How life is for the wife of the creator of the largest financial pyramid. "The most successful thief in history Madoff Bernard is currently

The Story of Bernie Madoff's $64 Billion Scam

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On November 14, 2139, the prison term of American entrepreneur and former chairman of the board of directors of the NASDAQ stock exchange Bernard Madoff will end. Of course, an entrepreneur who turned 78 years old a few months ago is unlikely to live to see that time.

In June 2009, Madoff was sentenced to 150 years in prison for creating the largest financial pyramid scheme in history. As a result of his scam, from one to three million people suffered, and the amount of damage is estimated at $64.8 billion. A site observer told the story of an entrepreneur who does not consider himself guilty, but whose family business led to catastrophic consequences.

Bernie Madoff

Bernard Madoff, who later became known as Bernie, was born in 1938 into a Jewish family. His father, Ralph, worked as a plumber and tried to earn money on the stock exchange. Mother Sylvia took care of the housework.

Bernie's father got into finance several years before his son was born. In 1932, the acute phase of the Great Depression began and Ralph Madoff lost his job. However, his efforts on the stock exchange did not bring much success, and then Ralph opened his own business related to sporting goods.

When Bernie was in junior high, his father's sporting goods company went bust. He was of little interest to his father's financial affairs. At that time, Bernie was a good swimmer and was on the school swimming team. In his free time from competitions and studies, he worked as a lifeguard on the beach, where his coach placed him. He saved the money he earned from this job to invest in the future.

While studying, he met Ruth Alpern, to whom he became engaged in 1959 and lived together until his imprisonment in 2009. That same year, he received a bachelor's degree in political science and entered the Brooklyn School of Law. However, less than a year passed and Madoff dropped out to open his own business.

Using $5,000 he earned from working as a lifeguard and borrowing another $50,000 from his in-laws, he opened Bernard L. Madoff Investment Securities, LLC.

The first clients were brought to the company by his wife's father, Sol Alpern, who previously worked as a financial consultant. Alpern introduced Madoff to his old clients and acquaintances, and he invested their money outside the exchange in pink sheets. This brought in good income, but did not allow Madoff to compete with other companies on the stock exchange.

But in 1980, Madoff's company became the largest trader on the New York Stock Exchange and made approximately 5% of all transactions. The transition from pink sheet trading to stock market dominance was due to computerization. Madoff was one of the first to use electronic trading technology, while other funds were still sending traders to the exchange. After a test period, the technology used in Madoff's company became the basis for NASDAQ.

Madoff's company gradually became a family business. When things went well, he brought in his younger brother Peter, nephews Roger and Shana, and two sons Mark and Andrew. His wife, Ruth, was listed as vice president of the company, but was not involved in any activities in it. Madoff has been called a "pillar of Wall Street" and one of the most innovative traders of his time.

On October 19, 1987, the Dow Jones Industrial Average fell 22.8%. This led to panic on the stock exchange. Many clients began to withdraw their money from investment funds and close positions even on the most unfavorable terms. “They betrayed me,” Madoff later said.

To minimize losses caused by Black Monday, Madoff's company began trading index options, consisting of several stocks grouped according to a certain principle. But in the 90s, when the market became stable again, their effectiveness decreased.

That's when Madoff first started using a Ponzi scheme. He took money from new investors and paid profits to previous ones. The fund's clients could earn up to 15% per annum, but only in words. In fact, their funds were used to buy Treasury bonds with a profit of 2% per annum. What also attracted clients was the fact that Madoff did not charge a fee for money management.

The Madoff Fund was extremely popular among brokers, investors and celebrities. Among others, the fund contained money from Steven Spielberg, actor Kevin Bacon and actress Kyra Sedgwick. Joseph Safra, whose fortune is estimated at $15.7 billion, also made large investments (the exact amount is unknown). The basis of this money is the Brazilian bank Banco Safra and the Swiss credit institution J.Safra Sarasin. He also owns Safra National Bank of New York and real estate around the world.

My fund contained funds from all major banks. You know, when Safra comes to you and entertains you while trying to invest in your fund, it makes your head spin. It feeds your ego. Suddenly, all the banks that previously didn’t want to do business with you are literally pushing money into you.

- from Bernie Madoff's interview with New York Magazine

According to Madoff, at that point he no longer needed the money, but continued to accept “billions of dollars that were thrown in his face.” Madoff didn't feel guilty. “All these banks and funds should have known that something was dirty here,” he said in an interview.

Clients did not know how the entrepreneur managed to generate such profits. Madoff laughed it off, saying that he knew the market better than anyone else or that he was “just a wizard.” To those who asked too many questions, Madoff gave an ultimatum: "I said, 'If you don't like what I have to offer, take the money.'"

In February 2011, New York Magazine journalist Steve Fishman received a call from Bernie Madoff from federal prison. Fishman and Madoff spoke on the phone about 15 times. Based on these calls, the journalist published the only interview with the entrepreneur after the arrest.

