Bernie Madoff was a financier who ran the world’s largest Ponzi scheme. By the time of his arrest in December 2008, he had stolen $65 billion from thousands of people around the world. Many of the world’s wealthiest people — and the savviest investment managers — have fallen victim to it. No one seems to have scrutinized or checked his method.
In 1960, Bernie Madoff was working at his father-in-law’s accounting firm in Manhattan. He started his own small stock trading firm at Bernard L. Madoff Investment Securities, which slowly grew in importance.
His reputation is that of a respected financier. He has connections in the government and access to the securities industry’s leading trading groups, adding to his legitimacy. He even headed the SEC’s New York office in the mid-1980s, and was chairman of Nasdaq in 1990.
His scam is a typical Ponzi scheme. Bernie would find investors and collect their money – which she believed was traded on the stock exchange. In fact, it was used to illegally fund his lifestyle. To repay these existing investors, he will use the funds raised from new investors. Many people have been duped and spread their credible news. Its popularity increased and the program got bigger.
By this time, he had a feeder network of individuals and investment firms. These feeders found investors for Madoff, including European royals, major Hollywood stars and producers, some of the world’s most famous financial institutions, and of course many ordinary people. Often small investors put their savings or retirement savings into funds, which in turn invest alongside Madoff. The system collapsed when people pulled Madoff’s investments due to the 2008 global financial crisis and he couldn’t pay them back. When his sons found out what he was doing, they notified the authorities and he was handed over to the police.
Police investigations revealed a number of clear red flags in his company’s financial dealings. Harry Markopolos, a stock trader and mathematician who uncovered the pyramid scheme in 2000 and briefed the SEC on it for the next eight years, highlighted more than 24 red flags, But everyone ignored him.
Those who worked closely with Madoff, both staff and victims, said they had no idea what went wrong. Although some people feel that something is wrong, they ignore their doubts. One of the tradeoffs of investing in Madoff and making a lot of money is that he doesn’t allow any questions. So no one asked. It seemed like a win-win situation for her. Madoff charged no fees, the transactions were legal, and the money was flowing, so they thought everything was fine.
The Madoff financial scandal is a cautionary tale of what can happen when trust, complacency, greed, and the human tendency to follow suit and behave like sheep combine. He was sentenced to 150 years in prison and died in prison, having served 13 years, in April 2021. Today only $14.5 billion (out of a total of $65 billion) was confiscated and returned to victims.
Directed by: Marcela Gaviria
