Bernie Madoff had the most famous of the modern illegal “Ponzi schemes”. Yet, Allen Stanford was also a household name to CNBC viewers.
I’ve never quite understood exactly what Madoff was up to. That is, did he intend to run his business legitimately but just couldn’t make the returns he wanted. Was he looking to expand and saw this as “stop gap” that never stopped. Did he go into it fully intending for this to be a scheme. I just don’t know and the few reports I have heard are conflicting.
Allen Stanford on the other hand is really easy to understand. Here was a man who understood the concept of Other People’s Money and took full advantage of it.
You may say oh well in the end he got his. Uh-huh. Let’s review.
Here is a bad scene from Sir Allen’s life
though you’ll notice he doesn’t exactly look depressed. Maybe its because he is still remembering the following
That’s his cricket team winning the Super Series
That’s him cavorting with the wives of some other cricket players. Ones who are losing to his team if I am not mistaken.
That’s him after being Knighted Sir Allen.
This is him making a grand entrance in his helicopter
This is his yacht Sea Eagle parked at his home in Antigua
This is his office in Antigua
This is a picture of Stanford after his three mistresses showed up together to support him court.
You can do whatever you want to Allen Stanford. He is now broke. He got beat up in prison. He may very well spend the rest of his life there. But, he’s 61 years old now. These experience were his life. You can’t take that away.
Once you realize that, you realize the fundamental vulnerability that everyone has in handing over your assets to someone else. There is just no recourse against the other person consuming them.
You have to trust and that’s at the heart of what I call The Big Externality.