What Can Serviced Accommodation Business Owners Learn from the New Madoff Documentary on Netflix?
Disclaimer: This article contains references to mental health issues, extreme fraud, and suicide.
Infamously known as “The Monster of Wall Street”, and the “Financial Serial Killer”, Bernie Madoff executed the biggest Ponzi scheme in history, defrauding thousands of investors out of tens of billions of dollars.
During his 17-year-long tyranny, Madoff not only wreaked financial devastation in people’s lives but led a few of them to suicide, including his own biological son.
In 2009, the fraudster was finally sentenced to 150 years in prison and forced to forfeit $170 billion in restitution. But even after dying (due to natural causes) at the age of 82 – Madoff has left victims behind, who are still paying the painful price of his crimes.
Earlier this year, Netflix released a four-part docuseries about Bernie Madoff’s record-breaking Ponzi scheme, worth an eye-watering $64.8 billion. Viewers from all over the world watched open-mouthed as the docuseries featured harrowing accounts from some of Madoff’s victims, as well as old news footage from when the story first broke on Wall Street.
While many people are still left reeling after watching the Madoff documentary, it’s impossible to ignore the disturbing lessons that this real-life crime can teach us.
We find this is especially relevant for serviced accommodation business owners just like you, who can be susceptible to fake promises, and dodgy deals, and remain at the risk of losing a lot of money – simply by trusting the wrong people.
Read on to uncover the lessons you can learn from Madoff’s abhorrent crimes; and ensure that you’re always making the right decisions as a serviced accommodation professional.
Miscalculated Trust: How Madoff Used his Powerful Position to Exploit Others – and Why This Should Remind You to Always Ask Questions
Upon completing the entire four-part series, the general consensus from viewers has been “How did Madoff get away with this enormous fraud for so long?”.
It’s easy to assume that we would have behaved more cautiously if Madoff was preying on innocent investors right now. But you have to remember, this entrepreneur was massively respected in the global stock market sector, something that he had meticulously worked towards for a number of years.
One of the most frightening parts of Madoff’s facade is that he actually owned a legitimate stock trading business that was doing very well.
But, in spite of this, the criminal continued to run his phoney consultancy business in secret (with the help of a few handpicked accomplices), where he would use new investors’ money to pay “returns” to exist investors. This is how the Ponzi scheme worked; and psychologists say it was purely fuelled by ego or sociopathy.
Because of Madoff’s other legitimate company (that was making good money and ticked all the legal boxes), people found it easier to believe that his consultancy business was also in keeping with the law.
Unfortunately, people will often believe what they want if it makes life simpler for them – and this was probably the case with Bernie Madoff’s victims.
However, imagine a situation where you get approached by an SA property expert, who invites you to join their franchise business model. Their existing short-term rental business may seem perfectly legitimate when you do your due diligence, but this doesn’t necessarily guarantee that their franchise model will be trustworthy too. The two brands need to be reviewed and verified separately – an approach that Madoff’s victims failed to take.
In the event of verifying an SA business leader’s franchise business, you must first entirely disassociate them from the success of their other brands. Don’t be fooled into thinking that just because one of their companies is legitimate, the other will be too.
Ideally, these are the things you should be looking for when doing your due diligence for a franchise business:
✅ Set-Up Fees: Is the franchise model asking you to part with a large amount of money upfront? It is normal for an SA franchise business to ask for set-up fees, but an ethical and credible company will not ask you for a huge amount of money upfront, as they will have enough confidence in their delivery and service. For example, at Luke Stays we ask franchisees for the lowest investment fee on the market.
✅ Success Stories (with Proof): Don’t just believe lovely words on a website; it is all too easy for fraudsters to fake stories and manipulate you into trusting them. Ensure you go above and beyond to find reviews from other franchisees who have invested in this model and dive deep into their experiences and journey. If the SA leader makes a sweeping statement about how they have helped build 10 other franchise businesses with their model, ask for proof. For instance, our franchisee members at Luke Stays are continuously sharing their personal stories of partnering with us across their personal social media. We even introduce them to other aspiring franchisees, should they wish to learn more.
✅ Processes and Solutions: Madoff’s victims turned a blind eye towards his “practises” and only concerned themselves with the end result. But when you enter a partnership, you must take some form of responsibility – and entering a serviced accommodation franchise model is no different. We do an excellent job of mapping out the entire journey, processes, and terms and conditions with our franchisees before they’ve even started working with us at Luke Stays. Transparency is key.
Of course, the above points have been used for the context of a franchise business model – but you can use the same approach with nearly every business deal or partnership. The key lesson here is to ask questions – and don’t be made to feel like an inconvenience for doing so.
Two Plus Two Never Makes Five: Remember, if Something Sounds “Too Good To Be True”, it Probably Is
Madoff was cunningly smart. Knowing that investors would instantly recognise the signs of a blatant Ponzi scheme, he didn’t promise to make them rich overnight.
Instead, the fraudsters repositioned his offer and guaranteed moderately high returns with no risk.
