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If I ask you to close your eyes and try to picture a thief who is capable of stealing tens of billions of dollars, how would they look? Strong, young, fast, smart, and devious would be the adjectives most of you would be using, but in the real world, a man in his late 60s and 70s would be just as capable.
The story of Bernie Madoff is not just some other rich financial fraudster who got caught. This man pulled off the largest Ponzi scheme in history without anybody knowing. A man’s actions compared to that of the notorious serial killer, Ted Bundy, his story is worth listening to.
Madoff, who was born in 1938 in New York to a working-class family of Eastern European
immigrants, began a stockbroking firm with his brother using money he had earned from working as a lifeguard and installing lawn sprinklers – a story that became a legend as he grew to fame. He began trading penny stocks, or shares of small companies not listed on major stock exchanges, in the 1960s.
Later, his business was legitimised and with the help of his brother and sons, he established Bernie L Madoff Investment Securities LLC. He went on to develop a great reputation for himself on wall street. He was considered one of the most trustable and creditable people on wall street, He was one the key people in the formation of the NASDAQ, and was even the company’s chairman for 3 years up until his arrest.
Before we get into the details of this ‘lick’, what even is a Ponzi scheme? A Ponzi scheme is a scam that invites innocent investors to invest their money into this fund by promising them high rates of returns. And they will also pay the early backers some money to which is supposed to be the ‘high rates of return’ But in actuality, nobody is investing money, there are no returns. The money invested in the scam is not invested anywhere. So as the scam keeps running, and new investors are added, the money from the new investors is used to pay the old investors, this flow is needed to keep the scam running. A Ponzi scheme will fail due to two reasons. Firstly, if this state of flow is interrupted and the scam has no money to pay the old investors. Secondly, if the investors request their money back at rates that the scam cannot afford, it will fail.
Madoff’s scheme is different from the other ones solely for its ability to keep going for so long. The investigation was not able to pinpoint an exact date as to when the scheme had started. But, some people working in Madoff’s company have said that it was going on well before 1975. Running a Ponzi scheme for thirty-three-plus years is no joke, neither was the reward. Madoff is estimated to have made around sixty—five billion USD. His scheme’s ability to survive the several market recession periods, the 1998 economic global crisis, and the market contraction during the 9/11 attack. As he built his wealth over the years through the Ponzi scheme, his reputation for always living up to his promises of providing ‘profits’ kept building up.
His scheme fell in the year 2008, the year of the housing crisis. As the markets crashed and people lost their jobs, all of the investors in the Ponzi scheme needed to liquidate their assets so they requested their money back. But Madoff could not pay them back as there were too many people asking for money, and he did not have that much. Seeing how everything was falling apart, Madoff explained this hidden lie to his sons. His sons went to the authorities and Madoff was arrested. Bernie pleaded guilty and said he was ashamed of the things he had done. He was given a sentence of 150 years.
What the most shocking part of the whole thing is not the size of the scam, but as to how he pulled it off without telling anyone who cared about him. Not his own wife neither his own sons who worked in the same office. This was an extremely difficult period of time for the Madoff family. All of their names were berated on television and on social media. Blogs held the sons and wife responsible for the crimes of Bernie. But, in actuality, they knew nothing of the crime.
The accusations, berating and false claims got to one of Bernie’s sons, Mark. Mark woke up at 4 a.m. in his New York City apartment on the second anniversary of his father's arrest and wrote his lawyer, pleading him to look after his family. He also texted his wife, Stephanie, who was on a Disney World trip with their daughter, to tell her he loved her and advise she send someone to look after their son Nick. Nick, who was only 22 months old at the time, slept sweetly in his bedroom while his father attempted to hang himself by looping a vacuum cleaner cord around a pipe in their living room. He tried again with the leash of their family dog, Grouper, after the cord snapped. When his father-in-law arrived, he was dead, despite Stephanie's urgent pleas to hurry to their home as soon as possible after receiving her husband's text. This was not the first time Mark had attempted to kill himself. The suicide note from his first attempt read, “Now you know how you have destroyed the lives of your sons by your life of deceit. F*** you.” Bernie’s other son, Andrew, developed cancer again. He blamed the development of cancer due to the stress brought on to him by his father. Andrew Madoff died in 2014.
There were other people who Bernie indirectly killed. William Foxton was a British soldier who lost his arm while fighting in Afghanistan. William shot himself when he realized that he lost all of his life savings to Bernie’s scheme. French Banker Thierry Magon de la Villehuchet who invested over one billion dollars of his aristocratic clients’ money into Bernie’s scheme took sleeping pills and slit his wrists.
Nowadays our government and all the private entities are trying to promote investing in stocks and mutual funds. Investing is a great way for families to earn more money and ease the pressure on the primary income. This is just a disclaimer to beware and to not, “put all your eggs in one basket.”