'American Greed: Biggest Cons' Episode 3: Who's Bernie Madoff, mastermind of biggest Ponzi scheme in history?
Bernie Madoff made headlines back in 2008 when it was found that he had been responsible for what is said to be the largest Ponzi scam in history. CNBC's latest documentary series, 'American Greed: Biggest Cons', has an entire episode dedicated to the mastermind behind it all, Madoff. Madoff, currently in prison, is facing the prospect of dying behind bars as he has kidney cancer and his plea for early release has been denied.
Who is Bernie Madoff?
Bernie Madoff, now aged 82, is best known for orchestrating history's largest Ponzi scheme. Madoff was responsible for stealing billions of dollars. He grew up in a Jewish neighborhood in New York and was highly educated. He had also founded the Bernard L. Madoff Investment Securities with his wife, Ruth. He had even served as a National Association of Securities Dealers Automated Quotations (NASDAQ) director for three one-year terms and rubbed shoulders with very wealthy and influential business people in NYC and Palm Beach in Florida. Madoff would sign them as investors, paid them in handsome returns and used their positive recommendations to attract more investors. He also further boosted his reputation by making friends with financial regulators. He made the entire investment procedure an exclusive one and not everyone was accepted into his funds. It eventually became a mark of prestige to be admitted as a Madoff investor, Britannica states.
Madoff's firm offered many reliable returns and he had a celebrity client list which also included the likes of Steven Spielberg. In 2008, Madoff had been arrested for running an elaborate Ponzi scheme. In March 2009, he pleaded guilty to 11 felony counts, and later that year, was sentenced to 150 years in prison, Biography reveals.
The Ponzi scheme
Investigators uncovered that Madoff's Ponzi scheme had originated during the early 1980s. While more and more investors joined, their money and investments were used to pay off existing investors. There were many skeptical individuals that had concluded that the promised returns which were estimated to be 10% annually in both up and down markets had not been credible. Many also questioned why the auditor of Madoff's firm was a small operation with very few employees.
The scheme's longevity had been possible through what is known as "feeder funds" also known as management funds that took money from other investors and collected it in a pool of investments used for Madoff Securities management. It is reported that most individual investors had no idea that their money was entrusted to Madoff. His operations fell through in 2008 during the economic crisis with an estimated loss of around $50 billion to $65 billion.
Current status and whereabouts
In 2009, Madoff had pleaded guilty to fraud, money laundering and other crimes. We had earlier reported that a Daily Mail article stated that Madoff revealed that he is dying of kidney cancer. Madoff, who is presently serving out his sentence in North Carolina, had hoped to get an early release from the prison on compassionate grounds.
Recently, Judge Denny Chin, who had sentenced Madoff more than a decade ago, denied the request. As per the New York Times, Judge Chin had written, "When I sentenced Mr Madoff in 2009, it was fully my intent that he live out the rest of his life in prison." "While Mr Madoff’s present medical situation is most unfortunate, compassionate release is not warranted," the Judge said. Madoff spoke to The Washington Post and said, "There's no cure for my type of disease. So you know, I've served. I've served 11 years already, and, quite frankly, I've suffered through it."