Word: madoff
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...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...
...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...
...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...