BOSTON (MarketWatch) -- For much of my life, the name Bernie Madoff has meant nothing to me. Now, however, it means far more than it should in my household and countless others across America. In my household, the net effect of the Madoff scheme is that my wife has lost all the money in her 401(k) account and her job as well.

But that's only part of the story. She worked at a private foundation that shut its doors last Friday, its assets -- all of which were "managed" by Madoff's firm -- frozen by court order.

The head of the Robert I. Lappin Charitable Foundation spent his hard-earned money on a cause that affected thousands of people who lived in the Jewish community north of Boston. And now, that cause -- in the absence of anyone or any group of people and organizations stepping up -- will become a memory instead of a legacy.

Red flags missed

My personal story with Madoff begins this way. Some years ago, my wife signed up for a 401(k) at work. I didn't pay much attention to her retirement account until earlier this year, after the 2007 year-end performance numbers were reported. Her account was up, not significantly but more than other retirement accounts.

Curious, I tried to learn more about her employer's 401(k) plan provider, the Bernard L. Madoff Investment Securities LLC. Unfortunately, I found little information about the firm on its Web site, nor on the Securities and Exchange Commission and Financial Industry Regulatory Authority (FINRA) Web sites. So, I dropped the matter, failing to take note of what, in retrospect, was one of the red flags. Read more on what prosecutors say was Madoff's Ponzi scheme.

Like most 401(k) statements, it listed employee contributions, employer contributions, amount vested, percent increase over the previous period and total value. But what the statement didn't contain was any footer with the usual legal mumbo jumbo, no mention of SIPC insurance, or the broker-dealer through which securities are cleared, or anything that is normally found on 401(k) statements. Nor did the statement contain the names of any listed securities or mutual funds.

Fast forward to October of this year. Her 401(k) statement for the nine months ended September 2008 arrives and once again the account was up 6% or so -- it's hard to tell exactly. Now, I'm thinking that maybe her 401(k) plan provider is the Joe Kennedy of his time. He's the one guy who's making money in a down market, he's the guy on the other side of the trade. He's the next Bill Miller or Peter Lynch. In fact, my wife and I even discussed upping her contribution to her 401(k) plan given what's his name's success.

Then last Thursday evening I am with two other gentlemen -- a professor and money manager -- at a holiday party. The money manager asks whether we read the news about Madoff. No, I say, thinking the name Madoff rings a bell but I can't place it. The money manager relates the story. "Madoff," the professor asks. "Oh my God, I think my sister has her life savings with that guy," he says.

He borrows the money manager's phone to call his sister and returns ashen-faced. His sister has lost her life savings. The money manager and I offer the professor our condolences. I tell him about Securities Investor Protection Corporation and the possibility of his sister getting some of her money back. But really there are no words of comfort, except "there but for the grace of God go I."

I return home from the party and tell my wife about the "Madoff story," about the professor, about how sad he looked, about how terrible it all is on top of everything else.

For whom the bell tolls

Bob, she says, Madoff is the guy who runs our 401(k). Oh s*#t, I say. The connection is made. We begin to read the stories on the Wall Street Journal, on MarketWatch, on every media outlet and blog possible. Does this mean what I think it means, my wife asks. Yes, I say. You've lost everything in your 401(k). And then my wife asks the question about the elephant in the room. What if the foundation's money was with Madoff? My wife emails her boss to no avail.

After a sleepless night, Friday morning arrives. There's an email from my wife's boss with a timestamp of 5 a.m. My wife rushes to work. By 10 a.m., I get a tearful call. The entire staff has been laid off and all the foundation's programs have been terminated. Their money and a lot of other people's money is gone. And all because of this guy Madoff, who wasn't happy with enough.

In some small way, I feel better knowing that plenty of big-name investors got duped as well. I'm angry with myself for not questioning the statements and the performance more closely, for not asking my friends at the SEC or other experts to give things a once over. But even then, I'm not sure what good it would have done. Plenty of people, more important than me, raised red flags to no avail.

With hope, my wife and I will survive this setback. We may or may not recover her 401(k) money. She may or may not land the same kind of job.

Oddly, that's almost irrelevant in the scheme of things. Thousands upon thousands of people put their trust in someone who didn't deserve that trust. And the collateral damage caused by that misplaced trust is not yet fully known and may never be fully known. Read about the lawsuits that are likely to ensue from the Madoff scheme.

"I hope he fries in hell," the professor writes in an email to me. And though Bernie Madoff has been a household name for a couple days now, so do I, so do I.