Investor's Watchdog.com: Stock, finance and investment protection for investors

Last week the U.S. Securities and Exchange Commission (“SEC”) charged computer programmers Jerome O’Hara of Malverne, New York, and George Perez of East Brunswick, New Jersey, with helping Bernie Madoff conceal his scam.  According to the SEC’s complaint, O’Hara and Perez accepted hush money to help Madoff.  Specifically, the SEC alleges that the two men created programs that “generated many thousands of pages of fake trade blotters, stock records, Depository Trust Corporation (“DTC”) reports and other phantom books and records to substantiate nonexistent trading.”

The SEC also alleges that Madoff had a separate computer, called “House 17,” that he used to process investment advisory account data.  The SEC alleges that O’Hara and Perez “recognized that the trades being entered into House 17 and the account statements and trade confirmations being sent to investors did not reflect actual trades.”  The Commission also alleges that O’Hara and Perez refused to continue helping Madoff in 2006, but that he convinced them to keep his secrets by agreeing to increase their salaries and paying them a bonus of $60,000.”

If you never believe anything else you read here, believe that this kind of cover up is not at all unusual for financial scam artists.  It is in the early pages of the Long Con Playbook.

Right now, there are thousands of “long cons” running worldwide.  Long cons involve substantial preparation and planning to create the illusion of legitimacy.  They aim to take wealthy marks (victims of a scam) for hundreds of thousands or millions of dollars each.  In contrast, the “short con” is opportunistic and aims to take a single mark for whatever money he has on his person at the time (think Three Card Monte or The Shell Game).

Long con operators expect you to check them out, to call references, to insist on seeing things with your own eyes.  Accordingly, they pay people to pose as satisfied investors and rent the kind of warehouses and offices that you would expect the company to have. What experience qualifies you to tell the real thing from a convincing phony?  How many long cons have you investigated?  How many con artists have you spoken to?  If you want to protect what it took you so long to save, do what banks do: hire private protection.