Benjamin Graham once said that you should never invest in companies that have engaged in malfeasance involving their earnings results, citing the necessity to have accurate numbers in order to make an investment. Since reports of outstanding debt, net profits, and cash flow are necessary prerequisites for determining what a business is worth, unreliable accounting would render business valuation nothing more than a guessing game.
And that brings me back to Benie Madoff’s selection to have a firm called Friehling & Horowitz serve as the auditors for the investment funds held through the Bernard L. Madoff Investment Securities, LLC. And what did Friehling & Horowitz consist of? A small 500-square building previously used for medical billing that consisted of nothing but Jerome Horowitz and David Friehling, who essentially were retirees chilling in Miami.