From Vanity Fair (hat tip to Freakonomics), an article about Madoff, his family, his victims, his suckered friends:

“I want justice!” screamed Joan Sinkin, who, along with her husband, Arnold, a retired contractor, had sunk every cent from 55 years of work and the proceeds from the sale of several houses into Madoff. After learning that they had lost everything, she was hospitalized with what seemed like a stroke, and her husband collapsed. “I want to be treated like G.M. and A.I.G. and Bank of America! I can’t wait years! I want S.I.P.C. [Securities Investor Protection Corporation, which insures investors up to $500,000] to put people like us back on our feet!” Out of her husband’s hearing, she whispered, “We had a good life, and it’s gone.”

[...]

“It’s boring now, the poor-victims story,” said Larry Leif, a Florida investment adviser who lost $8 million, and who has since become a lightning rod for victims’ rights. “I’m into legislation and action for those who were fooled. I’ve been on CNN six times, and it looks like Fox is going to give me a one-hour show, and we’re going to a town-hall victims’ meeting in Boca next week.” His ex-wife, Ronnie Sue Ambrosino, called me from Surprise, Arizona, where she said she’s been stranded since she learned that she’d lost all she had, $1.7 million. “Everybody knows we’re penniless and can’t pay our mortgages,” she said. “That’s not what people need to hear anymore. They need to hear the next step. Write about how the government let this happen and how the government is letting the victims down. I need people to know that the S.E.C. failed miserably for at least 10 years, if not more, that they were warned, and that they didn’t stop this devil from doing his deed. I need people to know that S.I.P.C. has taken more than a month to get a claim form out to help the victims. I need people to know that the I.R.S. has been collecting taxes on phantom income for at least 10 years. I need people to know that Bernard Madoff has given money to senators across the country in their campaign funds. So you tell me how our government is helping support the victims, or are they supporting themselves?”
That's a mighty lot of whining coming from people who committed stupidities such as the following:
Soon I knew of approximately 50 investors in Aspen who had been stung. As one of them told me, when the stock market began to slide, they had begun shifting “from the losers to the winners,” until some of them had everything except their houses—which in this town can mean a $10 million asset, frequently pure equity—invested with Madoff. Then, as Madoff kept performing and the market kept going to hell, the house would also go to him. “Everybody looked at it like a money market, backed by U.S. Treasuries,” one business leader said. “They kept pulling money out and putting it in. Somebody—I don’t want to mention his name—refinanced his house a couple years ago, when the rates were low, and put all of the money with Madoff. Now he has no money and no house.”

They called it “playing the spread.” Five years ago, if someone had a mortgage-free home in Aspen worth $15 million, he could easily get a mortgage on it for $10 million at 4 percent interest. The carrying costs on that $10 million mortgage would have been $400,000 per year. By investing the $10 million proceeds of the mortgage with Madoff at a 12 percent return, the 8 percent difference between the carrying costs and the return would have given the owner $800,000 per year. One friend said, “A lot of people here own their houses free and clear, so that would be a home run.”
Or this:
Goldman decided not to invest. In 2001, two skeptical articles appeared about Madoff, one in Barron’s and another in a hedge-fund trade publication (articles, sources said, that upset Mark Madoff but that Bernie seemed to take in stride). “Wherever I went, I’d tell people, ‘Don’t invest with this guy!,’” Goldman said. She even sent the articles to members of the Palm Beach Country Club. “I was expecting a thank-you, and all I got back in return was a hostile response. Some of the Madoff investors said that I was behaving unprofessionally and was bad-mouthing a competitor. Oh, they were nasty! Nasty! They said all these publications were jealous of Bernie. They were being anti-Semitic. People called me an anti-Semite. I’m not only a Jew, I live in Israel!”
Madoff's hardest hit "investors", those who lost everything including the roofs over their heads, appear to be what I would call the naive rich - people living under the illusion that wealth can somehow be safely preserved without effort.

Such "investors" are not much different in mindset from millions who live and work under the illusion that wealth can be safely preserved by putting it into a bank. The difference is, U.S. law treats these types of investors differently. If you put your money in a bank, or invest it up to a certain threshold, you are considered to be a fairly clueless person who needs protection of the law so as not to be fleeced outright. If, on the other hand, your net worth exceeds a certain threshold, then you are considered to be a responsible individual who knows about the ins and outs of investment, and who can be left responsible for their own financial decisions, whether or not they turn out to be wise.

In this case, my impression is that there were big groups of naive rich socialites putting all their eggs into a single basket. Then, when that basket blew up - gosh! How come the government failed to protect us?

The fact of the matter is that, yes, Madoff belongs in jail - the worse the jail, the better. But the victims, posing for pictures such as in the article, and whining about now having to live with their children and having to find work waiting tables, fail to attract my sympathy.

These are naive people who trusted a man with their whole net worth based on herd instincts, without understanding what he does, without scrutinizing his investment strategy. Either put your eggs in many baskets, or, as Warren Buffett says: put them all in one basket, then watch it closely.

These people did neither. Wealth cannot be preserved this way.