In interviews with New York Magazine, Madoff often recalls how difficult it was for him to keep his secret. “It was a nightmare. Imagine, I came home every evening and could not tell my wife, my sons, or my brother that an ax was hanging over my head,” the entrepreneur recalls.

The first person to notice that something was wrong with Madoff was financial analyst Harry Markopolous. He sent his calculations to the Securities and Exchange Commission, but was ignored. He sent his investigations 4 times - in 2000, 2001, 2005 and 2007, but none of his attempts were successful.

According to his calculations, the Madoff Foundation simply could not exist, but neither the federal authorities nor the press listened to him. Subsequently, he published a book, No One Would Listen, about his futile attempts to expose Madoff as a fraud.

In 2000, when the market was stable, Madoff had a chance to sell his fund for $1 billion. Of course, he refused, since subsequent documentation checks would have revealed fraud. “For the family, my action seemed crazy, but I couldn’t do anything.”

However, Madoff was able to explain his decision to his circle of close relatives by saying that the company was doing well. Madoff said he wants to continue running the company and take it to the next level. The relatives agreed. "My sons idolized me, and I idolized them," Madoff recalls. Mark and Andrew - Bernie Madoff's sons - were sitting in a separate office not far from their father's office.

According to the entrepreneur, his children took wealth for granted and could easily fly on a personal plane to go fishing. This didn’t bother Madoff: “After all, I lived extravagantly too. I bought a plane and 4 houses as a gift."

Until 2002, Madoff still hoped to get out of this situation. “I believed in miracles. I don’t know which one,” the entrepreneur recalls. However, by 2002, the amounts that had to be paid had become astronomical. Madoff tried to maintain the flow of new investments, but they were no longer enough to pay out previous investors.

I even tried to return money to some close friends. They didn't take them. Everyone said, “No, you can't do this. I’ve been your friend and client for years.” I couldn't say I was doing them a favor.

In September 2008, the stock market crashed. This was the final point for the Madoff company. In an attempt to get their money back, too many clients began to come to the fund. On December 10, Andrew and Mark went to Uncle Peter's office and tried to find out what was happening to their father. “It feels like he’s falling apart in his office,” Andrew said.

The Madoff family has experienced this before. There have been several cases of cancer in each generation of the family, and Madoff Sr. had previously “been in a vegetable state for several weeks” when his son was diagnosed.

Peter came to Madoff's office, he almost immediately told him about the scam and burst into tears. Madoff needed to return $7 billion to clients and in the last month he was only able to raise $700 million in new investments. This money would be enough to support the scheme for several weeks. But there was no point in this.

It wouldn't solve my problems. Besides, I'm tired of hiding it all. So I decided not to take any new money and tell everything to hell. Then, during the searches, a check for $173 million was found on my desk. Uncashed.

On the same day, Madoff's sons went to the office of a lawyer they knew and then handed their father over to the authorities. The next day he was arrested, and 5 days later all the company's accounts were frozen. After checking the accounts, it turned out that Madoff had not invested funds entrusted to him for more than 13 years.

On March 12, 2009, Madoff testified on all charges. He admitted to money laundering, perjury and fraud. Three months later, the court sentenced him to 150 years in prison.

On December 11, 2010, Mark Madoff was found hanged at his home in New York. For two years he took antidepressants and saw a psychologist. In an email to his lawyer sent hours before his suicide, Mark wrote: “No one wants to hear the truth. Please take care of my family." He probably meant that the press did not believe that the sons were not involved in their father’s scam. Madoff Sr. was devastated by his son's death.

I cried for two weeks. I didn't leave my cell. I didn't talk to anyone. Now I’m talking to you on the phone and there are tears in my eyes. Not a single day goes by that I don't suffer. Maybe I speak normally now. But I'm not okay and I never will be okay.

Madoff's second son, Andrew, owns a small energy company, Madoff Energy Holdings, and a fishing reel company, Abel Automatics.

Madoff is treated well in prison. “They love thieves here, and I am, as it may sound, one of the most successful thieves in history,” Madoff says. But what pleases him most is that he no longer has to hide anything.

According to him, almost all the victims of his fraud were able to return part of the money. “Fifty cents for every dollar. They would probably lose their money in the market anyway. But don’t think I’m trying to justify everything I did.”

Bernard Madoff himself

Bernard Madoff is a New York native. There, in 1938, a boy was born into a Jewish family, whose future would be as terrible as it was great. However, as a child, Bernard was not much different from his peers: he graduated from the prestigious Far Rockaway school without any special distinctions, then studied at Hofstra College and received a bachelor's degree in political science. Just as he once opened his own business with only a few hundred dollars in his pocket, Bernard Madoff started practically from scratch. While studying in college, he worked as a laborer and managed to save about $5,000. This money was enough for Bernard to open his own company, Madoff Investment Securities, where he then hired several of his relatives.

