Willful investor ignorance of how returns are made enables fraud

Evidence

Madoff ran his operation for a long time without a large cadre of smart money manipulators wielding intricate financial instruments. This was a readily detectable fraud. However, Madoff’s brother, who oversaw the compliance program, circumvented regulators by filing phony documents and fraudulent tax returns (Lattman & Protess, 2012). The banks and prospective investors who flocked to Bernard Madoff seemed more interested in his high returns than in how he achieved them. — Albert Bandura, Moral Disengagement, 1453

Categorization

• XREF: The ‘if you’re doing something wrong we don’t want to know’ bank attitude is a structural-level moral disengagement that parallels bystander complicity claims in the vault.
• corroborated: 2 independent passages support this claim — Albert Bandura, Moral Disengagement: How People Do Harm…, 1453