CONFIRMED
Bernie Madoff and the Biggest Ponzi Scheme in History
Bernard L. Madoff was not a fringe hustler but a pillar of Wall Street. He had helped build the Nasdaq stock market and served as its chairman; he ran a respected market-making firm; he moved easily among the wealthy, the philanthropic, and the powerful. And alongside his legitimate business, he ran an investment-advisory operation that was, for decades, the envy of finance: a fund that delivered remarkably steady, positive returns year after year, in good markets and bad, never seeming to lose money. To be allowed to invest with Madoff was a mark of status, a privilege extended to wealthy individuals, charities, university endowments, banks, and feeder funds around the world. There was only one problem, and it was total: the investments did not exist. Madoff was not generating those steady returns by any strategy at all. He was running a Ponzi scheme — paying the 'returns' and redemptions of existing investors with the fresh money of new ones, while no real trading took place. For decades it worked, because as long as more money came in than went out, the scheme could continue and the statements could show whatever Madoff wanted them to show. When the financial crisis of 2008 triggered a wave of withdrawals he could not meet, the scheme collapsed, and the scale of it stunned the world: customer account statements showed about $65 billion that did not exist, built on perhaps $17–20 billion of real money that investors had actually handed over and that was now largely gone. It was the largest Ponzi scheme in history. And the most damning detail of all was that a financial analyst named Harry Markopolos had been telling the Securities and Exchange Commission, repeatedly and in detail, for nine years, that Madoff was a fraud — and had been ignored. This article tells the story of the respectable man who ran the biggest financial fraud ever, the warnings the watchdogs missed, and the lives it destroyed.