Bernard participated in the creation of the American stock exchange Nasdaq, which buys and sells securities for the benefit of investors. His company, Investment Securities, was one of the largest bidders on the Nasdaq. By the early 1990s, Madoff was chairman of the board of directors of Nasdaq. Over time, Madoff Investment Securities has been recognized in America and throughout the world as the most reliable investment fund. It is worth noting that throughout its existence it has brought high profits - about 12-13% per annum.

2 businesses – double income – double bottom

The construction of a broker-dealer business and the organization of securities trading lasted more than 40 years. Madoff Investment Securities sold stocks, bonds and other securities profitably for itself and clients. Experts estimated Madoff's business income at $67 million in 2006. Net trading in 2006 brought in $72.5 million, and the company's expenses were only $30 million.

At the same time, in the skyscraper where the residence of the Madoff Investment Securities company was located, the great schemer managed to organize, as it were, two businesses: one - legitimate - representing a broker-dealer company, and the second - fraudulent - a hedge fund, which is not limited by regulatory regulation and is not available to the general public. circle of people. The first business was regulated by the Securities and Exchange Commission. Everything was subject to verification: brokerage books, statements, cash receipts, transactions. At least once every 2 years, auditors came there with inspections. In a word, a mosquito will not undermine your nose.

But on the floor below in the offices other workers worked tirelessly. Unlike their “colleagues” brokers, they did not wear jackets, but came to work in casual clothes so as not to be conspicuous and stand out in the crowd. The entrance to the 17th floor (which is where the hedge fund was located) was classified and was a small, inconspicuous door to the left of the elevator.

Brokers demonstrated the activities of Madoff's empire, and the few employees on the 17th floor made his capital. Most broker-dealer employees were barred from the 17th floor.

What were they doing on this mysterious 17th floor? Madoff adhered to the following operating principle: a private investor opens a brokerage account. But in reality, this account is not such, because it is not connected with the brokerage part of the business at all. Madoff gets access to the client’s funds, but does not place them in a hedge fund, but spends some of them on his own needs, giving old investors money to new ones. This is the scheme of the traditional “pyramid”.

Bridge funds and friends and family are other sources of investment for Madoff. They received a certain percentage of the transaction by attracting other investors. By the way, it was on the 18th respectable floor that the campaigning of investor candidates took place. And then their funds were redirected to the floor below.

Exposure: “Pavlik Morozov” or crisis?

According to legend, on December 10, 2008, Madoff, in a frank conversation with his sons, admitted to them that his entire business was based on lies, and without thinking twice, they reported their father to the authorities. On December 11, Madoff was arrested, and on December 16, all his accounts were frozen. During the proceedings, it was found out that Bernard Madoff had not invested anywhere for 13 years.

According to a more truthful version, the reason for the collapse of the pyramid is the global financial crisis. When its first wave passed, some large investors decided to withdraw their invested funds and property in the amount of $7 billion. It is clear that Madoff did not have such funds.

In March 2009, Madoff pleaded guilty to all 11 charges, namely: perjury, fraud, money laundering, etc. And on June 29, 2009, Bernard Madoff was sentenced to 150 years in prison by the Manhattan District Court. According to one source, Madoff's company squandered $50 billion.

The consequences of the collapse of the financial pyramid were terrible. Large banks, financial and investment corporations, insurance and charitable organizations in various countries of Europe and the world suffered from it. Among them are Fairfield Sentry Ltd, Kingate Global Fund Ltd, the Spanish banking group Banco Santander, Royal Bank of Scotland and many others. etc.

On December 11, 2008, in the midst of the global financial crisis, Bernard Lawrence Madoff, beloved and revered on Wall Street by his friendly nickname “Bernie,” was arrested. Arrested on charges of creating a financial pyramid, which turned into the largest theft of funds in history - $50 billion.

Then, hot on the heels, I thoroughly researched this case (using, of course, only those materials that were available at the beginning of the trial) and wrote an article for Business Magazine, to which I refer readers for an introduction to the course of events.

7 years have passed since then. Bernie Madoff received a 150-year prison sentence, and both of his sons, who worked in the family financial business, died: Mark hanged himself two years after his father’s arrest, Andrew died of lymphoma in 2014. As for the amount of the alleged thefts, it has swelled in the admiring and envious eyes of the public to $65 billion.

