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Bernard Madoff -- The Rule or the Exception?

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Add the name Bernard Madoff to the pantheon of big-time thieves. The legendary billionaire hedge fund manager, "the man with the Midas touch," now stands accused of running a massive Ponzi scheme, perhaps the largest in history. Year after year, his investors -- somehow, someway, in good times and bad -- received a consistent, steady return on their investments. If the accusations against him hold up, Madoff's modus operandi would have embarrassed Carlo Ponzi.

Ponzi, in the early 1900s, defrauded investors by paying out money to old investors -- not through legitimate earnings, but through the entry money of new suckers. The music, of course, stopped -- as it always does -- and the "investments" collapsed, leaving a bunch of people angry and broke.

To many, the Madoffs of the world confirm this "truism": the rich get rich not through hard work, risk-taking or crafty assumptions about the future. No, the rich get rich the old fashioned way: They steal. They profit through inside information, use their clubby network of eyes and ears, get a heads-up when storm clouds appear, and plunder the unsophisticated, and thus cleverly dodge the common misfortunes suffered by the "little guy."

But the overwhelming majority of the soon-to-be-a-lot-less-than-super-rich people did not deal with Madoff. They lost a lot of money while the guardian angels perched on their shoulders let it happen.

Consider the declining fortunes of some of these immune-from-disaster elites:

Indian brothers Anil and Mukesh Ambani of Reliance Capital lost a combined $60.7 billion. Anil dropped $32.5 billion -- perhaps making him, worldwide, the biggest loser in today's downturn.

Lakshmi Mittal of Mittal Steel -- whose $50 billion net worth last year made him the richest man in India and the fourth-richest in the world -- has lost $30.5 billion, sending his net worth plummeting down to about $20 billion.

Sumner Redstone is CEO of National Amusements, one of the largest entertainment conglomerates, which owns Viacom, CBS and all their subsidiaries, among others. His net worth -- so far -- has declined by more than 80 percent. Forbes, three months ago, placed his net worth at more than $5 billion. Facing a margin call (lenders wanting their money back), Redstone unloaded, fire-sale-like, hundreds of millions in stock to pay it off.

The Google guys, Sergey Brin and Larry Page, are down $12.1 billion this year -- nearly half their net worth.

Forbes magazine, in 2006, called Las Vegas casino and real estate mogul Sheldon Adelson the third-richest person in the country. He has lost $30 billion, perhaps the largest loss on paper in the history of the United States -- and this includes John D. Rockefeller's adjusted-for-inflation Great Depression losses.

Eddie Lampert of ESL Investments is sometimes called the "next Warren Buffett." But the Sears Holdings chairman has lost, so far, on paper, $5 billion.

And speaking of the still-gazillionaire Warren Buffett, even he's down $13.6 billion on paper, and thus forced to scrape by with only $48 billion.

No one's passing a hat for any of these people. They're still rich. But this shows that even smart guys' money can go south, Antarctica-like south.

The that-guy's-a-crook headlines aside, most rich folks do it the hard way. They get up early, bust their tails, and work harder than their subordinates. They treat their staff, employees and co-workers with respect. In return, employees enjoy their work, remain loyal and work hard for a boss who shows his appreciation. Decades of work later, the boss suddenly wakes up rich.

The rich consider their success primarily a combination of hard and persistent work. But most are humble enough also to recognize the role of luck -- lucky to operate in a place that values free enterprise and risk-taking, with a stable government and an orderly transition of power.

They subscribe to the adage that "the harder I work the luckier I get," without discounting the role of luck, chance and happenstance. But above all -- unlike the Madoffs of the world -- most successful people value and practice honesty.

Ephraim Diamond, one of North America's largest real estate developers, recently died. A former electrical engineer, this Canadian real estate czar came from a poor immigrant family. He co-founded and ran a wildly successful company called Cadillac Fairview. Business associates, friends and co-workers spoke about him with reverence. One of the company's senior directors said he "reeked of integrity."

Diamond once said, "If scoundrels were aware of the benefits of being honest, they would be honest out of pure rascality."

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