Alexandra Penney is an American author best known for her 1982 best-selling book "How to Make Love to a Man" who was also an editor at Self magazine and has been credited as one of the creators and popularizers of the pink ribbon as a symbol for awareness of breast cancer.
Ms. Penney earned a "substantial" amount of money as an author. A recommendation from a friend led her to invest with Bernie Madoff with the idea that said funds would be safe.
On Thursday, December 11, 2008, agents of the FBI arrested Bernie Madoff and charged him with one count of securities fraud. That was day the world of safe, secure investments to the tune of fifty billion dollars came to a screeching halt and left those who had trusted so much slack-jawed at their money vaporizing. That was the day a last name entered the English lexicon as a verb denoting the state of being most foully scammed. Ms. Penney had been "madoffed".
Ms. Penney documented her experiences post financial loss in a series of articles entitled The Bag Lady Papers which were published in The Daily Beast, an online news website. Starting from the moment she first heard the news, to the realisation that everything she had invested with Madoff had just disappeared, she tells of her life and how she got to where she was. She then diarizes dealing with the life altering event of losing one's nest egg and figuring out the next step. She goes through a list: lay off the housekeeper, sell jewellery, get rid of some property and finally, look up the Hemlock Society to find out a painless way to die only to discover it no longer exists.
It is a telling moment when she talks about the statements she got from Madoff showing a return on investments consistently around 10%. Harry Markopolos, an independent fraud investigator, repeatedly told the Securities and Exchange Commission starting as far back as 1999 that it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. They did nothing. Alexandra Penney penned a series of articles about her situation but she is just one person. What about all the other people who were duped by Bernie? Where are their articles, their blogs, their painful recounting of their harrowing ordeals coping with financial ruin?
Phyllis Molchatsky
In a moving video from March 2009, Ms. Molchatsky tells her story of working since she was 17 and wanting a better life for her family. At the age of 51, she was diagnosed with Parkinson disease. She had invested $1.7 million with Madoff and thought it had grown to $3.8 million and based on the recommendation of her doctor to stop working; she thought she had enough to live and not be a burden to her family. She lost it all. Reports said she would have to sell her home and while she had insurance at that moment, the future was uncertain as to how she was going to continue to live without being that burden. (see NY Mag-Oct 14/09 for a compelling personal story of this woman's loss)
As a follow up, Ms. Molchatsky did file suit against the SEC on October 14, 2009 accusing the government agency of failing to properly investigate Madoff. However, suing a government agency doesn't have much of a chance of success but one has to try.
Is there hope?
While the number $50 billion has been bandied about as the total amount lost in the Madoff scam, experts have pointed out that this number represents what investments were supposed to be worth. In reality, it is felt the original investments only total $20 billion. That is, people have lost $20 billion as their original investments; the rest would represent interest supposedly earned on those investments.
A key to the recovery of some of that money is connected to the widow of Jeffry Picower. The Picowers greatly benefited from Madoff and his investment schemes, so much so that they amassed a staggering amount of money. At the moment, it is unknown why Madoff would have directed so much of the proceeds from his Ponzi scheme in their direction, but whatever the case, Barbara Picower has agreed to turn over $7.2 billion as per reports dated December 17, 2010. Coupled with the $2.6 billion recovered in stolen assets, this represents nearly half of the supposed $20 billion lost in the Madoff business.
Irving Picard, the court-appointed trustee in the Madoff case, has stated that this money will spare victims a recovery process which would prove to be lengthy because of litigation. Picard claims that Picower was a key beneficiary of Madoff's scheme. Picower had only deposited $619 million but had withdrawn $7.8 billion from Madoff's firm since the 1970s Picard has also stated that Picower "knew or should have known that [he] was profiting from fraud, because of the highly implausible high rates of return" on his accounts. His widow denies that her late husband had any idea he was benefiting from a scam.
What does the future hold?
