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Tuesday
Jun072011

What Lessons Can We Take from Madoff's Scam?

Mario Tama/Getty Images(NEW YORK) -- With yet another of Bernard Madoff's employees pleading guilty to his boss' investment scam on Monday, what lessons can investors take to avoid being part of a similar Ponzi scheme?

For one, you might have been a victim of Madoff's scandal without even knowing it.

"By one calculation, more than three million people were touched by this fraud.  That includes pensioners who's pension funds were effected," says Diana Henriques, author of The Wizard of Lies.

Henriques says one of the biggest lessons learned "is to accept that you can't trust your own gut."

Madoff ran a secret hedge fund.  "He was an unregistered investment adviser; he didn't use a third party custodian," she says, meaning someone who would verify the paper statements were backed up by real money.

Copyright 2011 ABC News Radio

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