was unprecedented”, as after adjustments for inﬂation, Ivar Krueger’s inter-war and John
Laws eighteenth-century frauds were on the same scale. A converse view is that the scale
and operating strategy of Madoff’s fraud would be familiar to any white-collar
criminologist,or ﬁnancial historian,as the economist J. K. Galbraith has noted:
The man who is admired for the ingenuity of his larceny is almost always rediscovering some
earlier form of fraud. The basic forms are all known, have all been practiced. The manners of
capitalism improve. The morals may not (Galbraith, 1979, p. 75).
From this perspective, Madoff started out with a commonplace afﬁnity fraud, and
subsequently grewit into investment fund fraud open to anyone gullible enough to invest.
Madoff was also following a familiar “rob Peter to pay Paul bubble,”latertermed “Ponzi
scheme” to lurein his investors.
The commonplace nature of the Bernie Lionel Madoff Securities (BLMIS) fraud did
prevent the case from achieving a level of infamy not witnessedin recent times. In short,
this investment fraud attained a symbolism in excess of being just another example of a
gifted con man swindling the afﬂuent out of their investments; rather, Madoff came to
personifying the discredited valuesthat led to the ﬁnancial crash of 2007: to some critics, he
became responsible for the crash (Hurt, 2009, p. 961). Thus, the investment fraud, with its
scale and reach, length of operation and also deft playing of the media by the “victims”,or
survivors as they termed themselves (Lewis, 2012, pp. 47-73), quickly established wider
symbolism and signiﬁcance.The extensive public interest in the case indicatedthat while
being a typical investment fraud, there was also something remarkable about Madoff and
To meet the wider interest in the case a number of mainly descriptive accounts of
theinvestment fraud have been published, (Arvedluund, 2009; and Markopolos, 2010). This
developing literature includesa sub-genre written from a social network perspective (Baker
and Faulkner, 2004;Nash, Bouchardand Malm, 2013). These structural analyses of criminal
networks draw attention to the importance of constructing and maintaining socially
embedded networks to provide proximity between criminal and victim. Socialnetworks are
therefore vital for facilitating fraud as they create proximity. In the syntax of conmen
(conﬁdence men), social networksallowed “ropers”to identify the investors (the “marks”)to
be “roped in, told the tale, and then ﬂeeced”(Lewis,2012,p.14).
These structural analyses are also analogous with well-established theories from
criminology, which consider the personality traits and social activities of white-collar
crime, to analyze the dis-utilities associated with their criminal networks. There is,
however, a limitation of these structural approaches in that they under-report the human
and qualitative qualities of personal interaction and social groups, as the social capital
theorist Robert Putnam has discussed:“Knowledge needs a social context to be meaningful”
(2000, pp. 170-180).
Accordingly, the extant social network (sometimes called structural) analyses of the
BLMIS investment fraud need to be expanded with an examination of the social context of
Madoff and BLMIS’s networks. This article will therefore expand the social network/
structural perspective to analyze the qualitative social context of the fraud’s embedded
network interaction, that is, to focus on the network interactions that are dependent on the
“persistence of human contact”(Cohenand Prusak, 2001, pp. 179-180).
The social capital concept encompasses the structural social network analysis (SNA)
favored by criminologists, who have studied the exploitative and deleterious effects of
socially embedded networks and transactions (Baker and Faulkner, 2004;Nash et al, 2013).
These analyses have already comprehensively reviewed the social network characteristics