Page 51 - Malcolm Gladwell - Talking to Strangers

fraud in history, but what were the chances of that?
The Holy Fool is someone who doesn’t think this way. The statistics say that the liar and the con
man are rare. But to the Holy Fool, they are everywhere.
We need Holy Fools in our society, from time to time. They perform a valuable role. That’s why
we romanticize them. Harry Markopolos was the hero of the Madoff saga. Whistleblowers have
movies made about them. But the second, crucial part of Levine’s argument is that we can’t all be
Holy Fools. That would be a disaster.

Levine argues that over the course of evolution, human beings never developed sophisticated and
accurate skills to detect deception as it was happening because there is no advantage to spending
your time scrutinizing the words and behaviors of those around you. The advantage to human
beings lies in assuming that strangers are truthful. As he puts it, the trade-off between truth-default
and the risk of deception is
a great deal for us. What we get in exchange for being vulnerable to an occasional lie is efficient
communication and social coordination. The benefits are huge and the costs are trivial in
comparison. Sure, we get deceived once in a while. That is just the cost of doing business.
That sounds callous, because it’s easy to see all the damage done by people like Ana Montes and
Bernie Madoff. Because we trust implicitly, spies go undetected, criminals roam free, and lives are
damaged. But Levine’s point is that the price of giving up on that strategy is much higher. If
everyone on Wall Street behaved like Harry Markopolos, there would be no fraud on Wall Street—
but the air would be so thick with suspicion and paranoia that there would also be no Wall Street. 1

4.

In the summer of 2002, Harry Markopolos traveled to Europe. He and a colleague were looking for
investors for a new fund they were starting. He met with asset managers in Paris and Geneva and all
the centers of capital across Western Europe, and what he learned stunned him. Everyone had
invested with Madoff. If you stayed in New York and talked to people on Wall Street, it was easy to
think that Madoff was a local phenomenon, one of many money managers who served the wealthy
of the East Coast. But Madoff, Markopolos realized, was international. The size of his fraudulent
empire was much, much larger than Markopolos had previously imagined.
It was then that Markopolos came to believe his life was in danger. Countless powerful and
wealthy people out there had a deep-seated interest in keeping Madoff afloat. Was that why his
repeated entreaties to regulators went nowhere? Markopolos’s name was known to prominent
people at the SEC. Until the Ponzi scheme was publicly exposed, he could not be safe.
He decided that the next logical step was to approach New York’s attorney general, Eliot Spitzer,
who had shown himself to be one of the few elected officials interested in investigating Wall Street.
But he needed to be careful. Spitzer came from a wealthy New York City family. Was it possible
that he, too, had invested with Madoff? Markopolos learned that Spitzer was going to be in Boston
giving a speech at the John F. Kennedy Library. He printed out his documents on clean sheets of
paper, removing all references to himself, and put them in a plain brown 9x12 envelope. Then, to be
safe, he put that envelope inside a larger plain brown envelope. He wore a pair of gloves, so he left
no fingerprints on the documents. He put on extra-heavy clothing, and over that the biggest coat he
owned. He did not want to be recognized. He made his way to the JFK Library and sat
unobtrusively to one side. Then, at the end of the speech, he went up to try to give the documents to
Spitzer personally. But he couldn’t get close enough—so instead he handed them to a woman in
Spitzer’s party, with instructions to pass them along to her boss.
“I’m sitting there, and I have the documents,” Markopolos remembers.
I’m going to hand them to him, but after the event, I give it to a woman to hand it to Eliot Spitzer
because I can’t get to him. He’s just surrounded by people. Then he heads out the back door. I
think he’s going to go to the restroom and go to have dinner next door, all right? I’m not invited
to the dinner. He’s heading out the back door to get in a limo to the airport to catch the last
shuttle flight to New York.…Eliot never got my package.