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Hi -

It sounds like a well-crafted, classic affinity network scam, e.g.,

"In fact, the art world, with its clubby nature and casual intimacy between
dealers, collectors, galleries and artists, is particularly vulnerable to
exactly the kind of fraud that Salander masterminded.
"It's a world of relationships, friendships, handshakes," says longtime
Manhattan gallery owner Joan Washburn. "A world where you only deal with
people you know and trust. And often, transactions are very informal."

Moving millions w/o basic due diligence is unforgivable. In that sense the
victims are guilty too, despite the network patterns. Recall hearing very
few people knew Madoff, which substantiates some network conclusions.

Question for me is, given the scale and duration of the Ponzi scheme, were
specific network patterns crafted deliberately and consciously?

Meanwhile, the utter, wholesale and disgraceful collapse of the SEC network
patterns and structures is interesting too. This is a perfect example of why
markets need LESS regulation, not more... Tell Washington next 2 Nov!

Interesting that Madoff's scheme only surfaced, naturally, when the market
cratered. Or, as they say on Wall Street, "The regulators won't get ya, but
the market will!"


-j


-----Original Message-----
From: Social Networks Discussion Forum [mailto:[log in to unmask]] On
Behalf Of Valdis Krebs
Sent: Saturday, October 23, 2010 11:36 AM
To: [log in to unmask]
Subject: Re: [SOCNET] Strong Ties and deception

***** To join INSNA, visit http://www.insna.org *****

Yes, Madoff and Salander had two key networks -- 1) Buy and 2) Sell.
Salander had one network to acquire the art and another to sell the art.
Since Madoff did not appear to have actually invested the monies received,
his Buy and Sell networks may have been the same.

Here we see Madoff's inflows of money from key feeders/accumulators...
http://www.thenetworkthinkers.com/2009/02/madoff-feeder-funds.html
We notice 1)structural holes and 2)distance(Madoff was beyond the network
horizon of many of his investors). Distance may be the key ingredient?
Distance/Separation via structural holes and distance via steps in the
network - horizon of observability(Friedkin 1983).

Valdis Krebs
http://orgnet.com

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