The collapse of Bernard “Bernie” Madoff’s storied Ponzi scheme and the revelations following it has provided valuable lessons for other con artists as well as investors.

That was one of the major points New York Times contributing writer Diana Henriques made during her talk at University of North Carolina Wilmington Wednesday afternoon.

Henriques reported on the unfolding Madoff scandal and penned a best-selling book on the subject, “Wizard of Lies: Bernie Madoff and the Death of Trust.”

The discussion was part of the Cameron School of Business’ events for Business Week.

In her remarks, she turned her tale of confidence peddling and greed into a lesson in ethics for the assembled students, faculty and staff.

“It would be unusual if, in your career, you were not confronted [by unethical situations], she cautioned her audience. What are you going to do?” she said.

Urging students to build an ethical framework for themselves as they prepare for careers, Henriques emphasized three points that they must consider – points that were ignored by those whose silence allowed Madoff to weave an international $65 billion web of deceit.

“First, waiving rules for those we trust is not a good idea,” she said, noting that investors are defrauded by those they trust, not by strangers.

“Second, insist on independent audits, and get references,” she said , referring to vendors, service providers and investment advisors. “A lesson from the Bernie Madoff affair is that you deal with slightly crooked people at your peril.”

Henriques’ third point was that business leaders are wary of whistleblowers, and American culture in general makes it difficult for people to expose wrongdoing. A few people who tried to raise questions about Madoff’s dealings were ignored.

Henriques first learned of Madoff’s arrest on securities fraud when the headline scrolled across the TV screen in the newsroom.

“I knew him slightly as a sometime source, and knew that his background would make this a big story,” she said in a separate interview, adding that the Times had recently written about a five-way partnership Madoff was involved in, along with some of the biggest names on Wall Street.

“I made a quick call to a source to find out what I could,” she said. “I asked what type of fraud he was accused of, and was told it was a Ponzi scheme. ‘How big?’ I asked. ‘Huge,’ he said.”

With that information, Henriques’s editor went to the afternoon editors’ meeting and pitched the story. By nightfall, Henriques and her colleagues had learned that the extent of the scheme was immense: Madoff, turned over to the FBI by his two sons, had told investigators that his scheme was worth $50 billion.

After that, Henriques, by her own account, was “flat out,” reporting constantly on the Madoff drama as it unfolded, attracted as much by the human tragedy of the affair as by the swindle.

“There were two issues in tension: the improbable scale of the fraud, and the certainty that his sons would not have turned in their father to the FBI if it were not true,” she said.  “Shakespearian dimensions.”

In an interview with the GWBJ, Henriques emphasized that Ponzi schemes, or cons of any kind, don’t get traction just in good times.

“We think, when the punch bowl is going hot and heavy, that’s the time that con artists move in. No, no. They are there when the party looks like it’s over; when people are looking for a reasonable return on their money,” Henriques said. “Small business people are vulnerable to this type of fraud. If you look at a list of Ponzi victims you see successful business people who have a need to invest, but they are consumed by their own challenges. They tend to be entrepreneurial about investing. They are a con artists’ dream.”