Bernard Lawrence "
Bernie"
Madoff is a former American businessman, stockbroker,
investment advisorThe term Investment Advisor is an individual or firm who, for compensation, engages in the business of advising others, either directly or through publications or writings, as to the value of securities or as to the advisability of investing in, purchasing, or selling securities...
, and
financierFinancier is a term for a person who handles typically large sums of money, usually involving money lending, financing projects, large-scale investing, or large-scale money management. The term is French, and derives from finance or payment...
. He is the former non-executive chairman of the
NASDAQThe NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
stock market, and the admitted operator of a
Ponzi schemeA Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
that is considered to be the largest financial fraud in U.S. history.
In March 2009, Madoff pleaded guilty to 11
federalIn the United States, a federal crime or federal offense is a crime that is made illegal by U.S. federal legislation. In the United States, criminal law and prosecution happen at both the federal and the state levels; thus a “federal crime” is one that is prosecuted under federal criminal law, and...
feloniesA felony is a serious crime in the common law countries. The term originates from English common law where felonies were originally crimes which involved the confiscation of a convicted person's land and goods; other crimes were called misdemeanors...
and admitted to turning his
wealth managementWealth management is an investment advisory discipline that incorporates financial planning, investment portfolio management and a number of aggregated financial services...
business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars. Madoff said he began the Ponzi scheme in the early 1990s. However, federal investigators believe the fraud began as early as the 1970s, and those charged with recovering the missing money believe the investment operation may never have been legitimate. The amount missing from client accounts, including fabricated gains, was almost
$The United States dollar , also referred to as the American dollar, is the official currency of the United States of America. It is divided into 100 smaller units called cents or pennies....
65 billion. The court-appointed trustee estimated actual losses to investors of $18 billion. On June 29, 2009, he was sentenced to 150 years in prison, the maximum allowed.
Jeffry PicowerJeffry M. Picower was an American investor and noted philanthropist involved in the Madoff investment scandal...
, rather than Madoff, appears to have been the largest beneficiary of Madoff's Ponzi scheme, and his estate settled the claims against it for $7.2 billion.
J.P. Morgan Chase & Co. may have also benefitted from the scheme—through interest and fees charged—to the tune of $1 billion. Trustee
Irving PicardIrving H. Picard is a partner in the law firm Baker Hostetler. He graduated from the Wharton School, University of Pennsylvania, with a B.S. degree , from Boston University School of Law with a J.D. degree , and from the New York University School of Law with an LL.M. degree in 1967, and was...
has filed suit seeking the return of $1 billion and damages of $5.4 billion. Morgan denied complicity. According to the same lawsuit,
New York MetsThe New York Mets are a professional baseball team based in the borough of Queens in New York City, New York. They belong to Major League Baseball's National League East Division. One of baseball's first expansion teams, the Mets were founded in 1962 to replace New York's departed National League...
owners
Fred WilponFred Wilpon is a real estate developer, baseball executive and the majority owner of the New York Mets.-Biography:...
and Saul Katz and associated individuals and firms, received $300 million from the scheme. Wilpon and Katz "categorically reject" the charges.
Madoff founded the
Wall StreetWall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
firm Bernard L. Madoff Investment Securities LLC in 1960, and was its chairman until his arrest on December 11, 2008. The firm was one of the top
market makerA market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. From a market microstructure theory standpoint, market makers are net sellers of an option to be...
businesses on Wall Street, which bypassed "specialist" firms by directly executing orders
over the counterWithin the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....
from retail brokers.
On December 10, 2008, Madoff's sons told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme, and quoted him as describing it as "one big lie." The following day,
FBIThe Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
agents arrested Madoff and charged him with one count of
securities fraudSecurities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
. The U.S. Securities and Exchange Commission (SEC) had previously conducted investigations into Madoff's business practices, but did not uncover the massive fraud.
Early life
Madoff was born on April 29, 1938 in
QueensQueens is the easternmost of the five boroughs of New York City. The largest borough in area and the second-largest in population, it is coextensive with Queens County, an administrative division of New York state, in the United States....
, New York City, New York. He is the son of Jewish parents Sylvia (née Muntner) (December 1911 – December 1974), a homemaker, and Ralph Madoff (June 1910 – July 1972), a
plumberA plumber is a tradesperson who specializes in installing and maintaining systems used for potable water, sewage, and drainage in plumbing systems. The term dates from ancient times, and is related to the Latin word for lead, "plumbum." A person engaged in fixing metaphorical "leaks" may also be...
and stockbroker. Madoff's grandparents were Jewish emigrants from
PolandPoland , officially the Republic of Poland , is a country in Central Europe bordered by Germany to the west; the Czech Republic and Slovakia to the south; Ukraine, Belarus and Lithuania to the east; and the Baltic Sea and Kaliningrad Oblast, a Russian exclave, to the north...
,
RomaniaRomania is a country located at the crossroads of Central and Southeastern Europe, on the Lower Danube, within and outside the Carpathian arch, bordering on the Black Sea...
and
AustriaAustria , officially the Republic of Austria , is a landlocked country of roughly 8.4 million people in Central Europe. It is bordered by the Czech Republic and Germany to the north, Slovakia and Hungary to the east, Slovenia and Italy to the south, and Switzerland and Liechtenstein to the...
. He is the second of three children; his siblings are Sondra (Weiner) and Peter. Madoff graduated from
Far Rockaway High SchoolFar Rockaway High School, a public high school in the public school system of New York City, was located on Bay 25 Street in Far Rockaway in the borough of Queens, as part of the New York City Department of Education. The school was founded in 1897, with Sanford J. Ellsworth as principal for over...
in 1956. He attended the
University of AlabamaThe University of Alabama is a public coeducational university located in Tuscaloosa, Alabama, United States....
for one year, where he became a brother of the Tau Chapter of the
Sigma Alpha MuSigma Alpha Mu , also known as "Sammy", is a college fraternity founded at the City College of New York in 1909. Originally only for Jewish men, Sigma Alpha Mu remained so until 1953, when members from all backgrounds were accepted. Originally headquartered in New York, Sigma Alpha Mu has...
fraternityA fraternity is a brotherhood, though the term usually connotes a distinct or formal organization. An organization referred to as a fraternity may be a:*Secret society*Chivalric order*Benefit society*Friendly society*Social club*Trade union...
