Two Articles on Madoff’s Psychopathology

Putting Bernie Madoff On The Couch           Dec. 31, 2008
 Jeffrey Kluger

There are a lot of things that make the life of a con artist a dubious career track — not the least being the risk that you’ll get caught. No matter how grand your ill-gotten Bentley or your cooked-books villa, they have to be hard to enjoy when you know that at any moment the jig could be up. The hope — and the thrill — is in the fact that that’s only one possibility. The other is that the scam is so good you’ll never be nabbed.

But what if your con is certain to fail? Why would any self-respecting scoundrel pick a scheme that’s guaranteed to end in handcuffs and a perp walk? That’s what a lot of people are asking as 70-year-old Bernie Madoff cools his heels under house arrest, charged with masterminding a decades-long, $50 billion Ponzi scheme that has incinerated wealth around the world. (See the top 10 scandals of 2008.)

A Ponzi scheme — as anyone smart enough to engineer one knows — is a plan that is uniquely without an exit strategy. It requires a constant infusion of new investors to pay off a growing body of existing ones, and ultimately it becomes impossible to find enough suckers. When that happens, the scam collapses. Sure, you could always flee the country before the roof caves in, but many scammers don’t and Madoff famously didn’t. The reason lies in the personality — or, more accurately, the personality disorder — that drives them to such frauds in the first place.

Forensic psychologists studying Madoff-type minds start with the usual menu of personality disorders, particularly narcissism. “These people get real enjoyment from doing what they do,” says forensic psychologist Michele Galietta of John Jay College of Criminal Justice in New York City. “They feel good pulling the wool over other people’s eyes.”

Other conditions such as bipolar or manic disorders may be involved as well, particularly since they are characterized by grandiosity and impulsiveness, with little regard for consequences. But grandiosity and impulsiveness can also be self-limiting, and lead to smaller-bore crimes that don’t require the patience and plotting of a Ponzi scheme. Madoff, says Galietta, “was very planful.”

Such deliberateness requires a whole different type of disorder, one that may rise to the level of true psychopathy. In the popular mind, psychopathy is an impossibly broad term that more or less means crazy. But psychologists see it differently and have devoted no shortage of energy to defining just what the condition is. The researcher who may have come closest is psychologist Robert Hare of the University of British Columbia, author of numerous books including Snakes in Suits: When Psychopaths Go to Work.

Many criminals, Hare explains, suffer from some form of antisocial personality disorder, a condition that causes them to behave impulsively and aggressively and generally commit violent crimes. Within that group, a subset also exhibits psychopathy, a coldness and lack of empathy for the people they hurt. They are the ones most likely to commit repeat violent crimes. The smallest group of all is the people who suffer from psychopathy alone — indifference to others, without the violence. These, says Galietta, are the “white-collar psychopaths.” And that group is an incubator of Madoffs.

Of course, a non-violent willingness to hurt other people for your own enrichment describes every mortgage bundler or junk-bond scammer who’s ever forged a balance sheet. What distinguishes the Ponzi artist is the sheer scale of the scam.

The same exponential multiplication of funds that makes a Ponzi scheme impossible to sustain also means that, at first, it makes you very rich, very fast. “The financial payoff is so much larger,” says Minnesota-based forensic psychologist Steven Norton. “The money comes in, the power comes in and that pushes them.” What’s more, says Galieti, the pyramid structure of a Ponzi scam means that there can be only one person at the pinnacle — an appealing idea for a narcissist who would just as soon not work invisible frauds inside a big investment bank.

It helps too, Norton says, if while you’re picking your investors’ pockets you can also convince yourself that you’re justified in doing so. Maybe you grew up poor; maybe you’ve been cheated yourself. Or maybe, as with Madoff, the phony dividends you’re paying are initially benefiting charitable foundations. You’re actually doing the groups a lot of good — at least until you bankrupt them.

When the collapse inevitably happens, someone like Madoff is so drunk on the power and the wealth and the illusion of do-gooding that he truly may not have seen it coming. “There was no living in the future,” says Galieti. That’s just as well. For a 70-year-old man facing 20 years in prison, the past is all that’s left.


The Psychology Behind Bernie Madoff

Huffington Post    12/18/08
By Mona Ackerman, Clinical Psychologist

Q: I don’t understand the Bernie Madoff situation? I know it has been written about and discussed, but I don’t understand how a person can do such a thing. Wasn’t he living amongst the people that he screwed? Wasn’t he involved with charity himself? Why would he threaten so many other charities? It really makes me scared to trust anyone or anything that one believes is legitimate. Are we all now going to go through a period of mistrust?

A: If I only knew the answer to that question. Wouldn’t life be so much easier if we knew what the future held? Wouldn’t it be better if no one could fool us and we could see through all deceptions? But because we are all unique individuals we will respond differently to a given situation. There is no consistent theory of how to read another person. Psychology has been called a soft science for precisely that reason. There is no solid chemical reaction or mathematical formula that predicts a person’s future. It is mostly the therapist’s ability to listen and have a gut feeling about the issues that are being presented by the patient’s. Only then can a therapist determine goals for the patient’s future.

At the same time, psychology likes to label people and their problems. So, we have been hearing a lot about Bernie Madoff being a sociopath. In many ways I agree with that. As you said, he certainly was able to exist within worlds where he was lying to everyone. A sociopath feels no real love toward others. They feel power over others precisely because they are capable of lying without any remorse or second thoughts. Many sociopaths are also quite intelligent and quite charming. So they, or any rogue, can convince people to trustingly hand over their life savings, which is what Bernie Madoff did. In some respects, then, the sociopath depends on the need of their victim to get whatever it is the sociopath is promising. In this case, the victims were all hoping for a sure bet and for membership in an exclusive investment club. And, the last couple of years have been filled with high flying returns that bring out, as market psychologists will tell you, all of the market’s tendencies toward greed and a lack of aversion to high risk situations.

But, at the same time, and something that is very peculiar, Madoff shows some kind of responsibility and guilt toward his family. I, for one, am not certain that his sons knew nothing of what was happening. They may not have been personally involved, but they must have realized in certain situations that they did not know the full story. And yet, they turned their father in. Doesn’t it actually sound like he told them that he will take the full brunt of the punishment, and that they should portray their innocence by showing shock and dismay? If that’s the case, Madoff was not completely detached from all people. Amazing!!! Perhaps he sees his children as an extension of himself – a need to continue his legacy in some way, and not a sign that he is being protective. In other words, it’s not about them. It’s about him.

My conclusion is that Madoff certainly had sociopathic tendencies that bloomed in the proper environment. That environment is us -you and me. As has happened many times throughout history, the culture needed a lift, a sense of elation at the possibility that lots of money could come real fast – not a slow and steady process, but through luck or connections or financial nimbleness. This explains the Tulip Bubble of yore as well as the Enron debacle of just yesterday and, even, the thrill some people feel at Caroline Kennedy going from Upper East Side housewife to, possibly, New York senator in a flash.

The years since 9/11 have certainly been tough and unpredictable. We live with so much uncertainty. Madoff personified certainty. He gave a lot of people, charities, and bankers the answers they needed. But it appears Madoff had already been a successful investment manager. Why would he threaten all that he had already accomplished for bigger rewards? Maybe, for precisely that reason – bigger rewards. But the rewards were not money, or not just money. More people found him brilliant, more people depended on him as a wise man and more people wanted to be around him. That is what he needed.

At the same time, his clients were getting what they needed. They got rewards and security. They sought what you once did–security, predictability, certainty. For that, they looked away. They ignored warning signs -those remarkable earnings -and believed in a sort of wizard. But when the curtain was pulled back, there was Bernard Madoff, a sociopath -and the till was empty.

You are right. We all need to be less trusting, a bit more cautious, and certainly a bit more respectful of simple and long-term success.




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