On December 11th, 2008, Bernard Madoff and his invesment firm, Bernard L. Madoff Investment Securities LLC, was charged with securities fraud by the SEC. The reason for this was that Madoff was operating what is known as a Ponzi scheme, wherein he was not investing his clients money, but just using the investments of his newer clients to pay off his older clients who asked to withdraw money from his fund. The estimated losses from this scheme is an astounding $50 billion.
To perpetrate this, Madoff would send his clients falsified return statements showing steady gains that averaged around 10% a year. Like most Ponzi schemes, Madoff’s fund was revealed because the current economic crisis caused most investors to attempt to withdraw money fearing losses were ahead, only to find that their investments were gone.
The firm is currently in the process of being liquidated, but as is common with most Ponzi schemes, there is more money invested in the fund than is returnable and all customers are looking to get their assets back as quickly as possible. Many clients had entrusted their entire life savings to Madoff, then watched their money evaporate in a matter of hours, causing an unimaginable amount of devastation.
I’d also recommend the following short video that explains how Madoff operated this fraud:
If you or anyone you know was affected by Bernard Madoff and his Ponzi scheme please contact us or leave a comment below