Bernard Madoff goes down in history as America’s biggest fraudster who lived namely by placing wealthy people’s fortunes in hedge funds and other type of high risk hedge funds. He managed to defrauded investors for at least $ 50 billion.
Bernard Madoff was born 29 April 1938 in Queens, New York. In 1960 he founded the investment firm Bernard L. Madoff Investment Securities LLC.
He was co-founder of NASDAQ in 1971 and was chairman there for several years. Madoff, who is Jewish, has given large sums of money to Jewish and pro-Israel organizations.
He was arrested on 11 December 2008 after allegedly admitting to using a pyramid scheme against two senior managers in his investment company which was according to the U.S. media his own two sons Andrew and Mark.
The Pyramid Scheme
Hundreds of wealthy investors, hedge funds and foreign banks put billions of dollars into his business which over the years always gave good returns. Also pensioners, a Jewish welfare organization and even senator Frank Lautenberg is among those who have lost large sums of money.
The scheme was actually clever. Investors that had deposited money made profits from other new investor’s deposits, and the total fund was therefore depending on a steady stream of new investors. The total invested capital does not provide enough return alone, such pyramid schemes always eventually collapse.
A number of banks and investment companies in Europe and Asia reports of huge losses after the disclosure of Bernard Madoff’s huge scheme. Here are some of the companies that were hardest hit:
1- United Kingdoms:
Royal Bank of Scotland may have lost $4.1 billion.
HSBC announces losses of $6.8 billion.
BNP Paribas estimates losses of $3.2 billion.
The investment bank Natixis estiamtes losses of $4.1 billion.
Santander, Spains’s largest bank lost as much as $21 billion.
Private bank Reichmuth & Co. reports loss of $2.2 billion.
EIM Group may have lost $1.5 billion.
The financial giant Nomura has lost $2 billion.
The already ailing bank Fortis lost $9.2 billion .
Among his more prominent victims were Nobel laureate Elie Wiesel, filmmaker Steven Spielberg, Senator Frank Lautenberg and real estate king Mortimer Zuckermann.
The FBI believes that Madoff, who was chairman of the Nasdaq stock market in the early 90s, stood behind a massive pyramid scheme through its brokerage business, which included at least one hedge fund.
According to FBI Madoff defrauded his clients for as much as $50 billion, and he admitted when he was arrested that his entire business was a lie.
Everyone is wondering now about how it was possible for Madoff to run the scam for so many years without being discovered. Although some were alarmed at how his business could provide such a consistent good returns year after year.