, then transferred to and graduated from
Hofstra UniversityHofstra University is a private, nonsectarian institution of higher learning located in the Village of Hempstead, New York, United States, about east of New York City: less than an hour away by train or car...
in 1960 with a
Bachelor of ArtsA Bachelor of Arts , from the Latin artium baccalaureus, is a bachelor's degree awarded for an undergraduate course or program in either the liberal arts, the sciences, or both...
in
political sciencePolitical Science is a social science discipline concerned with the study of the state, government and politics. Aristotle defined it as the study of the state. It deals extensively with the theory and practice of politics, and the analysis of political systems and political behavior...
. Madoff briefly attended
Brooklyn Law SchoolBrooklyn Law School is a law school located in Brooklyn Heights, in Downtown Brooklyn, New York.-History:Founded in 1901 by William Payson Richardson and Norman P. Heffley, Brooklyn Law School was the first law school on Long Island. Using space provided by Heffley’s business school, the law...
, but founded the
Wall StreetWall Street refers to the financial district of New York City, named after and centered on the eight-block-long street running from Broadway to South Street on the East River in Lower Manhattan. Over time, the term has become a metonym for the financial markets of the United States as a whole, or...
firm Bernard L. Madoff Investment Securities LLC and remained working for his own company.
Career
Madoff was chairman of Bernard L. Madoff Investment Securities LLC from its startup in 1960 until his arrest on December 11, 2008.
The firm started as a
penny stockIn the United States, penny stocks are common shares of small public companies that trade at less than $1.00. In some countries, similar shares of stock are known as cent stocks.-Concerns for investors:...
trader with $5,000 ($ today) that Madoff earned from working as a
lifeguardA lifeguard supervises the safety and rescue of swimmers, surfers, and other water sports participants such as in a swimming pool, water park, or beach. Lifeguards are strong swimmers and trained in first aid, certified in water rescue using a variety of aids and equipment depending on...
and sprinkler installer. He further secured a loan of $50,000 from his father-in-law which he also used to set up Bernard L. Madoff Investment Securities LLC. His business grew with the assistance of his father-in-law, accountant Saul Alpern, who referred a circle of friends and their families. Initially, the firm made markets (quoted
bid and askThe bid–offer spread for securities is the difference between the prices quoted for an immediate sale and an immediate purchase...
prices) via the National Quotation Bureau's
Pink SheetsOTC Markets Group, Inc., informally known as "Pink Sheets", is a private company that provides services to the U.S. over-the-counter securities market including electronic quotations, trading, messaging, and information platforms. According to the U.S. Securities and Exchange Commission, OTC...
. In order to compete with firms that were members of the
New York Stock ExchangeThe New York Stock Exchange is a stock exchange located at 11 Wall Street in Lower Manhattan, New York City, USA. It is by far the world's largest stock exchange by market capitalization of its listed companies at 13.39 trillion as of Dec 2010...
trading on the stock exchange's floor, his firm began using innovative computer information technology to disseminate its quotes. After a trial run, the technology that the firm helped develop became the
NASDAQThe NASDAQ Stock Market, also known as the NASDAQ, is an American stock exchange. "NASDAQ" originally stood for "National Association of Securities Dealers Automated Quotations". It is the second-largest stock exchange by market capitalization in the world, after the New York Stock Exchange. As of...
.
The firm functioned as a
third-marketThird market in finance, refers to the trading of exchange-listed securities in the over-the-counter market. These trades allow institutional investors to trade blocks of securities directly, rather than through an exchange, providing liquidity and anonymity to buyersThird market trading was...
provider, which bypassed exchange specialist firms, by directly executing orders
over the counterWithin the derivatives markets, many products are traded through exchanges. An exchange has the benefit of facilitating liquidity and also mitigates all credit risk concerning the default of a member of the exchange. Products traded on the exchange must be well standardised to transparent trading....
from retail brokers. At one point, Madoff Securities was the largest
market makerA market maker is a company, or an individual, that quotes both a buy and a sell price in a financial instrument or commodity held in inventory, hoping to make a profit on the bid-offer spread, or turn. From a market microstructure theory standpoint, market makers are net sellers of an option to be...
at the NASDAQ and in 2008 was the sixth largest market maker on Wall Street. The firm also had an investment management and advisory division, which it did not publicize, that was the focus of the fraud investigation.
Madoff was "the first prominent practitioner" of
payment for order flowIn financial markets payment for order flow refers to the compensation that a broker receives, not from its client, but from a third-party who wants to influence how the broker routes client orders...
, in which a dealer pays a broker for the right to execute a customer's order. This has been called a "legal
kickbackBribery, a form of corruption, is an act implying money or gift giving that alters the behavior of the recipient. Bribery constitutes a crime and is defined by Black's Law Dictionary as the offering, giving, receiving, or soliciting of any item of value to influence the actions of an official or...
." Some academics have questioned the ethics of these payments. Madoff has argued that these payments did not alter the price that the customer received. He viewed the payments as a normal business practice: "If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow is an issue that attracted a lot of attention but is grossly overrated."
Madoff was active in the National Association of Securities Dealers (NASD), a self-regulatory securities industry organization and has served as the Chairman of the Board of Directors and on the
Board of GovernorsBoard of governors is a term sometimes applied to the board of directors of a public entity or non-profit organization.Many public institutions, such as public universities, are government-owned corporations. The British Broadcasting Corporation was managed by a board of governors, though this role...
of the NASD.
Government access
Since 1991, Madoff and his wife have contributed about $240,000 to federal candidates, parties and committees, including $25,000 a year from 2005 through 2008 to the
Democratic Senatorial Campaign CommitteeThe Democratic Senatorial Campaign Committee is the Democratic Hill committee for the United States Senate. It is the only organization solely dedicated to electing Democrats to the United States Senate. The DSCC's current chair is Sen. Patty Murray, who succeeded Sen. Robert Menendez following...
. The Committee has returned $100,000 of the Madoffs' contributions to
Irving PicardIrving H. Picard is a partner in the law firm Baker Hostetler. He graduated from the Wharton School, University of Pennsylvania, with a B.S. degree , from Boston University School of Law with a J.D. degree , and from the New York University School of Law with an LL.M. degree in 1967, and was...
