There’s a great scene in the movie “Casino” where Ace Rothstein (Robert DeNiro) has to fire a local young man named Don Ward, who is responsible for supervising a slot machine that pays out multiple times in a short span:
Don Ward: You might regret this, Mr. Rothstein.
Ace Rothstein: I’ll regret it even more if I keep you on.
Don Ward: This is not the way to treat people.
Ace Rothstein: Listen, if you didn’t know you’re bein’ scammed, you’re too f%$@in’ dumb to keep this job. If you did know, you were in on it. Either way, you’re out. Get out! Go on.
To me, this sums up the argument of whether or not the feeder funds, including Tremont Advisors or the Fairfield Greenwich Group, were in on the Madoff scam.
If they didn’t know what was going on, then they were too stupid to justify the incredibly huge fees they were taking for their “due diligence”. They should be forced to give back every penny. If you say you’re going to do something, then charge a fortune without actually doing it…this is stealing, n’est-ce pas? How is this different from a house painter who gets paid and never shows up to actually paint the house?
The other side of the coin is that they were not so stupid and they knew what was happening. If that’s the case, then we should ask the National Museum of France to borrow a guillotine and a technician or two.
That’s really what it boils down to; They’re either complete idiots and negligent to a fault or they’re aiders and abettors. Either way, if I were Fairfield Greenwich‘s Walter Noel, I’d make like Peter Madoff (brother and compliance officer to Chief Lowlife) and buy a primary residence in Florida before it’s too late. One way or the other, he’s at fault.