Just when it seemed like the Marc Dreier case had the market cornered on “crazy,” along comes the case of Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and leading Wall Street figure for nearly 50 years. Madoff was arrested by federal agents on Thursday a day after telling two senior employees that his investment advisory business was “a giant Ponzi scheme.”
According to a complaint filed today by the SEC, Madoff informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was “finished,” that he had “absolutely nothing,” that “it’s all just one big lie,” and that it was “basically, a giant Ponzi scheme.” The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion.
That’s $50 billion. With a “b”.
The SEC’s Andrew M. Calamari stated that “[o]ur complaint alleges a stunning fraud that appears to be of epic proportions.” The SEC stated that of the more than $17 billion in assets under management by Mr. Madoff’s firm at the start of 2008, essentially all the assets appear to be missing.
In a separate criminal complaint, the FBI stated that Madoff had “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.”
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Merry Christmas from Wall Street… too bad Madoff will never be able to repay society for the staggering amount he stole