The Madoff Ponzi Scheme

There are no heroes in the Madoff story, just villains and those who lost millions of dollars in what is known as the “con of the century”. The scary truth to the story is that if Madoff hadn’t faced seven billion dollars in redemptions his Ponzi scheme might not have been discovered. Everyone in New York City wanted to know how he could’ve possibly pulled off such a stunt. Madoff was one of the most active traders in the marketplace and the list of victims grows longer and longer by the day. On the surface Mr. Madoff looked very clean; he was a pioneer market maker, he had chaired NASDAQ, advised the government on market issues and was a noted philanthropist (The Economist). He turned down various investors and those he did accept he told them not to talk to outsiders, which caused a sense of privacy or exclusivity like a club. The fact that …show more content…
Madoff rarely suffered a bad month, even when the market was down and he confessed later that he achieved this by creating a pyramid scheme in which the existing clients’ returns were topped up, as needed, with money from new investors (The Economist). According to the U.S. Attorney's office in the southern district of New York, Madoff admitted to defrauding clients for up to $50 billion in a massive Ponzi scheme that was committed over a number of years (Gandel). Madoff used a Ponzi scheme, which lured in investors by giving the guarantee of high returns. The name of the scheme originated from Charles Ponzi, who promised in only a matter of ninety days fifty percent returns on investments (Yang). Ponzi schemes are run by a central operator who uses the money from new and incoming investors to pay off the promised returns to older ones (Yang). The