It will take time for the trustee in the case to deal with the particulars. Apparently Irving Picard is examining each individual case where an investor is suing to recover their money. He is throwing out any case which is seeking to recover profit or interest and trying to focus on those where he can return just the original investment. However, not everyone is suing for recovery.
Retired British Army Maj. William Foxton, 65, lost his life's earnings in the Ponzi scheme. He shot himself on Feb. 10, 2009. His son, Willard Foxton says that he is stunned by the news that so much money is being returned by a single investor. He added that his father probably wouldn't have taken his life if he had thought he might get his money back.
Final Word
If it sounds too good to be true, it probably is. Apparently this catchphrase originated with the Better Business Bureau back in the early 1950's as a way of alerting the public to shady business practices. Do we always heed the call? Does greed or just unrealistic hope blind us to the reality of the world? We all want to be rich or at least financially independent but at the end of the day, the tried and true method comes back to Slow and steady wins the race. There are no shortcuts and we certainly can't be staking our future on winning the lottery.
What became of Alexandra Penney? She wrote a book called The Bag Lady Papers and I have left links below to a review and excerpts. Will she ever recover? Probably not to where she may have been before the Madoff affair blew up. If she continues to write she will earn something but for the most part, she's starting over again, not quite from scratch but it is starting over. She may be lucky to recover something from the trustee considering the $7.2 billion returned by Mrs. Picower but I wouldn't be counting on it. It is going to take years to sort out that mess.
All of us make investments with the hope that the person sitting on the other side of the desk taking our money knows what they are doing and are not a crook. Madoff is certainly a reminder that we need to do our homework about the person and the company with which we invest. We also need to pay attention to unrealistic claims. Nobody can promise 10% or 15% year after year. It is mathematically impossible and that's something you can count on.
References
Urban Dictionary: madoffed
http://www.urbandictionary.com/define.php?term=Madoffed
To be scammed in a financial, or Ponzi scheme. Money lost is often several millions of dollars.
Wikipedia: Alexandra Penney
http://en.wikipedia.org/wiki/Alexandra_Penney
The Daily Beast - December 17, 2008
The Bag Lady Papers by Alexandra Penney
http://www.thedailybeast.com/blogs-and-stories/2008-12-17/the-bag-lady-papers
http://www.thedailybeast.com/blogs-and-stories/2008-12-22/the-bag-lady-papers-contd/
http://www.thedailybeast.com/blogs-and-stories/2009-01-06/the-bag-ladys-papers-part-iii/
The Bag Lady Returns - March 2009
http://www.thedailybeast.com/blogs-and-stories/2009-03-04/penney-ruth-madoff/
Madoff victim and Daily Beast blogger Alexandra Penney has discovered an even more repugnant sociopath than Bernie: his loyal wife Ruth, who now wants to keep $69 million, including the penthouse. Outraged Penney asks: Excusez moi?
CNN - January 13, 2009
Life savings gone, 'Madoffed' best-selling writer back at work
http://www.cnn.com/2009/CRIME/01/09/madoff.alexandra.penney/index.html
Wikipedia: Ponzi Scheme
http://en.wikipedia.org/wiki/Ponzi_scheme
Wikipedia: Bernie Madoff
http://en.wikipedia.org/wiki/Madoff
Book Review: 'The Bag Lady Papers: The Priceless Experience of Losing it All'
By Inman News - Jan. 4, 2011
Title: "The Bag Lady Papers: The Priceless Experience of Losing it All"
Author: Alexandra Penney
Publisher: Hyperion, 2010; 220 pages; $23.99
ABC News - Feb 17, 2010
Excerpt: 'Bag Lady Papers' by Alexandra Penney
Former Self Magazine Editor Lost Her Life Savings in the Bernie Madoff Scandal
ABC News video: interview with Alexandra Penney
http://abcnews.go.com/GMA/Books/video/alexandra-penneys-bag-lady-papers-9907692
It almost sounds comical. She says that her son phones her and says, "Mom, Madoff has been arrested. You can come and live with us."
origin of If it sounds too good to be true, it probably is
2011-01-05
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