... on Friday, less than 24 hours after this prominent Wall Street figure was arrested on charges connected with what authorities portrayed as the biggest Ponzi scheme in financial history, hard questions began to be raised about whether Mr. Madoff acted alone and why his suspected con game was not uncovered sooner. ... some investors said they had questioned Mr. Madoff’s supposed investment prowess years ago, pointing to his unnaturally steady returns, his vague investment strategy and the obscure accounting firm that audited his books. Most Ponzi schemes collapse relatively quickly, but there is fragmentary evidence that Mr. Madoff’s scheme may have lasted for years or even decades. A Boston whistle-blower has claimed that he tried to alert the S.E.C. to the scheme as early as 1999, and the weekly newspaper Barron’s raised questions about Mr. Madoff’s returns and strategy in 2001, although it did not accuse him of wrongdoing.
For years, the investment funds run by Wall Street legend Bernard L. Madoff turned in such consistently strong results that they seemed unbelievable.It turns out that they were, federal authorities say. As details of one of the largest alleged frauds ever to rock Wall Street began trickling out Friday, it became clear that warning signs about Madoff's funds had abounded for years.But many investors, in a bull-market rush to get in on the action, either ignored the red flags or didn't bother to look
for them."We felt it was too good to be true," Charles Gradante, co-founder of hedge-fund research firm Hennessee Group, said of Madoff's investment performance. "You can't go 10 or 15 years with only three or four down months. It's just impossible." But some of Gradante's clients dismissed his admonitions and invested with Madoff anyway.