On the heels of the economic meltdown and the financial bailout comes Bernie Madoff, the former chairman of NASDAQ, with his 50 billion dollar Ponzi scheme which, according to the Wall Street Journal, has stunned “sophisticated investors”.  These individuals and foundations, affluent enough to invest millions with Madoff in a ‘too good to be true/don’t want to be left out’ scenario, are today wondering what happened to their wealth.  

The effects of the investment scheme have been felt worldwide.  Here in the United States, in Palm Beach, FL, for example, where many of Madoff’s investors reside at least part of the year, multi-million dollar homes have suddenly gone up for sale overnight with household antiques and lush furnishings being put up for auction.

How could such seemingly intelligent, successful people see their money just suddenly vanish and ‘be taken to the dry cleaners’ by just one man?  In fact, news sources indicate many lost up to 95% of their wealth.

The answer is a simple one:  Greed.

It’s the same answer that got the nation into the sub-prime mortgage mess.  Greedy people with big eyes who wanted to live in houses they couldn’t afford and when they had a chance to get an adjustable rate mortgage or a no-interest loan, they thought the good times would role forever and their houses would continue to go up in value at an astronomical rate.  How could they pass up such a deal?  Except house values stopped rising just as adjustable rate mortgages came due and began their interest ascent.   For these homeowners, the economy tanked at the same time their pay raise didn’t come through or the house they invested in couldn’t be sold.   Now foreclosure is the only option.  It’s what many are calling “the perfect storm”.

Greed is part of the human condition.  I never go to an all-you-can-eat salad bar.  Because I too can fall victim to the human condition called greed. I pile my plate high several times, eat too much, and then afterwards question myself about the sanity of gourging myself.  It’s like the old saying:  ‘It tasted good going down but afterwards it didn’t feel so good’.  The same can apply to Madoff’s Ponzi scheme or to the people who bought houses above their means.

Now let’s talk about how this applies to running your business.  There isn’t any CEO, company president or business owner who isn’t affected by the current economy.  This is the time when the dishonest and the scammers will be coming at you using that human condition called greed to take your money and to make “deals”.

One of the key elements about greed is that often you fall short in asking the right questions or asking any questions at all and instead become involved or invested in something simply because you don’t want to ‘pass up a good thing’ and look foolish by asking a lot of questions.

Moral of the story:  Always ask questions.  Ask questions in your business dealings till you are satisfied you have the necessary answers to move forward.  And if someone doesn’t want to answer your questions or answer them as fully as you would like, let that potentially be a red flag to you to rethink the situation.

Be very careful who you do business with.  Remember, if it sounds too good to be true, it probably is too good to be true.  Don’t fall for the bait called greed.  You may lose your business in the process. 

And then what?