This guide will examine the man behind the largest Ponzi scheme in history– Bernie Madoff. It will investigate the ins and outs of the Bernie Madoff Ponzi scheme, how he got away with it, and the devastation he left behind as well as detail how Ponzi schemes work in general.
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Who is Bernie Madoff?
Bernard Lawrence Madoff was an American fraudster and Wall Street financier who ran (likely for decades) the largest, possibly most devastating Ponzi scheme in history, defrauding thousands of investors out of about $64.8 billion.
Madoff kept his firm afloat by paying early investors with money raised from latecomers, a classic Ponzi scheme method. As a result, even when markets tumbled, he consistently recorded an average 11% annual gain, claiming to use an investing strategy called a split-strike conversion. In reality, however, Madoff merely deposited investor funds into a single bank account that he used to compensate existing clients who wanted to withdraw their profits.
The scheme began to unravel amid the Great Recession, and as investors flocked to withdraw their money, Madoff didn’t have the funds to fulfill the stream of requests. Finally, faced with ruin, Mr. Madoff confessed to his two sons, Mark and Andrew, that his supposedly profitable money-management…
