Episode Notes for Fraud Talk Podcast: Mailing Madoff


Sarah Hofmann
ACFE Public Information Officer

When you think of pen pals, you usually think of kids staying in touch after friendships forged at summer camp. In stark contrast of that sunny scene, for David Weber, J.D., CFE, his pen pal was the result of a U.S. Securities and Exchange Commission (SEC) investigation. Weber, academic director of fraud management programs at the Smith School of Business at the University of Maryland, regularly corresponds with infamous fraudster Bernie Madoff.

In the latest episode of Fraud Talk, Weber describes how the two first crossed paths when Weber was working as the assistant inspector general for the SEC and directed the reporting of misconduct in the Madoff case. After leaving the SEC, and becoming a professor, Weber received an email from none other than Madoff. The two began talking on a regular basis and Madoff even answers questions posed by Weber’s students. “He’s very direct in the emails; he’s not a man that minces words,” Weber said. “He really does express remorse, and he does continue to be of the view, and I agree with him, that the regulatory agencies really failed to do their jobs.”

His close relationship with a man who cheated hundreds of people and organizations out of billions may raise eyebrows, but Weber believes there is more to be gained from talking to convicted fraudsters than refusing to on hear their stories.  

“There’s no question that we can learn from fraudsters,” he said. “As fraud fighters, we are frequently in a position where clearly being proactive is part of our role, but in many cases, when there is spectacular fraud, we are not learning of the fraud until the incident has finally occurred. We are part of the response team.”

Weber likened investigating fraud to coming to the scene of a car crash after the fact. “There are injured people, there are people who need to be triaged, there are cars that are damaged, there is debris in the road,” he said. “Many times, it’s hard to figure out through the victims what transpired, so having any person on the scene who is still able to speak is helpful, even if they were a drunk driver. Even if they were somebody who drove recklessly, hearing what they have to say is very important to reconstructing the scene.”

Weber acknowledges that hearing from fraudsters may be controversial, as anti-fraud professionals understandably don’t want to glamourize their actions. “I have been at the fraud conference many times where I have heard some of these convicted felons speak … and I agree it can put some of them on a pedestal,” he said. “But anything we can get from these people to help us reconstruct the scene, and build a better mousetrap in the future — we should embrace the ability to speak to them.”

To hear more from Weber, register for the 28th Annual ACFE Global Fraud Conference June 18-23 in Nashville where he will be teaching a session on the Panama Papers.

Excuses Don’t Hold Up in Court: Madoff 5 Found Guilty 


John Gill, J.D., CFE
ACFE VP of Education

“The only thing necessary for the triumph of evil is for good men to do nothing.” 

This quote has been attributed to the philosopher Edmund Burke. The verdict this week convicting five of Bernard Madoff’s former employees reinforces this wise observation.

No one reasonably believed that Madoff could have pulled off a multi-billion dollar Ponzi scheme for decades without assistance. The employees’ defense consisted of basically, “we did as we were told and we never knew the whole picture.” Similar defenses were tried during the war crimes trials after World War II, and they didn’t succeed then either.

I hope that the verdict will be noticed by employees who at this very minute are being asked to do things that they believe may be wrong, or at least questionable. Individuals, regardless of where they are on the organizational chart, must be held accountable for their actions. If an employee suspects that her boss is falsifying financial statements, stealing company funds, or lying to the government and does nothing, then she should be held accountable.

Thankfully the jury in this case did not buy the “I just did as I was told” defense. The U.S. Department of Justice is doing the right thing by sending the message to employees who are complicit in fraud schemes that if they know of wrongdoing and don’t come forward, they too can be prosecuted.

However, it’s not just about saying no to fraud; in many cases, it is about standing up to fraud. Both the Sarbanes-Oxley Act and the Dodd-Frank Act provide for substantial rewards for those who blow the whistle on fraud. Last October, the Securities and Exchange Commission (SEC) announced that it had awarded more than $14 million to a whistleblower who provided information that led to a successful enforcement action.

I sincerely hope that this verdict will cause employees across the U.S. and beyond to consider what they are doing or being told to do and ask themselves, “Am I assisting in breaking the law even though I’m just doing what I was told?” If the answer is yes, I hope they will not allow evil to triumph by doing nothing. Ignoring the problem may land them in jail.