And here’s what’s amazing: for 7 years, no one has ever dared to publicly start a conversation about the version of events, which, in my humble opinion, is the only one worthy of discussion by people who consider themselves sane and capable of resisting unscrupulous zombies. The version, which, as it seemed to me in 2008, lies on the surface, was not heard in the Public Broadcasting Service film investigation “Frontline: The Madoff Affair” (2009), nor is it in the documentary film of the French Channel Three “Madoff, l'homme qui valait 65” billions" (2014). The authors of the monographs also have no doubt about the officially sanctioned script: neither Gerald Strober (“Catastrophe: The Story of Bernard L. Madoff, the Man Who Swindled the World”, 2009), nor Jerry Oppenheimer (“Madoff with the Money”, 2009), nor Diana Enriquez (“The Wizard of Lies: Bernie Madoff and the Death of Trust”, 2012).

Maybe, of course, I missed something, but in all of the listed mainstream I did not find anything except the repetition of a dreary, monotonous mantra: Ponzi pyramid, 65 billion, stole, deceived those who trusted him, scoundrel, how could you, Bernie and so on. It even somehow became awkward for my colleagues. For their stubborn, downright deliberate superficiality and militant lack of curiosity. Has it really not occurred to anyone to at least for a moment take off the imposed blinders and try to evaluate the Madoff story - no, not from the position of conspiracy theories, God forbid! - but just common sense?! Everything is also on the surface, sewn with white thread.

Apparently not fate. And if so, I have no choice but to again and again draw the attention of readers to what seems obvious. I do this on Insider.pro for at least two reasons. Firstly, the very name of the portal obliges us to go beyond the square-nested system of thinking allowed by someone from above. Secondly, the details of the Madoff story shed light on the structure of a considerable number of structures vaguely designated by the term “hedge fund”, so popular these days and so far from adequate public interpretation.

In order not to repeat myself, I refer readers for details of the arrest and biography of Madoff to my essay, from which I borrow the key points of my hypothesis. Here they are:

• The reason for all the charges, as well as for the arrest, was a voluntary denunciation of his father made to an FBI agent by Madoff's sons Mark and Andrew, employees of the family financial business. That is, the sons, with their own hands, not only sent their father to jail, but also deprived themselves of their future (by also going to prison);
• the information contained in Mark and Andrew's report was based from beginning to end on what the father himself had told them. Yes, that’s right: Bernie Madoff accused himself of creating a “Ponzi scheme,” called his half-century-old financial business “one big lie,” and - sic! - voiced the figure of $50 billion, the absurdity of which is characterized by the fact that in all the accounting statements of Bernard L. Madoff Investment Securities LLC there was not a hint of such amounts - neither at the entrance nor at the exit from the hedge fund. This also explains the wild approximation of damage - from 7 billion to 65;
• version of the financial pyramid (Ponzi Scheme - I described in the book “What is the name of your god”), invented by Madoff himself, is an intellectual insult for any person even remotely aware of its structure. On this basis, I left the explanation behind the scenes of “Barium Porridge”, however, it seems that I did it in vain. Well, I'm catching up.

Every financial pyramid has not only a primitive interpretation of its mechanism - the payment of income to old members is carried out at the expense of funds received from new members - but also objective circumstances that only allow it to stay afloat:

• a financial pyramid can attract investment solely by promises of high returns. Otherwise, no one will bring money into it, especially in a situation where no one gives any guarantees;
• a financial pyramid always develops and only through pure outward expansion: the more participants it involves in its networks, the longer it will last;
• not a single financial pyramid in history lasted more than three years, because this contradicts simple arithmetic: remember the fairy tale about the creator of chess and grains of wheat (“put one grain on the first square, two on the second, four on the third, eight on the fourth " etc.)

Bernard L. Madoff Investment Securities LLC has never had the work of a hedge fund: on average, throughout its history, the hedge fund demonstrated a return of 10% per annum, in the best periods - 13%. If you imagine the structure of stock markets, then you simply have to admit that such figures are the absolute mainstream. To give 10% a year, you don’t need to be a financial pyramid, it’s enough to be... the most ordinary, most ordinary mutual fund investing in corporate and municipal bonds near investment grade. 10% per annum for Wall Street is everyday life, practically devoid of risk. And only in the case of Bernie Madoff has the public not tired of saying, “Pyramid! Ponzi! Crime!"

Further. Pyramids live by maximizing expansion and attracting money from any passerby. Bernard L. Madoff Investment Securities LLC is a completely closed and elite financial structure, which also has a strictly racial overtones: Madoff generously accepted money only from his fellow believers, and almost always only from Orthodox and deeply religious Jews. Every day, long lines of people lined up to give away their savings to someone who received the nickname Jewish T-Bill, “Jewish treasury note,” emphasizing the reliability and reliability of investments. Madoff refused every second person. And this despite the fact that the minimum contribution to the hedge fund was $1 million. This is a good pyramid, isn't it?

Finally, the lifespan. Pyramids live up to three years. Bernie Madoff's hedge fund operated for... 48 years! 48 perfect years with a constant return of 10% per annum, with countless financial scheduled and unscheduled audits by all interested government departments from the Securities and Exchange Commission to the Ministry of Finance. Nobody ever found anything. Not a single violation! An ideal model hedge fund, owned by the most influential person who, among other things, founded the Nasdaq exchange and served on its Board of Directors for decades.