, the
bankruptcyBankruptcy is a legal status of an insolvent person or an organisation, that is, one that cannot repay the debts owed to creditors. In most jurisdictions bankruptcy is imposed by a court order, often initiated by the debtor....
trustee who oversees all claims. Senator Charles E. Schumer returned almost $30,000 received from Madoff and his relatives to the trustee, and Senator Christopher J. Dodd donated $1,500 to the
Elie WieselSir Eliezer "Elie" Wiesel KBE; born September 30, 1928) is a Hungarian-born Jewish-American writer, professor, political activist, Nobel Laureate, and Holocaust survivor. He is the author of 57 books, including Night, a work based on his experiences as a prisoner in the Auschwitz, Buna, and...
Foundation for Humanity, a Madoff victim.
The Madoff family gained access to Washington's lawmakers and regulators through the industry's top trade group. The Madoff family has long-standing, high-level ties to the
Securities Industry and Financial Markets AssociationThe Securities Industry and Financial Markets Association is a leading securities industry trade group representing securities firms, banks, and asset management companies in the U.S. and Hong Kong. SIFMA was formed on November 1, 2006, from the merger of The Bond Market Association and the...
(SIFMA), the primary securities industry organization. Bernard Madoff sat on the Board of Directors of the Securities Industry Association, which merged with the
Bond Market AssociationThe Bond Market Association was the international trade association for the bond market industry. It had headquarters in London, New York City, and Washington D.C. Twenty per cent of the membership was located outside of the US, while 70 per cent was located outside New York City...
in 2006 to form SIFMA.
Madoff's brother Peter then served two terms as a member of SIFMA's Board of Directors. He stepped down from the Board of Directors of SIFMA in December 2008, as news of the Ponzi scheme broke. From 2000 to 2008 the two Madoff brothers gave $56,000 to SIFMA, and tens of thousands of dollars more to sponsor SIFMA industry meetings. Bernard Madoff's niece Shana Madoff was active on the Executive Committee of SIFMA's Compliance & Legal Division, but resigned her SIFMA position shortly after her uncle's arrest.
In 2004
Genevievette Walker-LightfootGenevievette Walker-Lightfoot is a former U.S. Securities and Exchange Commission attorney who worked on the Bernard Madoff investigation in 2004 as the Lead Investigator for the SEC on the case. She discovered key elements of his Ponzi scheme and reported them to her superiors. She was silenced...
, a lawyer in the SEC's Office of Compliance Inspections and Examinations, informed her supervisor branch chief Mark Donohue that her review of Madoff found numerous inconsistencies and recommended further questioning. However, because of agency pressure to investigate the mutual fund industry, she had to conclude work on the probe. Donohue's boss, Eric Swanson, an assistant director of the department, married Shana Madoff, after the investigation concluded in 2005. A spokesman for Swanson, who has left the SEC, said he "did not participate in any inquiry of Bernard Madoff Securities or its affiliates while involved in a relationship" with Shana Madoff.
While awaiting sentencing, Madoff met with the SEC's
Inspector GeneralAn Inspector General is an investigative official in a civil or military organization. The plural of the term is Inspectors General.-Bangladesh:...
,
H. David KotzH. David Kotz is the Inspector General of the U.S. Securities and Exchange Commission since his appointment on December 5, 2007...
, who is conducting an investigation into how regulators failed to detect the fraud despite numerous red flags. Madoff said he could have been caught in 2003, but bumbling investigators acted like "Lt. Colombo" and never asked the right questions.
"I was astonished. They never even looked at my stock records. If investigators had checked with the Depository Trust Company, a
central securities depositoryA Central Securities Depository is an organization holding securities either in certificated or uncertificated form, to enable book entry transfer of securities. In some cases these organizations also carry out centralized comparison, and transaction processing such as clearing and settlement of...
, it would've been easy for them to see. If you're looking at a Ponzi scheme, it's the first thing you do." Madoff said in the June 17, 2009, interview that SEC Chairman
Mary SchapiroMary L. Schapiro is the 29th chairperson of the U.S. Securities and Exchange Commission .She is the immediate past chairperson and CEO of the Financial Industry Regulatory Authority , the securities industry self-regulatory organization for broker-dealers and exchanges in the United States, and...
was a "dear friend," and SEC Commissioner Elisse Walter was a "terrific lady" whom he knew "pretty well."
Since Madoff's arrest, the SEC has been criticized for its lack of financial expertise and lack of
due diligence"Due diligence" is a term used for a number of concepts involving either an investigation of a business or person prior to signing a contract, or an act with a certain standard of care. It can be a legal obligation, but the term will more commonly apply to voluntary investigations...
, despite having received complaints from
Harry MarkopolosHarry M. Markopolos is a former securities industry executive and independent financial fraud investigator for institutional investors and others seeking forensic accounting expertise. He has received public acclaim for uncovering evidence over a period of nine years that Bernard Madoff's wealth...
and others for almost a decade. The SEC's Inspector General, H. David Kotz, found that since 1992, there were 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.
Investment scandal
Concerns about Madoff's business surfaced as early as 1999, when financial analyst
Harry MarkopolosHarry M. Markopolos is a former securities industry executive and independent financial fraud investigator for institutional investors and others seeking forensic accounting expertise. He has received public acclaim for uncovering evidence over a period of nine years that Bernard Madoff's wealth...
informed the U.S. Securities and Exchange Commission (SEC) that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. According to Markopolos, he knew within five minutes that Madoff's numbers didn't add up, and it took four hours of failed attempts to replicate them to conclude Madoff was a fraud. He was ignored by the Boston SEC in 2000 and 2001, as well as by Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented further evidence. He has since published a book,
No One Would ListenNo One Would Listen: A True Financial Thriller is a book by whistleblower Harry Markopolos about his investigation into the Madoff investment scandal and how the U.S. Securities and Exchange Commission failed to react to his warnings....
, about the frustrating efforts he and his team made over a ten-year period to alert the government, the industry, and the press about the Madoff fraud.
Although Madoff's wealth management business ultimately grew into a multi-billion-dollar operation, none of the major derivatives firms traded with him because they didn't think his numbers were real. None of the major Wall Street firms invested with him either, and several high-ranking executives at those firms suspected he wasn't legitimate.
Others also contended it was inconceivable that the growing volume of Madoff accounts could be competently and legitimately serviced by his documented accounting/auditing firm, a three-person firm with only one active accountant.
