Reputation is NOT everything.

That is true for two reasons.
1. It can be lost
2. It can be false.

Two of the many painful lessons of the Madoff scandal are that a good reputation can be lost and or false.

It is hard for me to imagine that Mr. Madoff started out with the firm intention to defraud his friends and clients. The investigations and trial will reveal whether I am correct. I can imagine that at one moment, when some investments incurred a loss, he covered those losses by illegally depleting accounts of other investors, most probably expecting the market condition to improve and to be able "correct" the fraudulent transactions. Instead he must have found himself having to continue covering larger and larger losses until his operations became a Ponzi scheme.

Anyone's reputation that may have taken years or even a lifetime to build can be lost in one instant, by one single action. We are human and subject to errors in judgment and temptations to stray for the right path.

The fundament question for each one of us is who can we trust? Mr. Madoff had the best reputation one could imagine, yet it was not based on truth or reality. How do we know if someone's reputation is true? The cynic will say that you can trust no one but this is not a way to live and totally unrealistic. If we did not have some trust, we would never take an elevator, follow our doctor's advice or buy a product.

We should trust and verify. We should demand transparency even when we trust. I have a friend and attorney who told me that he was representing the managers of a multi-million dollar fund. They considered investing with Mr. Madoff and went to see him with specific questions as to how and where investments were made. They were not given the answers they were looking for and decided to walk away. I am sure many of Madoff's victims wished they had done the same.

George Henrik von Wright, the Finish philosopher was right when he said:

"Society is becoming less and less transparent. People no longer know where decisions that substantially affect their lives are taken, nor by whom, nor how."