For 48 years no “pyramids” were heard of, and then Madoff himself came and said: “All this, guys, is one big lie. I created a financial pyramid and stole 50 billion dollars." And society unanimously believed, condemned, cursed and gave him 150 years in prison (the maximum possible term under the law).

Why didn’t anyone ask the question about the appropriateness of self-accusation in creating a pyramid? After all, the absurdity lies on the surface. Instead, all monographs, all video-documentary “investigative journalism” take Madoff’s own version on faith and, as much as they can, dig in the “stole-defrauded” direction, in the hope of raising the theft bar as high as possible (seven years ago Bernie’s figure of 50 billion was the maximum , and today the common figure is already 65).

I have no doubt at all that the hypothesis I expressed in “Barium Porridge” has occurred to thousands and thousands of financially sane people around the world. Maybe someone somewhere made it public, but it never leaked to the mainstream media.

Bernard Madoff was no banker, not because he was a beach lifeguard by profession, but because he always had another public role. Bernie was a “gisbar”, exactly the same as Edmond Safra was for European Sephardim (the story of his murder, attributed by the same vigilant mainstream media to either the “Russian mafia” or the “Medellin cartel”, and the essence of the “treasure keeper” phenomenon, I described V ).

The Madoff family financial contract was not a pyramid scheme or a hedge fund, but a secure parking lot for money belonging to the richest families of the Orthodox American Jewish community. This money was not invested in option “condors” (as Bernard Madoff himself tried to convince the court), but was kept in reliable bank deposits, or invested in equally reliable fixed income securities. Under conditions of complete openness and awareness of the beneficiaries themselves - this is the only way a gizbara-treasure keeper can work.

I have no doubt that from time to time Bernard Madoff made (with the knowledge and for the benefit of his clients!) extremely profitable insider transactions, since he was reputed and was perhaps the most informed person on Wall Street. Most likely, these transactions provided the same 10% per annum that the hedge fund demonstrated in its financial statements.

It is believed that Madoff's problems arose after one of his clients wanted to withdraw his money - $7 billion. Bernard L. Madoff Investment Securities LLC did not have any free funds and... away we go! The version, in my opinion, is ridiculous, if we assume that Madoff’s structure was a simple hedge fund. In case anyone forgot, in the fall of 2008, at the peak of the financial crisis, almost all hedge funds that were not organized along racial lines organized the so-called so-called for their clients. redemption halt, a ban on withdrawals that lasted until the spring of 2009. Why didn't Bernard Madoff do this? Everything is the same: he was a gizbar, and not an indifferent and irresponsible financier.

As for the real reason for Madoff’s self-accusation and, in fact, the sacrifice of himself and his family, in 7 years, in the absence of any more or less convincing alternative versions, I have not changed my opinion: Madoff took upon himself “ theft” and announced an absolutely wild figure of $50 billion so that his clients would have the opportunity to record and write off (non-existent) losses to Madoff, which could then be deducted from taxes at length and in detail.

In favor of this - I confess, conspiracy theory! - the version is indirectly supported by the enthusiasm with which the gizbar’s trustees, with the help of the mainstream media they hired to protect the “common cause,” began to inflate the “catastrophe.” Let's pay tribute to the diligence: in seven years they inflated it quite well: from 50 to 65 billion dollars!

Former Chairman of the Board of Directors of the Nasdaq Stock Exchange

American financier, founder of Madoff Investment Securities. Former Chairman of the Board of Directors of the Nasdaq Stock Exchange. In December 2008, he was arrested on suspicion of embezzlement of $50 billion - it turned out that Madoff Investment Securities had been operating as a financial pyramid for many decades. In March 2009, he confessed to fraud and in June of the same year was sentenced to 150 years in prison.

Bernard "Bernie" Lawrence Madoff was born on April 29, 1938 in New York City into a Jewish family. Madoff graduated from the prestigious Far Rockaway High School in 1956, where he was not an outstanding student and enjoyed swimming. In 1960, he graduated with a bachelor's degree in political science from Hofstra College (later Hofstra University) in New York. During his studies, he worked part-time as a beach lifeguard and as an installer of garden irrigation systems and managed to save up 5 thousand dollars. With this money in 1960, he founded his company Madoff Investment Securities. Ten years later, he recruited his brother, Peter, and subsequently his nephew Roger, niece Shana, and both of his sons, Mark and Andrew, into the business. The press reported that before entering the stock market, Madoff served as a second lieutenant at Fort Bragg in North Carolina.

