They "Madoff" With It...

Bernie's not the only fella who "Madoff" with his investors' money...during a recent family roundtable at Komang's home, the topic of a small bank paying over 300% interest to depositors over 4 months came to the forefront of the discussion. This particular bank pays interest and returns the principal on $300 in the form of a $1,200 scooter or even cars for larger deposits. "Not possible", I piped up. Her brother laughed in agreement, and her parents, despite having friends who have successfully "invested" were skeptical enough not to take it seriously.

I explained that in order for the bank to pay such interest, it must find investments of its own that pay returns in excess of those it provides its depositors. Then it hit me...Bernie Madoffs and ponzi schemes are alive and at work, even in small villages in Indonesia. This particular bank had been open for a couple of years, and apparently had no problem attracting myriads of new money as it doled out new scooters and cars to Indonesians who usually spend 1-5 years' wages for such purchases.

One day, approximately two weeks after our dialogue, I pulled up to the house. "Yesterday, the police went to the bank, shut it down, and took the owner to the police station," Komang called out. The timing was quite ironic, and I was glad that it appeared justice would be served. Conversely, I felt terrible for those who had their life savings deposited there, including a friend, Nyoman, whose family has decades of savings tied up. Nyoman is awaiting the return of his money...I decided not to say anything...

Comments

Andrew_Mehlhorn said…
Damn, even Madoff didn't have the balls to guarantee 300%. What were they up to I wonder? Someone should find out the real story and sell the movie rights.
Anonymous said…
Are you still traveling? Or have you returned home? No new entries for a while. Thank you for this journal, what a great adventure.