Worst ponzi scheme ever!

[aslan]

Super-size me! Everything nowadays is bigger and better (or worse)! az


Feds say Bernard Madoff's $50 billion Ponzi scheme was worst ever

BY THOMAS ZAMBITO and GREG B. SMITH
DAILY NEWS STAFF WRITERS

Saturday, December 13th 2008, 12:43 AM

Bondareff/AP

Bernard Madoff was arrested by FBI, accused of running Ponzi scheme from Third Ave. offices.

The secret life of Bernard Madoff unraveled as he stood in his upper East Side apartment in pale blue bathrobe and slippers, facing two FBI agents.

"We're here to find out if there's an innocent explanation," Special Agent Theodore Cacioppi told him at the Thursday morning encounter.

"There is no innocent explanation," Madoff replied.

Within hours, investors who had trusted the 70-year-old Madoff for years - including the owner of the New York Mets - were reeling at charges that one of the most trusted names on Wall Street was a full-time fraud.

Manhattan federal prosecutors disclosed a long-running scheme that may have resulted in $50 billion in losses - perhaps the biggest scam in Wall Street history.

The one-time Nasdaq chairman, investigators charged, operated a classic Ponzi scheme, paying off early investors with funds from subsequent clients to keep the illusion of profit alive.

He tallied his deals in secret books locked in a filing cabinet a floor away from Madoff Securities' main offices, they said.

His victims included Fred Wilpon and Saul Katz, co-owners of the Mets, who Friday acknowledged that their Sterling Equities had invested an unknown amount with Madoff.

Spokesman Richard Auletta insisted Madoff's arrest "does not affect the day-to-day operations and long-term plans of the Mets organization and Citi Field."

Wilpon even trusted Madoff to invest hundreds of thousands of dollars from family charities, documents show.

In May, Madoff's wife, Marion, joined Wilpon's wife, Judy, to raise money for the United Jewish Association Federation in a charity bridge tournament.

Since its founding in 1960, Madoff Securities won wealthy clients like the Wilpons by delivering steady profits through markets both bull and bear.

In January, the firm claimed Madoff's investment advisory business managed $17.1 billion for 11 to 25 clients. Madoff Securities boasted of an "unblemished record of value, fair-dealing and high ethical standards."

Last week, the truth began to emerge as investors, spooked by the battered economy, decided to pull out their money.

Madoff told an employee clients wanted $7 billion in redemptions, court papers state. He was "struggling" to get it, he said.

By Tuesday, Madoff announced he wanted to distribute employee bonuses, two months ahead of time. A suspicious senior employee said Madoff was "under great stress."

On Wednesday, employees challenged Madoff's claim the firm recently made profits. He declared he couldn't speak of the situation at the office because he "wasn't sure he would be able to hold it together."

They went to his E. 64th St. apartment, where he revealed his business was a fraud, that he was "finished," that he owned "absolutely nothing."

Shocked employees, including his sons Andrew and Mark, called the Securities and Exchange Commission, which told the FBI.

When the agents showed up at his apartment, Madoff admitted he'd "paid investors with money that wasn't there," was "broke" and knew "it could not go on."

Friday, angry investors crowded a Manhattan federal courtroom hoping to find out if the SEC would come to their rescue. Manhattan Federal Judge Louis Stanton issued an order freezing Madoff's assets, as well as those of his firm, and named lawyer Lee Richard to oversee the business.

The hearing was canceled, leaving investors bewildered.

"The one thing my father always told me was, 'Never sell your Madoff,'" said a Florida investor who believes he's out $3million he'd hoped to give to his children.

"My only question is whether [the feds] will be able to salvage anything," he said. "My gut tells me no."
http://www.nydailynews.com/news/ny_c...lion_ponz.html

[aslan]

Bernie Madoff's $50 Billion Ponzi Scheme
Robert Lenzner, 12.12.08, 06:45 PM EST
Brazen fraud ensnares well-known investors and nonprofits and gives hedge funds another black eye.