Madoff took part in the creation of the American Nasdaq stock exchange, which was engaged in the purchase and sale of securities in the interests of investors (it was opened in 1971). Madoff Investment Securities was one of the 25 largest participants in trading on this exchange, its creator was called a pillar of Wall Street and a pioneer of electronic trading on the exchange: he was one of the first in New York to completely computerize the document flow of his company. Madoff served on the Nasdaq board of directors and was its chairman in the early 1990s. In addition, Madoff was the head of the board of directors of the hedge fund Madoff Securities International, founded in 1983, whose headquarters were located in London. Also in 1985, he was one of the founders and a member of the board of directors of the International Securities Clearing corporation, which was engaged in financial clearing and non-cash payments between companies and states.

Madoff was known for his philanthropic work: after the death of his nephew Roger from leukemia in 2006, he regularly donated to research into treatments for cancer and diabetes. Together with his wife, he founded the Madoff Family Foundation, which donated millions of dollars to theaters, museums, educational institutions and Jewish charities. In addition, Madoff was treasurer of the board of trustees of Yeshiva University's school of business, and a member of the board of trustees of Hofstra University. In addition, Madoff made donations to the election campaigns of American politicians, mainly members of the Democratic Party, including Senator Charles Schumer and Congressman Edward Markey.

Madoff Investment Securities was considered one of the most reliable and profitable investment funds in the United States: it brought investors consistently high profits - about 12-13 percent per annum. Many investors were convinced that Madoff's firm was successful due to access to insider information. Madoff personally talked with all his future clients, inviting them to prestigious country clubs, and refused to invest in his fund for many. His clients included numerous hedge funds, banks, charities, and individuals, mostly celebrities. In total, Madoff Investment Securities had $17 billion at its disposal in 2008. The influx of new clients was not hampered by the concerns of some experts, who pointed to the zero volatility of the Madoff company, its lack of open financial statements, and the fundamental impossibility of providing stable profits by legal means. Madoff Investment Securities never disclosed its financial statements to the US Securities and Exchange Commission (SEC), converting all of its funds into cash by the end of the reporting period. In addition, unlike other similar funds, Madoff's firm did not provide clients with online access to their checking accounts, limiting itself to mailings. However, inspections by the SEC and auditors did not reveal significant violations in the company’s activities.

Following the onset of the global financial crisis in 2008, clients turned to Madoff to return their $7 billion investment. Then it turned out that all the years of its existence, Madoff Investment Securities worked on the model of a financial pyramid: money was paid to previous investors from proceeds from new investors. During the investigation, it turned out that the reports on the fund’s activities that were sent to investors also turned out to be fictitious, and presumably during the entire period of its operation, Madoff’s company did not make a single transaction at all on the stock exchange.

In December, Madoff told his two sons for the first time about how his business operated, estimating its combined losses at $50 billion. There is an assumption that the sons reported this to the FBI.

On December 11, Madoff was arrested on suspicion of embezzling $50 billion, but that same day, after questioning, he was released on $10 million bail without the right to leave New York City, and was later placed under house arrest. On December 12, investigators sealed the office of his company and seized its computers for analysis, and the activities of Cohmad Securities, which was searching for new clients for Madoff, were suspended. At the request of the SEC, legal proceedings were initiated against Madoff, and all of his accounts were frozen. The activities of the Madoff charitable foundation were also suspended. The SEC began an internal investigation into the reasons why Madoff was able to hide the nature of his activities from their auditors for so long.

When he was arrested, Madoff stated that “there was no reasonable explanation for his behavior” and that he “gave investors money that did not actually exist.” If Madoff is found guilty, he faces a fine of $5 million and 20 years in prison. The financial pyramid created by Madoff has been called the largest fraud in history.

After Madoff's arrest, news began to come in about who had invested their money in his financial pyramid. Many banks, insurance and charitable foundations reported possible losses. Thus, investments in Madoff Investment Securities of the hedge fund Fairfield Sentry Ltd amounted to $7.3 billion, Kingate Global Fund Ltd - 2.8 billion, Tremont Holdings Inc's Rye Investment Management - about 3 billion. Spanish banking group Banco Santander reported a possible loss of $3.1 billion, HSBC was valued at $1 billion, Royal Bank of Scotland was valued at $600 million, and French bank BNP Paribas may have lost $460 million.

The Boston-based Robert I. Lappin Charitable Foundation, which organized trips for Jewish teenagers to Israel and invested all the money in Madoff's company, was forced to suspend its activities. It also became known that the Wunderkinder charitable foundation, owned by the famous director Steven Spielberg, trusted Madoff with money. South Korea, which entrusted Madoff with $63 million, also suffered losses.

In addition, the liquidation of the London firm Madoff Securities International was begun: although its chief executive Stephen Raven claimed that it had nothing to do with Madoff Investment Securities, its assets (about 100 million pounds sterling) were seized. .

