As if there's not already enough reasons not to invest in the United States, Bernard Madoff's Ponzi scheme provides a powerful disincentive.

Many of the victims of what Madoff himself estimated to be a $50 billion scam were prominent foreign institutions and investors, and they are angry.

Nicola Horlick, a well-known fund manager in London, told the BBC: "I think now it is very difficult for people to invest in things that are meant to be regulated in America because they haven fallen down in the job."

Others who have lost money include the Royal Bank of Scotland and Man Group of Britain, Banco Santander of Spain, BNP Paribas and Natixis of France, Nomura of Japan, and the Korea Life Insurance Co. The Financial Times reports that HSBC Holdings could be on the hook for as much as $1 billion.

Many of these investors have lost much more in legitimate investment vehicles that were battered by the collapse of the subprime market and the resulting credit crunch. Many have rightfully asked where the regulators were then.

Yet the Madoff case is more disturbing because it is simpler and, in retrospect, an obvious act of malfeasance. Investors learned they could not trust American International Group or Lehman Brothers, but those companies contend that they were the victims of a financial tsunami they could not control.

The accusations against Madoff show a deception that was coldly calculated and a step removed from what was happening in the real world. And yet no one called him out on it.

It's not just foreign investors who were taken in, of course, The victims also include Mortimer Zuckerman, the owner of the Daily News, Senator Frank Lautenberg's foundation, and a charity of Steven Spielberg.

As Megan Barnett notes, the Securities and Exchange Commission failed to investigate Madoff's fund despite many red flags over the years.

Kara Scannell of the Wall Street Journal says that Madoff's money-management business "appears to have fallen into a regulatory gray zone for years, and the ambiguity may have helped him evade oversight." The business was not technically a hedge fund, and he did not register as an investment adviser until 2006.