The shocking revelation that prominent investment manager Bernard Madoff's hedge fund, Ascot Partners, was a giant scam will intensify redemptions from scores of other hedge funds that will be forced to liquidate holdings and increase downward pressure on stock prices.
http://www.forbes.com/finance/2008/1...oesus_inl.html

[aslan]

Wall Street legend Bernard Madoff arrested over '$50 billion Ponzi scheme'

(AP)


Bernard L Madoff reportedly told FBI agents that his fund was a 'giant Ponzi scheme'
Tim Reid, Washington

Some of America's wealthiest socialites were facing ruin tonight after the arrest of a Wall Street legend accused of the largest investor swindle ever blamed on a single individual.

Shock and panic spread through the country clubs of Palm Beach and Long Island after Bernard L Madoff, a trading powerbroker for over four decades, allegedly confessed to a massive fraud that will cost his wealthy investors at least $50 billion, perhaps the largest swindle in Wall Street history.

http://www.timesonline.co.uk/tol/new...cle5331997.ece

[aslan]

How could it go undetected for nearly 50 years??? What good is the SEC? What good is the GAO? What good is the press? Do we need a super agency to watch all the other agencies? How do you hide a $50 billion dollar fraud for nearly 50 years? Too bad this discovery did not happen last year when $50 billion was still a large amount of money!!!

[aslan]

Fifty billion dollars is equal to a pile of one dollar bills 200 feet high, 150 feet long, and 62½ feet deep.

What is that? 20 stories high, 3 house lengths long and more than a house length deep?


Try counting one dollar a second without stopping until you reach $50 billion. It will take you 1,585 years!

[shadroch]

It should read Best ponzi scheme ever.

[aslan]

Originally Posted by shadroch

It should read Best ponzi scheme ever.

Every time I read it, I feel the same way, but then, it depends on one's point of view. It was the worst for those who got bilked out of millions. I wonder what was the largest sum lost by any individual? But in the sense of being a successful scheme, I suppose you're right. It was the best of schemes. Or was it both? It was the best of schemes, it was the worst of schemes; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way. Sorry, I got carried away.

[zengrifter]

Originally Posted by shadroch

It should read Best ponzi scheme ever.

Hey, Kasi! Look! zg

[zengrifter]

Originally Posted by aslan

Every time I read it, I feel the same way, but then, it depends on one's point of view. It was the worst for those who got bilked out of millions. I wonder what was the largest sum lost by any individual? But in the sense of being a successful scheme, I suppose you're right. It was the best of schemes. Or was it both? It was the best of schemes, it was the worst of schemes; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair; we had everything before us, we had nothing before us; we were all going directly to Heaven, we were all going the other way. Sorry, I got carried away.

Wait until you hear the new ZG ponzi scheme story... right now ONLY Barfarkel knows. zg

[zengrifter]

Bernie Madoff's alleged $50bn fraud may be just a foretaste of what's to come

First come the losses and the stupidities committed by bankers working for their own self-interest.

By Rob Cox, breakingviews.com
Last Updated: 5:47PM GMT 12 Dec 2008

Then come the rogue traders, who are unable to 'fess up on market bets gone wrong. The last to arrive is the "bezzle".

That was economist JK Galbraith's word for the outright frauds built up when markets are good. These can be kept hidden for as long as the lies hold up. But the truth will out.

The first big outing in the current financial crisis is an alleged scam that may cost investors as much as $50bn. It was committed, according to a US criminal indictment, by a highly respected member of the financial community, a one-time Nasdaq executive and a legendary trader in New York.

Bernard Madoff is accused of orchestrating a multi-year fraud in which generous returns were manufactured for sophisticated investors. The technique was the usual Ponzi scheme. Old investors were paid off by the new funds lured into to Madoff's art-laden New York headquarters.

Losses of $50bn would probably make Madoff the biggest single fraudster in history. But in fairness, such an accomplishment shouldn't come as a great surprise. In Galbraith's model of a speculative cycle, good times spawn the excess and corruption which eventually bring them to end. The last good times were especially profitable, fertilising the ground for especially large frauds.

But the first frauds to be discovered are usually the not the largest. Madoff's alleged billions could only be a foretaste of what receding markets will eventually expose.