The
Federal Bureau of InvestigationThe Federal Bureau of Investigation is an agency of the United States Department of Justice that serves as both a federal criminal investigative body and an internal intelligence agency . The FBI has investigative jurisdiction over violations of more than 200 categories of federal crime...
complaint says that during the first week of December 2008, Madoff confided to a senior employee, identified by Bloomberg News as one of his sons, that he said he was struggling to meet $7 billion in redemptions. According to the sons, Madoff told Mark Madoff on December 9 that he planned to pay out $173 million in bonuses two months early. Madoff said that "he had recently made profits through business operations, and that now was a good time to distribute it." Mark told Andrew Madoff, and the next morning they went to their father's apartment and asked him how he could pay bonuses to his staff if he was having trouble paying clients. With Ruth Madoff nearby, Madoff told them he was "finished," that he had "absolutely nothing" left, that his investment fund was "just one big lie" and "basically, a giant Ponzi scheme." According to their attorney, Madoff's sons then reported their father to federal authorities. On December 11, 2008, he was arrested and charged with
securities fraudSecurities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
.
Madoff posted $10 million
bailTraditionally, bail is some form of property deposited or pledged to a court to persuade it to release a suspect from jail, on the understanding that the suspect will return for trial or forfeit the bail...
in December 2008 and remained under 24-hour monitoring and
house arrestIn justice and law, house arrest is a measure by which a person is confined by the authorities to his or her residence. Travel is usually restricted, if allowed at all...
in his
Upper East SideThe Upper East Side is a neighborhood in the borough of Manhattan in New York City, between Central Park and the East River. The Upper East Side lies within an area bounded by 59th Street to 96th Street, and the East River to Fifth Avenue-Central Park...
penthouse apartmentA penthouse apartment or penthouse is an apartment that is on one of the highest floors of an apartment building. Penthouses are typically differentiated from other apartments by luxury features.-History:...
until March 12, 2009, when Judge
Denny ChinDenny Chin is a judge on the United States Court of Appeals for the Second Circuit. He was a judge on the United States district court for the Southern District of New York before joining the federal appeals bench. President Clinton nominated Chin to the district court on March 24, 1994, and...
revoked his bail and remanded him to the Metropolitan Correctional Center. Chin claimed Madoff was a flight risk, because of his age, wealth, and the prospect of spending the rest of his life in prison. Prosecutors filed two
assetIn financial accounting, assets are economic resources. Anything tangible or intangible that is capable of being owned or controlled to produce value and that is held to have positive economic value is considered an asset...
forfeiture pleadings which include lists of valuable real and personal property as well as financial interests and entities.
Madoff's lawyer,
Ira SorkinIra Lee Sorkin is an American attorney. He is best known for representing Bernard Madoff, the American businessman who has pleaded guilty to perpetrating the largest investor fraud ever committed by a single person.-Education and career:...
, filed an
appealAn appeal is a petition for review of a case that has been decided by a court of law. The petition is made to a higher court for the purpose of overturning the lower court's decision....
, and prosecutors responded with a notice of opposition.
On March 20, 2009, an appellate court denied Madoff's request to be released from jail and returned to home confinement until his June 29, 2009, sentencing. On June 22, 2009, Sorkin hand-delivered a customary pre-sentencing letter to the judge requesting a sentence of 12 years, because of tables cited from the
Social Security AdministrationThe United States Social Security Administration is an independent agency of the United States federal government that administers Social Security, a social insurance program consisting of retirement, disability, and survivors' benefits...
that his life span is predicted to be 13 years.
On June 26, 2009, Chin ordered Madoff to forfeit $170 million in assets. Prosecutors asked Chin to sentence Madoff to the maximum 150 years in prison. Irving Picard indicated that "Mr. Madoff has not provided meaningful cooperation or assistance."
In settlement with federal prosecutors, Madoff's wife Ruth agreed to forfeit her claim to US$85 million in assets, leaving her with $2.5 million in cash. The order allowed the SEC and Court appointed trustee
Irving PicardIrving H. Picard is a partner in the law firm Baker Hostetler. He graduated from the Wharton School, University of Pennsylvania, with a B.S. degree , from Boston University School of Law with a J.D. degree , and from the New York University School of Law with an LL.M. degree in 1967, and was...
to pursue Ruth Madoff's funds.
MassachusettsThe Commonwealth of Massachusetts is a state in the New England region of the northeastern United States of America. It is bordered by Rhode Island and Connecticut to the south, New York to the west, and Vermont and New Hampshire to the north; at its east lies the Atlantic Ocean. As of the 2010...
regulators also accused her of withdrawing $15 million from company-related accounts shortly before he confessed.
In February 2009, Madoff reached an agreement with the SEC, banning him from the securities industry for life.
Picard has sued Madoff's sons, Mark and Andrew, his brother Peter, and Peter's daughter, Shana, for
negligenceNegligence is a failure to exercise the care that a reasonably prudent person would exercise in like circumstances. The area of tort law known as negligence involves harm caused by carelessness, not intentional harm.According to Jay M...
and breach of
fiduciary duty, for $198 million. The defendants had received over $80 million in compensation since 2001 and "used the bank account at BLMIS like a personal piggy bank." The trustee believes they knew about the fraud because of their personal investments in the scheme, the longevity of the fraud, and because of their work at the company including roles as corporate and compliance officers. Since 1995, Peter Madoff had invested only $32,146, but withdrew over $16 million. Mark and Andrew Madoff withdrew more than $35 million from a small original investment. Picard asserts Mark Madoff conspired with his father to hide $25 million in unknown Swiss accounts.
Mechanics of the fraud
According to the Securities and Exchange Commission indictment against Annette Bongiorno and Joann Crupi, two back office workers who worked for Madoff, they created false trading reports based on the returns that Madoff ordered for each customer. For example, once Madoff determined a customer's return, one of the back office workers would enter a false trade from a previous date and then enter a false closing trade in the amount of the required profit, according to the indictment. Prosecutors allege that Bongiorno used a computer program specially designed to backdate trades and manipulate account statements. They quote her as writing to a manager in the early 1990s "I need the ability to give any settlement date I want." In some cases returns were allegedly determined before the account was even opened.
Madoff admitted during his March 2009 guilty plea that the essence of his scheme was to deposit client money into a Chase account, rather than invest it and generate steady returns as clients had believed. When clients wanted their money, "I used the money in the Chase Manhattan bank account that belonged to them or other clients to pay the requested funds," he told the court.