In January 2009, the Spanish bank Banco Santander was the first to announce that it would pay its private investors 1.38 billion euros as compensation for losses from investments in Madoff's financial pyramid. This was done after clients accused the bank of negligence because their money was invested in Madoff Investment Securities without first checking the fund's financial performance.

In February 2009, Spanish law firm Cremades & Calvo-Sotelo said it estimated that 3 million people around the world had been directly or indirectly affected by the Madoff Foundation. Representatives of the company confirmed that the total amount of losses could be estimated at $50 billion. Lawyers from all over the world began to form an alliance to investigate the Madoff case. In addition, the family foundation of US Senator Frank Lautenberg sued Peter Madoff, accusing him of facilitating, or at least turning a blind eye to, his brother's financial fraud.

On February 20 of the same year, it became known that over the past 13 years Madoff had not invested the funds entrusted to him, and the total amount that could be returned to investors through the sale of Madoff Investment Securities assets was $950 million. In March, the valuation of Madoff Investment Securities' assets was already more than a billion dollars, but the estimate of the amount of losses from the fund's activities also increased and amounted to $65 billion.

Madoff appeared in court on March 13, 2009 and pleaded guilty to all 11 counts against him. On June 29 of the same year, the New York District Court found Madoff guilty on all charges and sentenced him to 150 years in prison. On July 13, Madoff was transferred to Butner Prison in North Carolina to serve his sentence. The press noted that this prison even had its own medical center.

On August 24, 2009, The New York Post, citing its sources, reported that Madoff was dying in prison from pancreatic cancer. According to the publication, in prison the financier engraves and paints fences.

In June 2010, The New York Post reported from one of Madoff's cellmates that the fraudulent financier hid $9 billion from his friends before his arrest. However, by the end of 2010, investors were able to return only $2.6 billion.

Madoff is married, his wife's name is Ruth. Together they entered influential Jewish circles in New York and Florida, and were members of several elite ski and golf clubs. At the end of July 2009, a lawsuit was filed against Ruth for $45 million: she was accused of obtaining funds illegally, as well as their subsequent expenditure, and demanded that this money be returned to defrauded investors. In December 2010, a collection company filed a lawsuit against Madoff's son, Mark, and a few days later, on December 12, he committed suicide.

Madoff owned apartments in Manhattan (worth $5 million), houses in Palm Beach (Florida) and in France. In the Bahamas he had his own yacht, "Bull".

Used materials

Chris McGreal. Madoff suicide: son was "upset" by lawsuits filed against his children. - The Guardian, 12.12.2010

Mary Thompson. Madoff Investors Divided Over Distribution of Recovered Money. - CNBC News, 09.12.2010

Dan Mangan. Madoff's hidden booty. - The New York Post, 21.06.2010

Rich Calder. Bernie "Dying" in Jail. - The New York Post, 24.08.2009

Aaron Smith. Ruth Madoff sued for $45 million. - CNN Money, 29.07.2009

Zachery Kouwe. Madoff Arrives at Federal Prison in North Carolina. - The New York Times, 15.07.2009

Brian Ross, Richard Esposito. Madoff En Route to New Prison; Leaves New York for Carolina. - ABC News, 13.07.2009

David Glovin, Patricia Hurtado, Thom Weidlich. Bernard Madoff Gets 150 Years in Jail for Epic Fraud. - Bloomberg, 29.06.2009

More Madoff assets found, U.S.-British probe linked. - Reuters, 24.03.2009

Walter Hamilton, Michael Muskal. Madoff pleads guilty to 11 felony counts. - The Los Angeles Times, 13.03.2009

Ten years later, he brought his brother Peter into his business, and subsequently his nephews Roger and Shana, and both of his sons: Mark and Andrew.

Madoff took part in the creation of the American stock exchange NASDAQ, which was engaged in the purchase and sale of securities in the interests of investors.

Madoff Investment Securities was one of the 25 largest participants in trading on this exchange, its creator was called a pillar of Wall Street and a pioneer of electronic trading on the stock exchange: he was one of the first in New York to completely computerize the document flow of his company

Madoff was a member of several elite ski and golf clubs, and owned apartments in Manhattan, houses in Palm Beach and France. He had his own yacht in the Bahamas.

In 2008, he was accused of creating the largest financial pyramid in history. On June 29, 2009, Madoff was sentenced by a New York court to 150 years in prison for his scam (see Bernard Madoff Scam).

Mark Madoff, one of Bernard Madoff's sons, was found hanged in his New York City home on December 11, 2010. According to preliminary data, he committed suicide. Mark was a witness in his father's case and was not charged as an accomplice. But in 2009, he was charged with illegally purchasing luxury housing in New York and Connecticut, worth a total of $66 million.

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Notes

Literature

• Harry Markopolos. Bernard Madoff's financial pyramid: an investigation into the biggest scam in history = No One Would Listen: A True Financial Thriller. - M.: “Dialectics”, 2012. - 368 p. - ISBN 978-5-8459-1686-0.