However, there was still a huge red flag here, which devastatingly failed to get picked up. There is essentially no such thing as “zero-risk investments” in the stock market, and while many investors questioned Madoff’s methods, a larger number of them were just taken aback by the millions they were making and decided not to poke the bear.
In hindsight, it seems this was a mixture of foolishness and greed on the investors’ part. Of course, many of them genuinely did trust Bernie Madoff because of his revered reputation – but we must also admit that the victims’ judgement might have been heavily clouded, as they became addicted to serving themselves.
Unfortunately, the serviced accommodation industry is rife with get-rich-quick schemes and so-called coaches and gurus who promise to make you thousands overnight, “with as little work as possible”.
The idea of being unemployed one week, to achieve financial freedom from a sunny beach in Bali the next week – definitely sounds too good to be true, right? Yet an increasing number of aspiring business owners continue to fall for the hoax, set up by shady property “entrepreneurs” – who barely have five grand to their name.
The worst part is, a number of these fake coaches trick you into “investing” hundreds if not thousands of pounds into a single life-changing coaching call, that is no more than a Zoom meeting with a dodgy slide deck.
CEO and founder of Luke Stays, Ryan Luke has been coaching and supporting aspiring SA business owners for years. So, in his case, people can verify his track record and credibility by doing the following:
🚀 Check His Company on Companies House: Here, you’ll find that the business is active, registered, and perfectly in line with the legal guidelines and the law.
🚀 Review His Digital Footprint: The biggest advantage of doing business in the age of social media is that you can quickly suss a person out through their personal accounts and a quick Google search. You’ll find that Ryan Luke is respected and revered in the industry, often speaking at global events, and appearing on a number of podcasts and panels. Our CEO has also been featured in the Daily Mirror and various other publications.
🚀 Finding Out the Opinions from Colleagues, Peers, Clients and Guests: Perhaps the destructive reign of Madoff would have been shorter if people had taken the opinions of others into serious account. The fraudster was accused of criminal behaviour on many occasions but always managed to wriggle his way out of it, as there were rarely any follow-ups. When you’re looking to spend money with a self-proclaimed coach and expert, it’s vital to find some reliable reviews and recommendations beforehand. In Ryan Luke’s case, the Recommendations section on his LinkedIn profile is an excellent start, as well as endorsements from renowned industry leaders including Chris Maughan, Bill Faeth, Amber Hurdle, and Simon Lehmann.
🚀 Assessing His Track Record: Has the SA entrepreneur who guarantees you millions, made millions themselves? The proof really is in the pudding in this case; and if somebody claims to change your life with STRs, then you should definitely expect them to have done the same with their own life first. For example, our CEO is currently in control of a property portfolio worth over £90 million – so much so, it’s even turned the heads of well-connected journalists and reporters.
Lastly, be sure to use your initiative and common sense; and evaluate whether you’re being overpromised by a short-term rental coach or mentor. Fraudsters have a cruel way of exploiting your weaknesses and deepest desires; just as Madoff did for nearly two decades.
Tallying Up the Trust: Recognise What Leading with Trust Looks Like
In an industry as heavily unregulated as short-term rentals, where fraud and deception are unfortunately rife – it’s more important than ever to recognise trust signals.
Madoff doctored several fake statements, and documents, and hired a team of ruthless accomplices to continue his facade. However, the walls eventually began to crumble when the trust between him and his investors began to erode.
We talk a lot about eliminating uncertainty in the Short Term Rental industry, particularly regarding direct booking strategies (and how some guests choose not to book direct, because of uncertainty). Well, it was this exact uncertainty that first raised the eyebrows of the victims of Madoff who had already been fleeced.
Unfortunately, the investors were too late in acting upon their uncertainty. But this should be a monumental lesson for you when you’re choosing to work with a serviced accommodation professional or company – in any capacity.
What Madoff ultimately lacked, in the end, was official “verification” and solid proof that he was in line with the law (naturally, as he was a serial criminal). This is what got him sentenced to a symbolic 150 years.
This is precisely why Luke Stays (as a short-term rental company) and Ryan Luke (as a short-term rental manager) are I-PRAC Approved, meaning they guarantee 100% trust, payment protection, and security.
I-PRAC is the industry’s only verification and membership platform, and its approval process is meticulous – so getting the I-PRAC Approved badge of honour is certainly no easy feat.
It does make you question whether digital tools, platforms, and better resources would have stopped Madoff in his evil tracks during the 90s and early noughties?
Or is there simply a lot more work to be done in cementing trust, protection, ethics, and credibility in the business world; and in the Short Term Rental industry at large?
All we can be sure of is, we’d rather not take the chance and stick to following meticulous protocols instead.
For more information about how Luke Stays has become the most trusted brand in the industry, visit our trust page in the short term rental industry.
Also, follow and connect with our CEO Ryan Luke on LinkedIn, Facebook, Instagram, and TikTok for all the latest in the industry.