Affinity fraud
Affected institutions include the Stony Brook Foundation, the
James Harris SimonsJames Harris "Jim" Simons is an American hedge fund manager, mathematician, and philanthropist.In 1982, Simons founded Renaissance Technologies, a private investment firm based in New York with over $15 billion under management; Simons is still at the helm, as CEO, of what is now one of the...
family foundation, Kentucky University, the Women's Zionist Organization of America, the Elie Wiesel Foundation and
Steven SpielbergSteven Allan Spielberg KBE is an American film director, screenwriter, producer, video game designer, and studio entrepreneur. In a career of more than four decades, Spielberg's films have covered many themes and genres. Spielberg's early science-fiction and adventure films were seen as an...
's Wunderkinder Foundation. Jewish federations and hospitals have lost millions of dollars, forcing some organizations to close. The Lappin Foundation, for instance, was temporarily forced to halt operations because it had invested its entire $8 million endowment with Madoff.
Size of loss to investors
David SheehanDavid Sheehan has distinguished himself in the world of broadcasting with a series of trailblazing television firsts. Starting in 1970 on CBS, Sheehan was the first movie/television show reviewer/interviewer on a daily local newscast...
, chief counsel to trustee Picard, stated on September 27, 2009, that about $36 billion was invested into the scam, returning $18 billion to investors, with $18 billion missing. About half of Madoff's investors were "net winners," earning more than their investment. The withdrawal amounts in the final six years were subject to "clawback" (return of money) lawsuits.
In a May 4, 2011 statement, trustee Picard said that the total fictitious amounts owed to customers (with some adjustments) were $57 billion, of which $17.3 billion was actually invested by the customers. $7.6 billion has been recovered, but pending lawsuits, only $2.6 billion is available to repay victims. If all the recovered funds are returned to victims, their net loss would be just under $10 billion.
The Internal Revenue Service ruled that investors' capital loss in this and other fraudulent investment schemes will be treated as a business loss, thereby allowing the victims to claim them as net operating losses to reduce tax liability.
The size of the fraud was often stated as $65 billion early in the investigation, but former SEC Chairman
Harvey PittHarvey Pitt was the 26th chairman of the U.S. Securities and Exchange Commission , serving from 2001-2003. He led the SEC in restoring the U.S...
estimated the actual net fraud to be between $10 and $17 billion.
Erin ArvedlundErin E. Arvedlund is a financial journalist who has written for Barron's, The Wall Street Journal, the Moscow Times, The New York Times, TheStreet.com, and Portfolio.com. On Feb. 1, 2011, her "Your Money" column debuted in The Philadelphia Inquirer...
, who publicly questioned Madoff's reported investment performance in 2001, stated that the actual amount of the fraud might never be known, but was likely between $12 and $20 billion.
Plea, sentencing, and prison life
On March 12, 2009, Madoff pled guilty to 11 federal felonies, including
securities fraudSecurities fraud, also known as stock fraud and investment fraud, is a practice that induces investors to make purchase or sale decisions on the basis of false information, frequently resulting in losses, in violation of the securities laws....
,
wire fraudMail and wire fraud is a federal crime in the United States. Together, 18 U.S.C. §§ 1341, 1343, and 1346 reach any fraudulent scheme or artifice to intentionally deprive another of property or honest services with a nexus to mail or wire communication....
, mail fraud,
money launderingMoney laundering is the process of disguising illegal sources of money so that it looks like it came from legal sources. The methods by which money may be laundered are varied and can range in sophistication. Many regulatory and governmental authorities quote estimates each year for the amount...
, making false statements,
perjuryPerjury, also known as forswearing, is the willful act of swearing a false oath or affirmation to tell the truth, whether spoken or in writing, concerning matters material to a judicial proceeding. That is, the witness falsely promises to tell the truth about matters which affect the outcome of the...
, theft from an employee benefit plan, and making false filings with the SEC. The plea was the response to a criminal complaint filed two days earlier, which stated that over the past 20 years, Madoff had defrauded his clients of almost $65 billion in the largest
Ponzi schemeA Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
in history. Madoff insisted he was solely responsible for the fraud. Madoff did not plea bargain with the government. Rather, he pleaded guilty to all charges. It has been speculated that Madoff pleaded guilty because he refused to cooperate with the authorities in order to avoid naming any associates and conspirators who were involved with him in the Ponzi scheme.
On November 3, 2009, David Friehling, Madoff's accounting front man pleaded guilty to securities fraud, investment adviser fraud, making false filings to the Securities and Exchange Commission, and obstructing the IRS. Madoff's right hand man,
Frank DiPascaliFrank DiPascali, Jr. worked for Bernard L. Madoff Investment Securities LLC for 33 years and was a key lieutenant of Bernard Madoff. He referred to himself as "director of options trading" and as "chief financial officer". On August 11, 2009, he pled guilty to ten counts related to the Madoff...
pleaded guilty in August, 2009, and is awaiting bail.
In his plea
allocutionGenerally, to allocute in law means "to speak out formally." In the field of apologetics, allocution is generally done in defense of a belief. In politics, one may allocute before a legislative body in an effort to influence their position on an issue...
, Madoff stated he began his Ponzi scheme in 1991. He admitted he had never made any legitimate investments with his clients' money during this time. Instead, he said, he simply deposited the money into his personal business account at
Chase Manhattan BankJPMorgan Chase Bank, N.A., doing business as Chase, is a national bank that constitutes the consumer and commercial banking subsidiary of financial services firm JPMorgan Chase. The bank was known as Chase Manhattan Bank until it merged with J.P. Morgan & Co. in 2000...
. When his customers asked for withdrawals, he paid them out of the Chase account—a classic "robbing Peter to pay Paul" scenario. Chase and its successor, JPMorgan Chase, may have earned as much as $483 million from his bank account. He was committed to satisfying his clients' expectations of high returns, despite an economic recession. He admitted to false trading activities masked by foreign transfers and false SEC filings. He stated that he always intended to resume legitimate trading activity, but it proved "difficult, and ultimately impossible" to reconcile his client accounts. In the end, Madoff said, he realized that his scam would eventually be exposed.
On June 29, 2009, Chin sentenced Madoff to the maximum sentence of 150 years in federal prison. Madoff's lawyers originally asked the judge to impose a sentence of 7 years because of Madoff's old age.
