Bernie Madoff will remain in history as the scammer who pulled off the biggest Ponzi scheme. He was also a Wall Street savant and a one-time chairman of the NASDAQ stock exchange. Bernies’s Ponzi scheme lasted for decades. Before getting caught in 2008, it gathered $64.8 billion. Madoff became one of the most famous con men in history. Through his scam, he tricked laypeople as well as vetted investors. Well-known people, charities, and even institutions fell prey. For example, the Nobel laureate Elie Wiesel was one of his victims. Let’s dive deeper into this con artist’s story. Find out more about his life and what he confessed before dying in 2021.
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Who Was Bernie Madoff?
Bernie Madoff was born on April 29, 1938. He died at the age of 82, on April 14, 2021, in the Federal Medical Center Butner. Madoff was a talented financier. He experimented with different business fields and investment schemes. In the beginning, his activity was legal. However, later in life, he decided to turn to illicit financial schemes.
In 1960, Madoff established a penny stock brokerage. This company developed step by step. It gradually became the Bernard L. Madoff Investment Securities. The company was prosperous. Bernie was its chairman. He would keep this title until his arrest in 2008. By the time the scheme was revealed, Bernard L. Madoff Investment Securities was the 6th biggest liquidity provider in the S&P 500 stocks.
What Madoff did was a classical Ponzi scheme. The scheme involved billions of dollars and thousands of investors. What started as a legal business turned into fraud in the 90s. Madoff was stealing money from his investors. In 1999, doubts started emerging about his company.
Madoff’s Ponzi Scheme
The financial analyst Harry Markopolos was the first to signal red flags. He said it was impossible to achieve the returns Madoff promised investors. He even warned the SEC about it. The FBI, in its turn, started investigating the company.
For years, Madoff took money from investors. Then, he deposited it in his JPMorgan Chase account. He only withdrew money when investors asked for redemptions. However, the money was not enough. By 2008, he owed $7 billion in redemptions. The scheme was starting to shake. Madoff confessed to a senior employee of his that he had financial difficulties. Then, he confessed to his brother, Peter. He admitted he had been pulling a scam for decades. Afterward, Madoff confessed to his sons. They decided to report their father to the authorities.
In 2008, Madoff was arrested. He was charged with securities fraud. In 2009, he was sentenced to 150 years in prison. Of the nearly 18 billion investors lost, $14 billion were recovered and returned. This was the biggest scandal in Wall Street’s history.
What Did Bernie Madoff Confess Before Dying?
Madoff died in April 2021, but his story will never die. Jim Campbell, a business radio host, wrote a book about Madoff. It’s called Uncovering the Untold Story Behind the Most Notorious Ponzi Scheme in History. Campbell had direct contact with Madoff and his family. Hence, he managed to gain exclusive insights from the famous con artist. The author gathered information from Madoff from 2011 to 2019. They corresponded through the official prison email system. However, he never got to meet Madoff in person. Yet, the letters resulted in 400 pages of correspondence.
The book talks about how Madoff started his business. He was a jew living in Queens. His first investors were his in-laws. After that, he targeted people from the Palm Beach Country Club. He promised returns of 11%. Many of Madoff’s victims came from the Jewish community. According to the book, this contributed to Madoff’s success. Access to a close-knit community brought more opportunities. So, Madoff never ran out of clients. Moreover, people trusted him. His success depended on the power of word of mouth and recommendations.
Another interesting fact was Madoff’s dual nature. He was running two businesses side by side in the same Manhattan building. One was a legitimate company. However, it covered the corrupt business of the second one. Not even Madoff’s sons, who worked for their father, had access to the illicit business.
The author also revealed how Madoff received support from four big investors. These kept the scheme afloat for years. When he needed cash, they offered help. However, in exchange, they also took money from the fraudulent scheme. Madoff depended a lot on them. He also ended up hating them for this. Furthermore, the book reveals that Madoff himself only gained about $800 million from the scam. This puts him in a different light. He was the mastermind behind the scheme. However, he was not the only culprit for defrauding so many investors.
Campbell’s book provides lots of interesting details about Madoff – the investor, scammer, and family man. It also begs essential questions. Who else was behind the scheme? As it turned out, the scam also involved dirty money from Europe and Latin America. So, how did the money reach Madoff? In the end, we might never know the whole truth about the biggest Ponzi scheme in history.
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