Bernie Madoff caught a number of investors and regulators off guard, but this isn’t the first time that it’s happened. As a matter of fact almost 70 years ago something eerily similar occured, according to Fortune.
Richard Whitney was a respected financier and a former New York Stock Exchange president. He was credited with slowing the slide in the stock market in October of 1929. He too ran an investment business. And he too ran out of funds for his business. Whitney resorted to stealing money from the NYSE, from the New York Yacht Club and his father-in-law. That strategy didn’t work out so well.
Whitney, who like Madoff, took blame for the firm’s admitted wrongdoing, went down fast. After the firm’s fall it took just one month for him to be indicted and shipped off to the slammer. He pleaded guilty to stealing $214,000 from funds he supervised. At his sentencing, he received a withering rebuke from the judge.
“To cover up your thefts and your insolvency, you resorted to larcenies, frauds, misrepresentations and falsifications of books,” the judge thundered, adding that Whitney had dealt “the decent forces of America” a “severe setback.”
And what happened to Whitney? He went to prison for a few years.
Whitney was paroled in 1941 after serving more than three years of his five- to 10-year sentence. He became the manager of a dairy farm, supervising three farmhands and 25 cows. In 1946, he went back into business when he became president of a textile company that made yarns from the ramie plant, which grew in the Florida muck. The former financier died in 1974 at the age of 86.
Yikes. Let’s hope Bernie develops a firm grip if he ends up in prison.