Painful Psychology of Financial Victimization

This week I sat through “The Wizard of Lies” which is the HBO version of the Bernie Madoff’s 25 year run on a Ponzi scheme. This entire story is one of incredible non accountability, sheer ignorance on behalf of the SEC, FINRA and every other level of regulator in the industry. The Bernie Madoff story is one that is an outlier to the typical Ponzi schemes. The sheer length of his ongoing fraud is a massive indictment on the selectivity of the regulators on Wall St. Madoff was a total insider and as such he established a level of “good ole boys” credibility which allowed him to go unchecked for decades. The red flags and warning shots across the bow were available for any prudent regulator to see, it was however conveniently ignored with regularity.

It is easy to make the statement of how no one will ever be able to promulgate a fraud on the level Madoff did. Yet, as we speak there are probably at least 3 ongoing Ponzi schemes that have the red flags and warning bells going off, and are actively being ignored by regulators for any number of rationales. Will any ever reach the dollar amounts that Madoff did? Possibly not, but I am never surprised by anything that happens in the world of scams, fraud and predatory sales practices. Would anyone have believed the level of predatory sales manipulations and direct fraud committed by management at Wells Fargo? As long as there is hope, desire and greed in the world there will be scams, fraud and sales manipulations. It’s built into the psychological D.N.A. of victims.

Whatever story lines you see built on the Ponzi-schemes, stock frauds and other major frauds there is always a strong sympathetic bias towards victims. Sadly, all this does is help create more victims. As long as the financial victim continues to be a sympathetic soul we are simply enabling them to become systematically victimized with regularity and impunity. It’s time to help victims by exposing them to the harsh truth about their experience. They have culpability and with each Madoff or Stanford who comes along and pilfers their money the victim focuses on the poor me aspect of their shattered lives. My job is to work with victims on a regular basis and our work is to help clarify why victimization occurs.

If the why’s are discovered the events can be stopped and the conmen (includes women) can be stopped at the door and never gain traction with a potential mark (victim). When you are aware of the psychological triggers that occur in the process of being victimized you will be forever insulated from being a victim. As long as the people around you sympathize they will forever enable you. This enablement will directly lead to future financial victimization and you will be forever in the vicious cycle of being a victim.

The Madoff story displays the basic human behavior of those who are victimized. The vast majority never confront or discuss it as they suffer from pain, anger, embarrassment, shame and want to be forever anonymous. Then there is the minority who are driven by pain and anger while constantly seeking revenge. This group is not seeking to balance the books or find closure, they are purely motivated through anger, hatred and bitterness. They ultimately destroy all the good around them while pursuing their blinded hatred. This is displayed in the HBO version of Madoff. Presently it is 9 years since the exposure of Madoff’s scam and there still remains victims who are obsessed with revenge. It does no one any good and when you see how those people are impacted by their own hatred and bitterness you see the continuation of their victimization. The psychology of victimization is a fairly complicated process, without identification and healing the cycle of victimization will never end.

A very sad reality exists in that both the perpetrator and the victim have a sick connection. That connection is that neither is a sympathetic character. Both are perpetrators in the process of financial victimization. The painful reality is every financial victim had many, many opportunities to avoid involvement in the investment, purchase or business agreement. Each victim voluntarily participated, and many times they gleefully ignored every red flag or 6th sense call to walk away. When interviewed those who are willing to work through the psychology of the process all admit they heard that tiny voice in the back of their mind saying this is too good to believe. They also admit that they could have done more complete due diligence but simply relied upon a certain level of trust. This is how it always happens. Trust can never be taken in consideration of complete due diligence. Proof to this point is the fact in the Madoff deal where the regulators never made a simple call to the DTC to confirm that his investment advisory had an account. This was 2 years prior to the final fall of the Ponzi scheme. Why did the regulators ignore making a simple confirmation call that would have taken a couple of minutes? No one will ever have that answer, but it probably had to do with trust and credibility.

As CEO & Founder of the Advocacy Network I experience strong frustration in the knowledge that each and every day 1000’s of people are being financially victimized. For everyone we are able to help the others are being exponentially multiplied. What is most aggravating is the fact that almost ALL financial victimization could be eliminated with simple awareness, financial literacy education and consistently taking some self audits on personal beliefs, habits and values as to money. Kindly know that the Advocacy Network is committed to eliminating all forms of financial victimization through creating awareness, providing financial literacy education and helping people achieve financial independence.

YOUR Best Interest IS OUR ONLY Concern!