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Bernie Madoff: Architect Of Largest Ponzi Scheme In History



Author: Vaibhav Goyal

Designation: Student, University Institute Of Legal Studies, Panjab University

Email: goyal999@outlook.com

“The whole government is a Ponzi scheme”

-Bernard Madoff


On Wednesday, Bernie Madoff died in government jail, as reported by a report from the Associated Press. The 82-year-old died from normal causes, has been the mastermind of the biggest ever fraud schemes in the US before he got landed in jail. Last year, Madoff's legal advisors petitioned in court for early release from prison due to the Covid pandemic, as he had suffered from end-stage renal sickness and other persistent ailments. The application was denied by the court. He was remembered for history's biggest Ponzi scheme; a monetary fraud where early investors are reimbursed with cash obtained from later investors instead of from actual investment income.


Bernie Madoff started his Wall Street profession in the mid-1960s as a trader in penny stock. In the end, he shaped the business as the Bernard L. Madoff Investment Securities LLC, which would proceed to get one of the biggest penny stock business and wealth management firms. Madoff was a real business visionary – the computer trading program created by the investment advisor and his sibling, Peter – was embraced by the (National Association of Securities Dealers Automated Quotations) NASDAQ trading trade and established the framework for a large part of the electronic trading frameworks that are ordinary now. Indeed, Madoff was appointed as chairman of the NASDAQ trade in 1990.


As Madoff was so very much regarded on Wall Street that he additionally served as chairman of the board of directors of the National Association of Securities Dealers (NASD) – a private administrative organization for the protection of business. Different individuals from his family were involved in various industry associations, like the Securities Industry and Financial Markets Association (SIFMA). Madoff's brokerage firm was, by the 1990s, delivered 10%-15% of all the trading orders for the New York Stock Exchange (NYSE). Madoff was also a big trustee to various charity organizations and a significant supporter of the Democrat Party in the United States.


Madoff's Ponzi scheme was operated via management of wealth from his business. It was a very classic example, though simple in operation– Ponzi plot. Madoff pulled in investors by promising them remarkably exceptional yields on their investments. Nonetheless, when investors gave over the cash, Madoff just stored it into his ledger at Chase Manhattan Bank. He paid "returns" to prior investors utilizing the cash acquired from later investors. Customers' trading returns, showing their supposed benefits, were all forged. Ponzi plans attract investors by ensuring curiously exceptional yields. The name began with Charles Ponzi, a fraud who guaranteed half profits from interests in just 90 days and ended up in a 14-year jail punishment in 1920 because of his plan. In 2008, things went out of order, when an enormous number of investors needed to cash out their investments – as much as $7 billion. Madoff didn't have sufficient cash to cover the demand of the investors who needed the same. As indicated by Madoff, around then, he could just arrange only a couple of hundred million.


In 1992, people asked the Securities and Exchange Commission to examine Madoff's strategic policies, and the office had done so much on various occasions, however, had neglected to recognize the massive fraud. Madoff was disregarded by many Wall Street firms – a few of which wouldn't do any trading with him. Regardless, Madoff had the option to operate his huge Ponzi scheme without any check by any enforcement agency for years.


In March 2009 Madoff charged and pleaded guilty to fraud, money laundering, and other crimes. Madoff's accountant, David G. Friehling, was additionally accused in March of securities fraud; it was subsequently uncovered that he had been ignorant of the Ponzi scheme, and, in the wake of helping out investigators, Friehling at last served no jail. Bernie Madoff was arrested in 2008 and sentenced to a 150-year jail term in 2009. U.S. government agents kept on pursuing associates, including some from the Madoff family also.


Estimates of losses ranged from $50 billion to $65 billion, yet specialists observed that finding the missing assets may be impossible. The United States government offered to pay out more than $700 million to the cheated Madoff investors, however that sum failed to measure up to the heaps of dollars that investors had been scammed out. However, some of the early investors of the Madoff managed to get their hefty amounts too. In 2020, the US Department of Justice had returned about $3.2 billion to people that had been conned by Madoff.






References:

J.D. Rockefeller, The Bernie Madoff Ponzi Scheme, CreateSpace Independent Publishing Platform, 2016

Amy Tikkanen, Bernie Madoff: American hedge-fund investor, Britannica, April 14, 2021

Stephanie Yang and Grace Kay, Bernie Madoff died in prison after carrying out the largest Ponzi scheme in history - here's how it worked, Business Insider India, April 15, 2021

Diana B. Henriques, Bernard Madoff, Architect of Largest Ponzi Scheme in History, Is Dead at 82, The New York Times, April 15, 2021

Ethan Sacks, Bernie Madoff, mastermind of largest Ponzi scheme in history, dies at 82, NBC News, April 14, 2021

Marty Steinberg and Scott Cohn, Bernie Madoff, mastermind of the nation’s biggest investment fraud, dies at 82, CNBC, April 14, 2021

United States V. Bernard L. Madoff And Related Cases available at Official Website of The United States Attorney’s Office, Southern District of New York. Can be accessed at https://www.justice.gov/usao-sdny/programs/victim-witness-services/united-states-v-bernard-l-madoff-and-related-cases





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