Madoff apologized to his victims, saying, "I have left a legacy of shame, as some of my victims have pointed out, to my family and my grandchildren. This is something I will live in for the rest of my life. I'm sorry." He added, "I know that doesn't help you," after his victims recommended to the judge that he receive a life sentence. Chin had not received any mitigating letters from friends or family testifying to Madoff's good deeds. "The absence of such support is telling," he said.
Chin also said that Madoff had not been forthcoming about his crimes. "I have a sense Mr. Madoff has not done all that he could do or told all that he knows," said Chin, calling the fraud "extraordinarily evil," "unprecedented" and "staggering," and that the sentence would deter others from committing similar frauds. Chin also agreed with prosecutors' contention that the fraud began at some point in the 1980s. He also noted that Madoff's crimes were "off the charts" since federal sentencing guidelines for fraud only go up to $400 million in losses.
Ruth did not attend court but issued a statement, saying "I am breaking my silence now because my reluctance to speak has been interpreted as indifference or lack of sympathy for the victims of my husband Bernie's crime, which is exactly the opposite of the truth. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years."
Incarceration
Madoff's attorney asked the judge to recommend that the
Federal Bureau of PrisonsThe Federal Bureau of Prisons is a federal law enforcement agency subdivision of the United States Department of Justice and is responsible for the administration of the federal prison system. The system also handles prisoners who committed acts considered felonies under the District of Columbia's...
place Madoff in the
Federal Correctional Institution, OtisvilleThe Federal Correctional Institution in Otisville is located in Orange County, New York, USA. The federal prison, which opened in 1977, is a medium security facility, located in the Town of Mount Hope a quarter mile from the Otisville Correctional Facility, a New York medium security prison, thus...
, which is located 70 miles (112.7 km) from
ManhattanManhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
. The judge, however, only recommended that Madoff be sent to a facility in the Northeast United States. Madoff was transferred to the Federal Correctional Institution Butner Medium near
Butner, North CarolinaButner is a town in Granville County, North Carolina, United States. The population was 7,591 at the 2010 census]. Butner was managed by the state of North Carolina from 1947 through 2007. A bill passed by the North Carolina General Assembly incorporating the town was signed by Gov. Mike Easley on...
, about 45 miles (72.4 km) northwest of
RaleighRaleigh is the capital and the second largest city in the state of North Carolina as well as the seat of Wake County. Raleigh is known as the "City of Oaks" for its many oak trees. According to the U.S. Census Bureau, the city's 2010 population was 403,892, over an area of , making Raleigh...
; he is Bureau of Prisons Register #61727-054. Jeff Gammage of the
Philadelphia Inquirer said "Madoff's heavy sentence likely determined his fate."
Madoff's projected release date is November 14, 2139. The release date, described as "academic" in Madoff's case, reflects a reduction for good behavior. On October 13, 2009, it was reported that Madoff experienced his first prison yard fight with another senior citizen inmate. When he began his sentence, Madoff's stress levels were so severe that he broke out in hives and other skin maladies soon after.
On December 18, 2009, Madoff was moved to
Duke University Medical CenterThe Duke University Health System, combines the Duke University School of Medicine, the Duke University School of Nursing, the Duke Clinic, and the member hospitals into a system of research, clinical care, and education.-Duke University Hospital:...
in
Durham, North CarolinaDurham is a city in the U.S. state of North Carolina. It is the county seat of Durham County and also extends into Wake County. It is the fifth-largest city in the state, and the 85th-largest in the United States by population, with 228,330 residents as of the 2010 United States census...
, and was treated for several facial injuries. A former inmate later claimed that the injuries were received during an alleged altercation with another inmate. Other news reports described Madoff's injuries as more serious and including "facial fractures, broken ribs, and a collapsed lung". The Federal Bureau of Prisons said Madoff signed an
affidavitAn affidavit is a written sworn statement of fact voluntarily made by an affiant or deponent under an oath or affirmation administered by a person authorized to do so by law. Such statement is witnessed as to the authenticity of the affiant's signature by a taker of oaths, such as a notary public...
on December 24, 2009, which indicated that he had not been assaulted and that he had been admitted to the hospital for
hypertensionHypertension or high blood pressure is a cardiac chronic medical condition in which the systemic arterial blood pressure is elevated. What that means is that the heart is having to work harder than it should to pump the blood around the body. Blood pressure involves two measurements, systolic and...
.
In his letter to his daughter-in-law, Madoff claimed that he was being treated in prison like a "Mafia don". "They call me either Uncle Bernie or Mr. Madoff. I can't walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up. It's really quite sweet, how concerned everyone is about my well being, including the staff...It's much safer here than walking the streets of New York."
Personal life
On November 28, 1959, Madoff married
Ruth AlpernRuth Madoff is an American businesswoman and the wife of Bernard Madoff.-Early life:Madoff was born in Queens, New York City, New York. She has a sister, Joan. Madoff graduated from Far Rockaway High School in 1958...
, whom he had met while attending
Far Rockaway High SchoolFar Rockaway High School, a public high school in the public school system of New York City, was located on Bay 25 Street in Far Rockaway in the borough of Queens, as part of the New York City Department of Education. The school was founded in 1897, with Sanford J. Ellsworth as principal for over...
. The two eventually began dating. Ruth graduated high school in 1958 and earned her bachelor's degree at Queens College, she was employed at the stock market in
ManhattanManhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
before working in Madoff's firm, and she founded the Madoff Charitable Foundation. Bernard and Ruth Madoff had two sons: Mark (March 11, 1964-December 11, 2010), a 1986 graduate of the
University of MichiganThe University of Michigan is a public research university located in Ann Arbor, Michigan in the United States. It is the state's oldest university and the flagship campus of the University of Michigan...
, and Andrew (born April 8, 1966), a 1988 graduate of
University of PennsylvaniaThe University of Pennsylvania is a private, Ivy League university located in Philadelphia, Pennsylvania, United States. Penn is the fourth-oldest institution of higher education in the United States,Penn is the fourth-oldest using the founding dates claimed by each institution...
