Madoff Ponzi Scheme: Details and Latest News About the Bernard Madoff Scam

Bernard "Bernie" Madoff - Ponzi Scam:
Details and Latest News

Bernard L. Madoff,  a former chairman of the Nasdaq Stock Market, was given a 150 year prison term on June 29, 3009 after a trial in which he was found guilt. He had been accused by federal agents on December 11, 2008, of scamming investors out of Photo: Bernard Maddoff, from Madoff.com$50 Billion through his investment company, Bernard L. Madoff Investment Securities LLC. That would make this the largest scam in history. His sons are reported to have turned him in for running what they said their father called "a giant Ponzi scheme."

Current status  of the case against Madoff

The United States Securities and Exchange Commission announced that on December 18, 2008, a federal judge in the Southern District of New York, entered a preliminary injunction order, by consent, against Bernard L. Madoff and Bernard L. Madoff Investment Securities LLC ("BMIS") to restrain Madoff and BMIS from violating certain antifraud provisions of the federal securities laws. Also, by consent, Judge Stanton ordered that assets remain frozen until further notice, continued the appointment of a receiver for two entities owned or controlled by Madoff in the United Kingdom (while defendant BMIS remains subject to oversight by a SIPC trustee), and granted other relief. The preliminary injunction order continues the relief originally obtained on December 12, 2008, in response to the Commission's application for emergency preliminary relief that sought a temporary restraining order, an order freezing assets, and other relief against Madoff and BMIS based on his alleged violations of the federal securities laws.

The SEC's complaint, filed on December 11, 2008, in federal court in Manhattan, alleges that the Madoff and the other defendants have committed a $50 billion fraud and violated Section 17(a) of the Securities Act of 1933, Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder, and Sections 206(1) and 206(2) of the Advisers Act of 1940. The complaint alleges that Madoff actually told 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.

The SEC continues to seek, among other things, a permanent injunction, disgorgement of ill-gotten gains plus pre-judgment interest, and civil money penalties. The Securities and Exchange Commission, in the civil complaint, said it was an ongoing $50 billion swindle, and asked a judge to seize the firm and its assets. "Our complaint alleges a stunning fraud that appears to be of epic proportions," said Andrew M. Calamari, associate director of enforcement in the SEC's New York office.

Mr. Madoff didn't enter a plea during the December 12th court hearing Thursday evening. He was released after agreeing to post a $10 million bond secured by his Manhattan apartment. A preliminary hearing was scheduled for Jan. 12. He declined to comment after the hearing. It is possible that he may be placed into custody before that date after investigators discovered on January 8, 2009 that he attempted to mail expensive jewelry to friends and had hundreds of signed checks, allegedly worth $173 million dollars, ready to send to friends and family (the implication being that he is attempting to scatter his wealth to friends, to protect it)

Click here for current news about Madoff from the Wall Street Journal.

Who is Bernard Madoff?

Bernard Lawrence Madoff (born April 29, 1938) is an American businessman and is a former chairman of the NASDAQ stock exchange. He started the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 and was its chairman until December 11, 2008, when he was arrested and charged with perpetrating the largest investor fraud ever committed by a single individual. He also managed money for high-net-worth individuals, hedge funds and other institutions.

Mr. Madoff's family also works in the firms: his brother, Peter Madoff, joined the firm around 1970 and is the senior managing director, and his two sons, Andrew and Mark, have worked for the securities firm since graduating from college.

Financial World, in 1986, cited Madoff as one of "The Highest Paid People on Wall Street," stating he owned three homes and has a yacht moored in the Bahamas.


References:

  1. Wall Street Journal,

  2. SEC

  3. Associated Press news feed, January 9, 2009

  4. Wikipedia

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