Thursday, December 11, 2008
Former NASDAQ Chairman Arrested For $50 Billion Fraud Scheme (That's Right, $50 Billion)
Bernard L. Madoff, 70, of New York City, the former Chairman of the NASDAQ stock market, was arrested today on charges he ran a massive $50 billion Ponzi-type fraud scheme. Maddoff, well known fixture on Wall Street and the founder of Bernard L. Madoff Investment Securities LLC, was charged with one count of securities fraud. According to the complaint, Madoff "deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars." According to the SEC complaint, "Madoff yesterday informed two senior employees that his investment advisory business was a fraud. Madoff told these employees that he was 'finished,' that he had 'absolutely nothing,' that 'it's all just one big lie,' and that it was 'basically, a giant Ponzi scheme.' The senior employees understood him to be saying that he had for years been paying returns to certain investors out of the principal received from other, different investors. Madoff admitted in this conversation that the firm was insolvent and had been for years, and that he estimated the losses from this fraud were at least $50 billion."
Read the SEC's press release here.