's Wharton Business School. Both later worked in the trading section alongside paternal cousin Charles Weiner. Several family members worked for Madoff. His younger brother, Peter, an attorney, was Senior Managing Director and Chief Compliance Officer, and Peter's daughter, Shana, also an attorney, was the compliance attorney. On the morning of December 11, 2010—exactly two years after Bernard's arrest—his son Mark was found dead in his New York City apartment. The city medical examiner ruled the cause of death as
suicideSuicide is the act of intentionally causing one's own death. Suicide is often committed out of despair or attributed to some underlying mental disorder, such as depression, bipolar disorder, schizophrenia, alcoholism, or drug abuse...
by hanging.
Mark Madoff owed his parents $22 million, and Andrew Madoff owes $9.5 million. There were two loans in 2008 from Bernard Madoff to Andrew Madoff: $4.3 million on October 6, and $250,000 on September 21. Andrew owns a Manhattan apartment and a home in
Greenwich, ConnecticutGreenwich is a town in Fairfield County, Connecticut, United States. As of the 2010 census, the town had a total population of 61,171. It is home to many hedge funds and other financial service companies. Greenwich is the southernmost and westernmost municipality in Connecticut and is 38+ minutes ...
, as did Mark prior to his death. Following a divorce from his first wife in 2000, Mark withdrew money from an account. Both sons used outside investment firms to run their own private philanthropic foundations. In March 2003, Andrew was diagnosed with
mantle cell lymphomaMantle cell lymphoma is one of the rarest of the non-Hodgkin's lymphomas , comprising about 6% of NHL cases. There are only about 15,000 patients presently in the U.S. While it is difficult to treat and seldom considered cured, investigations into better treatments are actively pursued worldwide...
and eventually returned to work. He became chairman of the Lymphoma Research Foundation in January 2008, but resigned shortly after his father's arrest.
Peter and Andrew Madoff remain the targets of a tax fraud investigation by federal prosecutors, according to
The Wall Street JournalThe Wall Street Journal is an American English-language international daily newspaper. It is published in New York City by Dow Jones & Company, a division of News Corporation, along with the Asian and European editions of the Journal....
. David Friehling, Bernard Madoff's tax accountant, who pleaded guilty in a related case, is reportedly assisting the investigation. According to a civil lawsuit filed in October 2009, trustee
Irving PicardIrving H. Picard is a partner in the law firm Baker Hostetler. He graduated from the Wharton School, University of Pennsylvania, with a B.S. degree , from Boston University School of Law with a J.D. degree , and from the New York University School of Law with an LL.M. degree in 1967, and was...
alleges that Peter Madoff deposited $32,146 into his Madoff accounts and withdrew over $16 million; Andrew deposited almost $1 million into his accounts and withdrew $17 million; Mark deposited $745,482 and withdrew $18.1 million.
Madoff lived in
Roslyn, New YorkRoslyn is a village in Nassau County, New York, on the North Shore of Long Island. As of the United States 2010 Census, the village population was 2,770...
, in a ranch house through the 1970s and after 1980 owned an ocean-front residence in
MontaukMontauk [ˈmɒntɒk] is a census-designated place that roughly corresponds to the hamlet with the same name located in the town of East Hampton in Suffolk County, New York, United States on the South Shore of Long Island. As of the United States 2000 Census, the CDP population was 3,851 as of 2000...
. His primary residence was on
ManhattanManhattan is the oldest and the most densely populated of the five boroughs of New York City. Located primarily on the island of Manhattan at the mouth of the Hudson River, the boundaries of the borough are identical to those of New York County, an original county of the state of New York...
's
Upper East SideThe Upper East Side is a neighborhood in the borough of Manhattan in New York City, between Central Park and the East River. The Upper East Side lies within an area bounded by 59th Street to 96th Street, and the East River to Fifth Avenue-Central Park...
, and he was listed as chairman of the building's
co-opA housing cooperative is a legal entity—usually a corporation—that owns real estate, consisting of one or more residential buildings. Each shareholder in the legal entity is granted the right to occupy one housing unit, sometimes subject to an occupancy agreement, which is similar to a lease. ...
board. He also owned a home in
FranceThe French Republic , The French Republic , The French Republic , (commonly known as France , is a unitary semi-presidential republic in Western Europe with several overseas territories and islands located on other continents and in the Indian, Pacific, and Atlantic oceans. Metropolitan France...
and a mansion in
Palm Beach, FloridaThe Town of Palm Beach is an incorporated town in Palm Beach County, Florida, United States. The Intracoastal Waterway separates it from the neighboring cities of West Palm Beach and Lake Worth...
, where he was a member of the Palm Beach Country Club. Madoff owned a 55 feet (17 m) sportfishing yacht named
Bull. All three homes were auctioned by the U.S. Marshals Service in September 2009.
Sheryl Weinstein, former
chief financial officerThe chief financial officer or Chief financial and operating officer is a corporate officer primarily responsible for managing the financial risks of the corporation. This officer is also responsible for financial planning and record-keeping, as well as financial reporting to higher management...
of
HadassahHadassah, the Women's Zionist Organization of America is an American Jewish volunteer women's organization. Founded in 1912 by Henrietta Szold, it is one of the largest international Jewish organizations, with around...
, disclosed in a book written to recoup her investment losses that she and Madoff had an affair more than 20 years ago. As of 1997, when Weinstein left, Hadassah had invested a total of $40 million. By the end of 2008, Hadassah had withdrawn $140 million from an account valued at $90 million. At the victim impact sentencing hearing, Weinstein testified, calling him a "beast".
According to a March 13, 2009, filing by Madoff, he and his wife were worth up to $126 million, plus an estimated $700 million for the value of his business interest in Bernard L. Madoff Investment Securities LLC. Other major assets included securities ($45 million), cash ($17 million), half-interest in BLM Air Charter ($12 million), a 2006 Leopard yacht ($7 million), jewelry ($2.6 million), Manhattan apartment ($7 million), Montauk home ($3 million), Palm Beach home ($11 million),
Cap d' AntibesAntibes is a resort town in the Alpes-Maritimes department in southeastern France.It lies on the Mediterranean in the Côte d'Azur, located between Cannes and Nice. The town of Juan-les-Pins is within the commune of Antibes...
, France property ($1 million), and furniture, household goods, and art ($9.9 million).
During a 2011 interview on
CBSCBS Broadcasting Inc. is a major US commercial broadcasting television network, which started as a radio network. The name is derived from the initials of the network's former name, Columbia Broadcasting System. The network is sometimes referred to as the "Eye Network" in reference to the shape of...
