Madoff’s 150 year imprisonment means no end to investment scams?

The sentencing of an orchestrator of the largest investment fraud in the US history Bernard Madoff was welcomed by almost all Americans including financial advisors who expressed their approval and at the same time their concern that the precedent will unlikely stop other from committing similar crime.

“I think that the sentence is absolutely just and was the right thing to do,” said Scott Kays, president of Kays Financial Advisory Corp. of Atlanta, which has $120 million in assets under management. 

“He ruined the financial lives of so many people. Anything less would have been very unjust.”

“I think he deserved every bit of it,” said Carolyn McClanahan, founder of Life Planning Partners Inc. of Jacksonville, Fla., which has $25 million in assets under management. “People are fed up with white-collar crime that destroys lives.”

“With the high-profile nature of his case, it was kind of necessary,” said Steve Medland, partner in TABR Capital Management LLC of Orange, Calif., which has $135 million in assets under management.

Meanwhile, industry experts believe that the case would influence at least some potential perpetrators making them to think of the punishment they might face in case they are caught.

“I would like to think that 150 years would scare anyone from doing any Ponzi scheme again,” said Matthew Illian, wealth manager at the Richmond, Va. office of Marotta Wealth Management Inc. of Charlottesville, Va., which has $130 million in assets under management. 

If anything, the sentencing sends a message to investors as well as advisers about communications, Mr. Medland said.

“Investors need to do their homework and check out the background of anybody they want to work with,” he said.

“It makes advisers realize that we need to focus on these issues and communicate with clients.”

“It’s incumbent on advisers to demonstrate to clients and assure them that their money is safe in terms of custody,” Mr. Kays said. 

“A simple thing would be to require advisers to have independent, third-party custodianship of assets,” Mr. Kays said. “That would not totally eliminate the possibility of anybody sending out fraudulent statements, but it would reduce it.”