On December 11, 2008, Bernard Madoff, financier and Wall Street conman was arrested in his New York City apartment. He was charged with carrying-out a Ponzi scheme that had lasted nearly 20 years.
It is estimated that this charade involved an upwards of $65 billion. It would be one of the largest investment frauds on Wall Street.
In 1960, Madoff founded a trading firm opened in his name. Nearly two decades later, Madoff’s firm, which had revolutionized the system of trading stocks, had grown into the largest independent trading operation in the securities industry.
Built on the success of this business, which was legitimate, Madoff launched an investment-advisory business which operated as a part of the firm. By the 1990s it had become a Ponzi scheme.
Madoff paid his early investors with funds he had received from later investors. As the business grew, Madoff would send out statements to his clients that showed consistently high returns — the only problem was that they were all fraudulent.
As his business continued reporting success, new customers flocked to Madoff to invest their money. Madoff’s clientele included his country-club acquaintances, Hollywood celebrities, banks, hedge funds, universities, charities, and ordinary investors.
However, when the stock market crashed in 2008, Madoff’s financial swindle fell apart as his clients withdrew their money faster than Madoff could bring in fresh cash.
On December 10, 2008, Madoff revealed to his brother and two sons, who worked for the legitimate arm of the business, that his investment-advisory was a sham and nearly bankrupt.
Madoff’s sons turned their father in to the federal authorities. The next day, Madoff was freed on a $10 million bail and placed under 24-hour house arrest at his penthouse in Manhattan’s Upper East Side.
The fallout from Madoff’s scam was tremendous. Some of his investors lost their entire life savings. Also, the charitable organization of Holocaust survivor and Nobel Peace Prize winner Elie Wiesel lost more than $15 million. Wiesel also lost his personal savings.
Public outrage grew after it was revealed that a private financial fraud investigator, Harry Markopolos, had repeatedly warned the Securities and Exchange Commission about Madoff’s scam.
On March 12, 2009, Madoff pleaded guilty to 11 felony counts including securities fraud, money laundering, and perjury. On June 29th of that year, a federal district court judge in Manhattan sentenced Madoff to 150 years in jail. He referred to Madoff’s actions as, “extraordinarily evil.” Bernard Madoff is serving his time in the Butner Federal Correctional Complex in North Carolina.
On December 11, 2010, two years after Madoff’s arrest, his 46 year old son Mark was found dead in his Manhattan apartment after committing suicide.
Bernard has maintained that his family members knew nothing of his crimes. None have been charged with any wrongdoing. However, several of Madoff’s former employees, including his accountant and chief financial officer, have pleaded guilty in connection with the long-running fraud.