, Ruth Madoff stated that she and her husband had attempted suicide after his fraud was exposed, both taking "a bunch of pills" in a suicide pact on
Christmas EveChristmas Eve refers to the evening or entire day preceding Christmas Day, a widely celebrated festival commemorating the birth of Jesus of Nazareth that takes place on December 25...
2008.
In November 2011, former Madoff employee David Kugel pleaded guilty to charges that arose out of the ponzi scheme. He admitted having helped Madoff create a phony paper traiul, the false account statements that were supplied to clients.
Philanthropy and other activities
Madoff was a prominent
philanthropistPhilanthropy etymologically means "the love of humanity"—love in the sense of caring for, nourishing, developing, or enhancing; humanity in the sense of "what it is to be human," or "human potential." In modern practical terms, it is "private initiatives for public good, focusing on quality of...
, who served on boards of nonprofit institutions, many of which entrusted his firm with their
endowmentsA financial endowment is a transfer of money or property donated to an institution. The total value of an institution's investments is often referred to as the institution's endowment and is typically organized as a public charity, private foundation, or trust....
. The collapse and freeze of his personal assets and those of his firm affected businesses, charities, and foundations around the world, including the
Chais Family FoundationStanley Chais , was a Beverly Hills, California investment advisor who operated "feeder funds" which collected money for funds related to the Madoff investment scandal. He was born in Bronx, New York....
, the
Robert I. Lappin Charitable FoundationThe Robert I. Lappin Charitable Foundation is a Jewish non-profit organization that operates programs for Jewish youth. Its activities reflects the group's mission of "helping to keep our Jewish children Jewish, thus reversing the trend of assimilation and intermarriage." It is based in Salem,...
, the Picower Foundation, and the
JEHT FoundationThe JEHT Foundation was a grant-making nonprofit foundation based in New York City. The Foundation’s name was an acronym that stood for the core values that underlay the Foundation's mission: "Justice, Equality, Human dignity and Tolerance." The Foundation's programs reflected these interests and...
which were forced to close. Madoff donated approximately $6 million to
lymphomaLymphoma is a cancer in the lymphatic cells of the immune system. Typically, lymphomas present as a solid tumor of lymphoid cells. Treatment might involve chemotherapy and in some cases radiotherapy and/or bone marrow transplantation, and can be curable depending on the histology, type, and stage...
research after his son Andrew was diagnosed with the disease.
He and his wife gave over $230,000 to political causes since 1991, with the bulk going to the
Democratic PartyThe Democratic Party is one of two major contemporary political parties in the United States, along with the Republican Party. The party's socially liberal and progressive platform is largely considered center-left in the U.S. political spectrum. The party has the lengthiest record of continuous...
.
Madoff served as the Chairman of the Board of Directors of the
Sy Syms School of BusinessThe Syms School of Business is Yeshiva University's business school for men and women...
at
Yeshiva UniversityYeshiva University is a private university in New York City, with six campuses in New York and one in Israel. Founded in 1886, it is a research university ranked as 45th in the US among national universities by U.S. News & World Report in 2012...
, and as Treasurer of its Board of Trustees. He resigned his position at Yeshiva University after his arrest. Madoff also served on the Board of
New York City CenterNew York City Center is a 2,750-seat Moorish Revival theater located at 131 West 55th Street between 6th and 7th Avenues in Manhattan, New York City. It is one block south of Carnegie Hall...
, a member of New York City's
Cultural Institutions GroupOne hundred and thirty years ago, New York City and dedicated groups of private citizens established a new pattern of public-private partnerships that would prove to have an enormous impact on the future growth and reputation of the city. These partnerships were not for investment purposes, real...
(CIG). He served on the executive council of the Wall Street division of the UJA Foundation of New York which declined to invest funds with him because of the conflict of interest.
Madoff undertook charity work for the
Gift of Life Bone Marrow FoundationThe Gift of Life Bone Marrow Foundation is one of the public bone marrow, blood stem cell and umbilical cord blood registries in the United States...
and made philanthropic gifts through the Madoff Family Foundation, a $19 million private foundation, which he managed along with his wife. They donated money to hospitals and theaters. The foundation has also contributed to many educational, cultural, and health charities, including those later forced to close because of Madoff's fraud. After Madoff's arrest, the assets of the Madoff Family Foundation were frozen by a federal court.
In the media
- HBO is making a movie about Madoff in which actor Robert De Niro
Robert De Niro, Jr. is an American actor, director and producer. His first major film roles were in Bang the Drum Slowly and Mean Streets, both in 1973...
is set to star.
- A documentary, Chasing Madoff
Chasing Madoff is a 2011 documentary film written and directed by Jeff Prosserman. The film is based on the book by Harry Markopolos. -Content summary:...
, describing Harry MarkopolosHarry M. Markopolos is a former securities industry executive and independent financial fraud investigator for institutional investors and others seeking forensic accounting expertise. He has received public acclaim for uncovering evidence over a period of nine years that Bernard Madoff's wealth...
' efforts to unmask the fraud, was released in August 2011.
See also
- Affinity fraud
Affinity fraud includes investment frauds that prey upon members of identifiable groups, such as religious or ethnic communities, language minorities, the elderly, or professional groups. The fraudsters who promote affinity scams frequently are – or pretend to be – members of the group...
- FBI
- Financial crisis of 2007–2010
- K1 fund
The K1 fund was a British Virgin Islands based hedge fund, initially marketed to and invested in by mainly German-based private investors, and latterly a series of global banks. With an estimated size of $378million/£249million and $1Bn under management, it collapsed in 2008. It is estimated by...
, a German ponzi-scheme
- Participants in the Madoff investment scandal
- Ponzi scheme
A Ponzi scheme is a fraudulent investment operation that pays returns to its investors from their own money or the money paid by subsequent investors, rather than from any actual profit earned by the individual or organization running the operation...
- Recovery of funds from the Madoff investment scandal
- Michael Sabo
Michael John Sabo is an American consultant and speaker on identity theft and fraud in the business sector. He is currently Executive Director of US Prison Consultants, a principal resource for individuals charged with white-collar crime....
- White-collar crime
Within the field of criminology, white-collar crime has been defined by Edwin Sutherland as "a crime committed by a person of respectability and high social status in the course of his occupation" . Sutherland was a proponent of Symbolic Interactionism, and believed that criminal behavior was...
External links