Who is Bernard Madoff? Who are the victims of the Madoff scandal?

You’ve probably heard about the biggest Ponzi scheme in history orchestrated by Bernard Madoff. Want to know who Madoff is? Who did he work for, and who was affected by him?

The Madoff scandal: victims of a $50 billion Ponzi scheme

Bernard Madoff is a former chairman of the NASDAQ stock exchange and a prominent US businessman. He is the founder and chairman of a major financial firm for almost 50 years. On December 11, 2008, he was arrested on a charge of securities fraud.

Madoff ran what he himself described as a Ponzi scheme. He provided consistent investment returns every year, on the order of 12-13 percent, regardless of market volatility and fluctuations. Analysts were concerned whether profits were being fabricated or were in fact genuine. His investment firm also had suspicious business practices, such as the use of an unusually small auditing firm and lack of transparency for financial transactions.

In fact, Madoff was running a fraudulent Ponzi scheme in which nonexistent profits were used to entice new investors and generate more cash. However, the scheme began to unravel when clients asked to withdraw large amounts of cash because of the recent financial turmoil starting in 2007. Madoff admitted that there were no profits to his sons, who prompted the police, leading to his arrest.

Many leading banks suffered losses as a result of Madoff’s Ponzi scheme. Madoff was also a philanthropist, and charitable organizations that invested with him have been forced to close, including the Robet I. Lappin Chartiable Foundation, the Picower Foundation, and the JEHT Foundation. Several Jewish charities have also suffered large losses.

The Ponzi scheme that Madoff implemented is an old conman’s trick. Read the FAQ, What is a Ponzi scheme, to learn how they work and how to avoid them.

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