Where Do I send My Check?
His Website read: “in an era of faceless organizations … Bernard L. Madoff Investment Securities LLC harks back to an earlier era in the financial world: The owner’s name is on the door.” It went on to say “Bernard Madoff has a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm’s hallmark.” Sounds good, where do I send my money?

Wait…this was the day after authorities foiled the largest Ponzi scheme ever uncovered. Bernard Madoff, Investigators say, stole over 50 billion dollars from unsuspecting victims over the last 5 decades. Madoff apparently kept the loss a secret even from his two sons and other family members who work at the firm until he spilled his guts on Dec. 9th. “It’s all just one big lie,” he told his family. He confided he had blown the money in what was “basically, a giant Ponzi scheme.” A ponzi scheme, for those unfamiliar, is an investment swindle in which high profits are promised from fictitious sources and early investors are paid off with funds raised from later ones.

If It Seems Too Good to Be True…
How could thousands of investors place their trust in one man? Did anyone see it coming? The sad thing is many knew something was wrong, yet said nothing. Henry Blodget, investment giant said, “I knew he was cheating. That’s why I invested with him.” Greg Newton, who specializes in covering hedge fund shenanigans, digs up a 2001 report on Madoff’s fund. The report, entitled “Madoff tops charts; skeptics ask how, wonders: “What is striking to most observers is not so much the annual returns… but the ability to provide such smooth returns with so little volatility.” We may now know how that feat was possible.

Many suspected wrong doing, yet hundreds of investors kept giving him millions even billions of dollars to invest. Many of the investors were institutions, some religious. Billions of dollars are now gone with little recourse. What is the moral of the story? Don’t put too much faith in the abilities of an advisor, in a firm, in an institution, in a mutual fund, or any one company. When you hand money over to someone else to manage, many times you have no idea where that money is going or where it’s being investing. Is it supporting your values and faith? How well do you really know the person or people handling your money? I don’t say this to scare you, but rather to get you thinking about responsibility.

Our Responsibility
God blesses his people in many ways. He gives us each a responsibility to handle money. Should we hand over money to strangers? The better we handle resources, the more He provides… Even though Christians are better equipped to handle money when they follow biblical principles, many fail to incorporate these principles into their financial plan. One principle is seeking wise counsel. This means you fully understand what you are investing in and who you are hiring to handle your money.

When we see advisors swindle money from investors, it makes us lose confidence and trust. Keep in mind, these stories of deception are isolated incidences. There are thousands of honest, moral, and ethical financial advisors who are helping their clients reach their goals. In chapter 3 of The Faith-Based Millionaire, I talk about how to find a competent, qualified financial advisor. (For a limited time you can download the whole book for free at www.jayperoni.com through Dec 31 2008).

Understand advisors are only human. They make mistakes from time to time, but most truly put their client’s interests first. We serve a God who never breaks promises and never fails. You have to do your part. God cannot bless investments you never make. Seek wisdom and guidance from a qualified team of advisors. Your team should start with an advisor, attorney, and CPA. Seek advice, but fully understand the advice before acting on it, and fully know the person who is giving the advice. Most of all, seek advisors who share your faith, values, and beliefs.