Links

• - article in Lentapedia. year 2012.

Excerpt describing Madoff, Bernard

“Il nous arrive du monde, mon prince,” said M lle Bourienne, unrolling a white napkin with her pink hands. “Son excellence le prince Kouraguine avec son fils, a ce que j"ai entendu dire? [His Excellency Prince Kuragin with his son, how much have I heard?],” she said questioningly.
“Hm... this boy of excellence... I assigned him to the college,” the prince said offended. “Why son, I can’t understand.” Princess Lizaveta Karlovna and Princess Marya may know; I don’t know why he’s bringing this son here. I don't need it. – And he looked at his blushing daughter.
- Unwell, or what? Out of fear of the minister, as that idiot Alpatych said today.
- No, mon pere. [father.]
No matter how unsuccessfully M lle Bourienne found herself on the subject of conversation, she did not stop and chatted about greenhouses, about the beauty of a new blossoming flower, and the prince softened after the soup.
After dinner he went to his daughter-in-law. The little princess sat at a small table and chatted with Masha, the maid. She turned pale when she saw her father-in-law.
The little princess has changed a lot. She was more bad than good now. The cheeks sank, the lip rose upward, the eyes were drawn downwards.
“Yes, it’s some kind of heaviness,” she answered when the prince asked what she felt.
- Do you need anything?
- No, merci, mon pere. [Thank you, father.]
- Well, okay, okay.
He went out and walked to the waitress. Alpatych stood in the waiter's room with his head bowed.
– Is the road blocked?
- Zakidana, your Excellency; Forgive me, for God's sake, for one stupidity.
The prince interrupted him and laughed his unnatural laugh.
- Well, okay, okay.
He extended his hand, which Alpatych kissed, and walked into the office.
In the evening Prince Vasily arrived. He was met at the prespekt (that's the name of the avenue) by coachmen and waiters, who shouted and drove his carts and sleighs to the outbuilding along a road deliberately covered with snow.
Prince Vasily and Anatoly were given separate rooms.
Anatole sat, having taken off his doublet and resting his hands on his hips, in front of the table, at the corner of which he, smiling, fixed his beautiful large eyes intently and absent-mindedly. He looked upon his entire life as a continuous amusement that someone like that for some reason had undertaken to arrange for him. Now he looked at his trip to the evil old man and the rich ugly heiress in the same way. All this could have turned out, he supposed, very well and funny. Why not marry if she is very rich? It never interferes, Anatole thought.
He shaved, perfumed himself with care and panache, which had become his habit, and with his innate good-natured, victorious expression, holding his handsome head high, he entered his father’s room. Two valets were busy around Prince Vasily, dressing him; He himself looked around animatedly and nodded cheerfully to his son as he entered, as if he were saying: “So, that’s exactly what I need you for!”
- No, no joke, father, is she very ugly? A? – he asked, as if continuing a conversation he had had more than once during the trip.
- That's enough. Nonsense! The main thing is to try to be respectful and reasonable with the old prince.
“If he scolds, I’ll leave,” said Anatole. “I can’t stand these old people.” A?
– Remember that everything depends on this for you.
At this time, the arrival of the minister with his son was not only known in the maiden's room, but the appearance of both of them was already described in detail. Princess Marya sat alone in her room and tried in vain to overcome her inner agitation.
“Why did they write, why did Lisa tell me about this? After all, this cannot be! - she said to herself, looking in the mirror. - How do I get out into the living room? Even if I liked him, I couldn’t be on my own with him now.” The thought of her father's gaze terrified her.
The little princess and m lle Bourienne had already received all the necessary information from the maid Masha about what a ruddy, black-browed handsome minister's son was, and about how daddy dragged them with force to the stairs, and he, like an eagle, walking three steps at a time, ran after him. Having received this information, the little princess and M lle Bourienne, still audible from the corridor in their animated voices, entered the princess’s room.
– Ils sont arrives, Marieie, [They arrived, Marie,] do you know? - said the little princess, wobbling her belly and sitting heavily on the chair.
She was no longer in the blouse in which she had sat in the morning, but she was wearing one of her best dresses; her head was carefully adorned, and there was a liveliness on her face, which, however, did not hide the drooping and deadened contours of her face. In the attire in which she usually wore to social gatherings in St. Petersburg, it was even more noticeable how much she had looked worse. M lle Bourienne also unnoticed some improvement in her outfit, which made her pretty, fresh face even more attractive.
– Eh bien, et vous restez comme vous etes, chere princesse? – she spoke. – On va venir annoncer, que ces messieurs sont au salon; il faudra descendre, et vous ne faites pas un petit brin de toilette! [Well, are you still wearing what you were wearing, princess? Now they will come to say that they are out. We’ll have to go downstairs, but at least you’ll dress up a little!]