Four mistakes even the big names made with investment manager Madoff

Bernard Madoff, a 70-year-old, well-respected money manager, handled the investments of people including Wilpon, filmmaker Steven Spielberg, real estate and media magnate Morton Zuckerman, Bed, Bath & Beyond , co-founder Leonard Feinstein, and major financial institutions such as Britain's HSBC Banco Santander of Spain and France's BNP Paribas

Big names, right? But not too big that they couldn't get swindled: Madoff engaged in a typical Ponzi scheme, letting people think they were getting good returns. All the while, the red flags went unnoticed.

Now, some $50 billion of these investors' money has vanished, and whether the families and institutions that had their money with Madoff will even get it back is hardly clear.

So how could this have happened to these people? If it can happen to them, it can surely happen to you. Here are four big mistakes that people make in handing over their money:

If it's good for him, it must be good for me. Same as saying, "I don't need to ask any tough questions because my buddy over there says it's good." You simply can't assume that someone else has asked all the tough questions of an adviser, nor can you assume that they're asking questions about your personal situation.

Believing good actors. Madoff was apparently a great actor. He always played down his businesses and shrouded his business and "magic formula" in secrecy, creating an aura of exclusivity. The bottom line: Don't assume that what you see is what you get.

Failing to mind the store. I can't blame people for failing to keep their finger on the pulse when they've hired "experts" to manage their money. Especially when the "experts" have "experts" like accountants to ensure the books are clean. Still, it's up to you to look at your investment statements, question them and have the confidence to ask about items you don't understand. And watch out for advisers who can't be reached when the markets go south -- that's a big red flag.

Giving up personal responsibility. Too often, people simply wash their hands of their own finances. This latest scandal -- coupled with the multibillion-dollar bailout of the financial industry -- is just another testament to the fact that consumers must take control. By coming together, at places like WeSeed, America can share what they know, get smarter about the financial products they use and steer clear of scandals.

If there's one thing this fiasco has underscored, it's to take charge, be wary of things you don't understand and, if you are getting other people's help, make sure you understand what's behind it. It also reminds us that "experts" like accountants and even mortgage lenders aren't infallible. Anyone can claim to be a financial adviser, so be careful. Do your homework.