AKA: Bernie Madoff
Born: April 29, 1938 / Queens, New York City, NY
Position: Stockbroker / Chairman, NASDAQ / Founder, Bernard L. Madoff Investment Securities LLC
Crime: Instead of promising high returns to all comers, Madoff offered modest but steady returns to an exclusive clientele. He explained that his investment method was “too complicated for outsiders to understand,” and was very secretive about the operations of his firm. Madoff was considered a “master marketer,” and investors were wary about removing their investments for fear they could not get back in later. Annual returns were unusually consistent at around 10%, and were a key factor in perpetuating the fraud. In December of 2008, Madoff’s son alerted authorities that their father had confessed that the asset management unit of his firm was a massive Ponzi scheme. Madoff confessed that the scheme began in the early 90’s, but investigators believe the investment operation may have never been legitimate.
Losses: Amount missing from client accounts, including fabricated gains estimated around $65 billion. The court-appointed trustee estimated actual losses to investors of $18 billion. The SEC was criticized for its lack of financial expertise and lack of due diligence, despite having received complaints for almost a decade. There six botched investigations of Madoff by the SEC, either through incompetent staff work or neglecting allegations of financial experts and whistle-blowers. At least some of the SEC investigators doubted whether Madoff was even trading.
Charges/Sentencing: On June 29, 2009, Bernie Madoff was sentenced to 150 years in prison, the maximum allowed. Son’s Mark and Andrew Madoff, brother Peter and niece Shana were sued for negligence and breach of fiduciary duty, for $198 million. They had received in excess of $80 million in compensation and ‘used the bank account at BLMIS like a personal piggy bank.’
Interesting Fact: Robert De Niro and Michelle Pfeiffer are set to play Bernie and Ruth Madoff in a movie called, The Wizard of Lies. There is also a documentary called Chasing Madoff.