Into my computer pops an unsolicited e-mail: “Dear Mr Mortished, as a leading investment commentator, you have become eligible to participate in an exclusive new investment fund available only to discerning high net worth individuals. As a member of a select and privileged community of private investors, you will benefit from the skills and knowledge of Bernard Madoff.”

Sadly, no such e-mail was sent and, as a low net worth sort of guy, I would never have made the Madoff mailing list. Over the past week, however, we have heard of famous people and, more importantly, famous institutions — Royal Bank of Scotland, Man Group, Banco Santander and Union Bancaire Privée, the Geneva wealth manager — apparently gulled by the oldest ruse.

In his own words, Mr Madoff's funds were a Ponzi scheme, a sham in which the last investor's money was used to pay off previous investors. Tens of billions of dollars are said to be lost, much of it by pukka institutions. But the important point is not that big banks were putting clients' money into a pyramid selling scheme. The real shocker is that Mr Madoff's clients, private and corporate, seemed to believe that his extraordinary success was both possible and legitimate. The funds he ran showed consistent returns of between 10 and 12 per cent a year over decades.

I receive frequent promises of wealth by e-mail. Correspondents claim to be executives of Nigerian oil companies or relatives of deposed dictators and promise a share in a pot of stolen money in return for supplying bank details or paying a fee. During the 1990s property crash, desperate businesses were targeted by cheap loan scams. Pandering to a naive belief that, somewhere, privileged people were getting credit at half the normal rate, the scammers promised access to secret offshore money hoards at sub-Libor interest rates. All you had to do was pay a £50,000 administrative fee in advance. The point is that among the thousands who delete such e-mails and laugh at the absurdly cheap loans, there is always one who replies, excited by the prospect of money for nothing. Occasionally, scammers hook desperate people, but more often the crooks rely not on the folly of those on the edge but on simple greed. If the scammers persist, it is because they are successful and because, police say, their victims rarely complain, ashamed to admit their intent to profit from proceeds of crime.

For Mr Madoff's corporate victims there is no place to hide their embarrassment. There is no suggestion that these institutions were aware of any wrongdoing, but that leaves the question: what did they think? Where did they believe these profits came from?

Outside the community of investment professionals, the world of savings by ordinary people operates on such simple maxims as “If it looks too good to be true, it probably is”. If someone is generating returns double or triple what you get from risk-free gilts, you can draw two conclusions. The first is that such returns will not last and the second is that a fund delivering high returns is exposed to high risk of loss.

However, Mr Madoff appeared to win at every throw of the dice. The losses are gaping holes in some very public accounts. Worse, is the gap left in the credibility of investment management. If Northern Rock and Lehman Brothers put paid to what public trust remained in bankers, then Bernard Madoff and his fan club appear to have done a similar disservice to fund managers.

This is very bad for London. Again, an industry that is an important prop to the UK economy is shown to be a seedy fairground where tricksters lure poor saps. Men like Mr Madoff target the greedy, the insecure and the professional but lazy. It's the myth of a pot of money available only to a select few.

There are only three ways to get really rich. The first is to inherit. The second is to set up your own business. You may sacrifice your health and your family in nurturing it. The third is to cheat, but that need not mean outright stealing. It could mean piggybacking on the immorality of others.

For those of us not rich enough to draw Mr Madoff's attention, there is a consolation. Alongside “Too good to be true” is another maxim that guides you past hucksters and snake-oil merchants: it is hard to cheat an honest man.

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