The Tangled Web of Bernard Madoff's Network

Posted by: Helen Walters on February 17, 2009

Madoff.jpgBy now you’ve seen the exhaustive, 162 page list of the 13,000 people caught up in the world of disgraced financier Bernard Madoff, whose so-called Ponzi scheme fleeced investors of some $50 billion. And many commentators have been eager to slice and dice the data in an effort to work out the what, the where and the how of everything went down.

Now, Cleveland-based network analyst, Valdis Krebs has created an interactive map to explore some of those connections at work. The map (an admittedly illegible still image shown above) gives both a macro and a micro view, allowing users to get an instant snapshot of Madoff’s tangled web of investors. Then, by simply clicking on any of the individual nodes, they can drill down to learn more information via Google News.

Valdis focused on the feeder funds that had direct dealings with Madoff to form the most immediate layer of the Madoff Ecosystem and thus misses out many, many of those involved, but it’s still an interesting way of representing how far tentacles stretch in our global world. (For a good, brief analysis of how intricate and abstract the scheme had become, see also this recent Business Week article by my colleagues, Matt Goldstein and Peter Burrows.)

Valdis notes that this is still a work in progress. But his approach of focusing on the links and the inter-connections of the scheme seems useful to me. For all the chatter about online social networks, this entire scheme was driven by networks of the real world. As Matt and Peter wrote in their piece, a caddie persuaded his golfing clients to invest, while numerous other stories have been written detailing the social treachery that has been perpetrated, wiping out entire social communities. As Valdis put it when we spoke earlier, "the disaster is in the links". The more we can see and understand of that, the better.

Reader Comments

Pat

February 24, 2009 8:36 AM

Whether government transition, or corporate transition, transition fraud has come of age in this era of rapid mergers and acquisitions which disguise wrongdoing and give the appearance that falling through the cracks is unavoidable.

Merely using the disguise is something which frustrates justice whether the topic is the bail out, mortgage fraud, labor fraud or business evolution fraud.

Dividing and conquering is one of the primary methods of destroying democratic principles as much as the economics of a nation. And isn't this the real problem with the bail out fiasco, the Enron, and the World Com financial frauds?

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