The former chairman of the Nasdaq and founder of the market-making firm Bernard L. Madoff Investment Securities. Madoff, who also ran a hedge fund, was arrested on December 11, 2008, for running an alleged Ponzi scheme; his hedge fund lost about $50 billion, but kept it hidden by paying out earlier investors with money from later investors.
According to the U.S. Attorney's criminal complaint against him, Madoff was arrested after telling senior employees at his firm that "it's all just one big lie ... basically, a giant Ponzi scheme".
With consistent returns of 1-1.5% per month for more than 10 years, it was hard for investors not to believe the lines used to sell Madoff's hedge fund. The fund's supposed strategy was to use a proprietary option collar strategy that was meant to minimize volatility. This was provided as the reason for the fund's consistent returns.
There's a new number in the Great Madoff Rip-Off saga, and it's $850 million. That's the estimated amount of liquid assets left from Bernard Madoff's private sandbox of billions, according to Stephan Harbeck, president of the Securities Investors Protection Corp., speaking at Monday's House Financial Services Committee hearing on the $50-billion Madoff scandal.
Madoff was supposed to come clean with his list of assets last week — it certainly should add up to more than $850 million — but so far there has been nary a public peep of the list. When, during the hearing, Representative Gary Ackerman, a New York Democrat, asked David Kotz, the Securities and Exchange Commission's inspector general, what Madoff's assets were, Kotz answered meekly, "We don't have that information." Ackerman finally badgered Kotz to agree to supply the total asset list publicly within a week. We'll see. (See the top 10 scandals of 2008.)
Or maybe we won't. To anyone familiar with the world of numbered accounts, it's hard to believe that the Pirate of Third Avenue will fess up entirely to SEC investigators digging for the remaining $49.15 billion in vanished loot. Maybe the money total is as inflated and false as his victims' accounts; maybe large chunks were taken out by depositors. Either way, outside experts say it stretches credulity to think a clever sociopath and long-term bandit would not take special, even basic steps to protect his extended family from the ugly shame of poverty, ...