone.