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Monday
May092011

Avoid Being Scammed by a Madoff-Like Ponzi Scheme

Mario Tama/Getty Images(NEW YORK) -- More than two-and-a-half years after the collapse of Bernard Madoff's investment scam, it's almost time for hundreds of investors to start getting a small amount of their money back.

So what lessons have we learned from Madoff's Ponzi scheme?

First off, never give all of your savings to one person to manage.  That may be the first rule of investing.

"We make a lot of these short cuts in our lives," says author Margaret Heffernan, who interviewed victims of the Madoff Ponzi scheme.

Heffernan explains that some of the victims handed over their money after hearing advice from a friend.

"They were blinded by the fact that everybody just like them was doing just the same thing," she says.

And always remember to do your research, something the Madoff victims didn't do.

"Because things come from people who are like us and therefore make us comfortable we think well we don't really need to do the research, we don't need to do due diligence," says Heffernan.

Copyright 2011 ABC News Radio

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