Negotiation Trust: It’s ALWAYS an Inside Job

As I head out to mediate an alleged Ponzi scheme purportedly perpetrated by one member of the Adath Israel Shul/* against another, I ponder its similarity to many other allegedly fraudulent financial schemes I’ve personally mediated.  Then I pick up the morning New York Times where, three thousand miles away, “at Green’s Pharmacy, a popular lunch counter in downtown Palm Beach

a man who said two of his relatives were founding members of the [Palm Beach] country club wondered aloud whether the club’s unusually exclusive nature, especially among the wealthiest investors, is what enabled [Bernard L. Madoff’s] suspected scheme to go on so long.

“Anyone can get robbed,” the author of a tell-all about the country club, Madness Under the Royal Palms told New York Times reporter Ian Urbina. “Madoff’s scam was so much worse because he was one of their own.”

Whether he’s working the Shul, your local evangelical brethren or the elite of Palm Beach, the con man’s stock in trade is contained in his name — “con” for confidence.

We don’t get robbed for thousands, tens of thousands, hundreds of thousands or millions when someone jumps out of the bushes and demands our watches and jewerly.  No.  To get robbed on a massive scale requires trust and confidence in an authoritative figure who – gasp – is one of us.

As Albert Brooks said to Holly Hunter in 1987’s masterpiece Broadcast News,

What do you think the Devil is going to look like if he’s around? Nobody is going to be taken in if he has a long, red, pointy tail. No. I’m semi-serious here. He will look attractive and he will be nice and helpful and he will get a job where he influences a great God-fearing nation and he will never do an evil thing… he will just bit by little bit lower standards where they are important. Just coax along flash over substance… Just a tiny bit. And he will talk about all of us really being salesmen. And he’ll get all the great women.

Of the six rules of influence Madoff played on all of them.


Reciprocation: Reciprocation is about how, if you do something for somebody, they will feel obliged to do something for you, or they will at least feel better about doing something for you.

Commitment and consistency: People respond to others who are consistent in their messages. If you are constantly giving the same messages to people and acting in a consistent way, they will respond positively.

Social proof: If people see others doing something, they assume that it must be okay to do it and therefore, they will be happier about doing it themselves.

Liking:  People respond much more readily to people that they like, and even to the friends of people that they like. They feel comfortable if they see similarity or like the things that you’re associated with.

Authority: People invariably act more positively if they have respect for the authority of the person who is giving them information.

Scarcity: People get so much more interested in something if they feel that it’s about to run out.

from Mind Power Marketing here.

Con men do what we do; pretend to hold the same values we do; go to “our” “club”; attend “our”  social events; give to “our” charities; and, and look like “us.”

For another view of this same story — including the fact that Madoff’s suspicious activities were  reported to the SEC in 1999, see Jeff Matthews is Not Making This Up here.

Tips to the con-man wary will follow.

And did I say this is my 1,000th post.  I couldn’t think of anything to do to celebrate it other than to just keep on keepin’ on.


*/  All names, places and some circumstances of the mediated case changed to maintain confidentiality.


Victoria Pynchon

Attorney-mediator Victoria Pynchon is a panelist with ADR Services, Inc. Ms. Pynchon was awarded her LL.M Degree in Dispute Resolution from the Straus Institute in May of 2006, after 25 years of complex commercial litigation practice, with sub-specialties in intellectual property, securities fraud, antitrust, insurance coverage, consumer class actions and all… MORE >

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