The brain of the country’s largest investment fraud was 82

Bernard Madoff, mastermind of the largest investment fraud in American history, which ripped off tens of thousands of clients worth as much as $ 65 billion, died early Wednesday, reports The Associated Press. He was 82.

Madoff died at the Federal Medical Center in Butner, North Carolina, apparently from natural causes, the AP reported, citing an unknown person familiar with the matter. He would have turned 83 on April 29th.

Madoff is serving a 150-year sentence in prison, where he was treated for what his lawyer called terminal kidney disease.

He pleaded guilty in 2009 to a scheme that, according to investigators, began in the early 1970s and deceived as many as 37,000 people in 136 countries over four decades when Madoff was busted on December 11, 2008 – after his two sons handed him over. . Victims included well-known director Steven Spielberg, actor Kevin Bacon, former New York Mets owner Fred Wilpon, Hall of Fame pitcher Sandy Koufax and Nobel laureate Elie Weisel – and regular investors such as Burt Ross, who raised $ 5 million in the scheme. lost. .

Madoff maintained that the fraud only began in the early 1990s, when, according to him, “the market stalled due to the onset of the recession and the Gulf War.”

In a 2013 email from prison to CNBC, Madoff claims that the break in the market that started the Great Recession led to his scam.

“I thought it would only be a short-term trade that could compensate once the market became receptive,” he wrote. “The rest is my tragic history that I could never recover from.”

Investigators said Madoff had not done any trading for his advisory clients for years. Instead of using a so-called split-strike conversion strategy as he claimed, he simply deposited investor funds in a Chase bank account, by paying off new client funds from previous clients – a classic pyramid scheme – and his clients provide a counterfeit account. statement. The ‘returns’ of the investments – a total of about $ 50 billion – were pure fiction.

The Bernard L. Madoff Investment Securities scandal has broken investor confidence, which has already been damaged by the financial crisis. And that has led to sweeping changes at the Securities and Exchange Commission, which has been missing out on fraud for years despite repeated warnings, including from independent investigator Harry Markopolos, who wanted to analyze Madoff’s improbable returns and already declared it fraudulent in 2000. .

In a subsequent investigation by the agency’s inspector general, H. David Kotz, it was found that rather than follow up on clear evidence of fraud, SEC staff members decided to accept Madoff’s word that his operation was legal. .

“When Madoff gave evasive or contradictory answers to important questions in evidence, they simply accepted his statements as acceptable,” Kotz wrote.

Last June, a judge rejected a request for compassionate release, saying Madoff had committed “one of the worst financial crimes of all time,” and that “many people are still suffering.”

Bernard Lawrence Madoff was born on April 29, 1938 in Queens, New York, the son of Sylvia and Ralph Madoff, a plumber who became a stockbroker.

Bernie Madoff has been known on Wall Street for more than 50 years, a great money manager who founded his own firm at the age of 22 and became non-executive chairman of the Nasdaq in 1990. He received the recognition that he helped develop some of the systems and market structures that moved the stock market beyond the trading floor and gave rise to modern, electronic trading.

But Madoff’s life declined in 2008 during the depths of the financial crisis.

Flooded with redemption requests from his clients, Madoff could no longer keep the scam going. On December 10, 2008, he confessed to his sons, Mark and Andrew, that the investment advisory business was a lie. Madoff was hoping to buy some time to hand out hundreds of millions of dollars to employees, and then end the business. But Mark and Andrew, who were senior executives of the firm’s operating business – which operates separately from the fraudulent advisory firm – would not want any of that, and immediately warned authorities.

A day later, on December 11, 2008, the FBI raided its offices in the Lipstick Building on Third Avenue in Midtown Manhattan.

On March 12, 2009, Madoff pleaded guilty to 11 federal crimes and admitted to operating the largest private Ponzi scheme in history. He was sentenced three months later to the maximum sentence: 150 years in prison with a restitution of $ 170 billion.

In court, he insisted it was his idea – that his family knew nothing – even though his wife, Ruth, had kept the books once, his sons were senior officers, and his younger brother, Peter, the head of compliance. thereof.

But a trustee appointed to track down investors’ funds did not buy it. Irving H. Picard has sued dozens of people and entities, including family members of Madoff, claiming they knew about the scam or turned over cloths while collecting millions of dollars’ worth of benefits.

For the older boy Mark, the suspicion was too much. In 2010, two years to the day of his father’s arrest, he becomes the third suicide-related suicide. He was 46. Four years later, Andrew died of lymphoma at the age of 48.

Picard eventually reached settlements with the boys’ estate and with Ruth Madoff, who still denied knowledge of the fraud and allegedly lived modestly in Connecticut.

In the end, in addition to Madoff, more than a dozen individuals, including Peter Madoff, were convicted of federal crimes, but none of the others are accused of knowing about the fraud. JPMorgan Chase, Madoff’s primary bank, paid $ 2.6 billion to the U.S. government and Madoff victims in 2014 to settle allegations that it did not maintain adequate control. After Chase instituted some unspecified reforms, prosecutors dropped the charges against the bank.

As of mid-2020, Picard had recovered more than $ 14 billion for Madoff’s customers, or about 75 cents for every dollar in principal they invested, a figure usually unheard of in a Ponzi scheme. Out of jail, Madoff repeatedly tried to get credit for the story, claiming that he had put his biggest investors under pressure to return some of their money.

“These parties were well aware of the accusatory testimony I had about their complicit activities, and wisely came up with settlements,” he wrote in 2013.

But Picard and federal investigators said Madoff never provided them with meaningful assistance. The remorse he claimed in each message was also suspicious. At his sentencing in 2009, Madoff turned to his victims. “I’m sorry,” he said. “I know it does not help you.”

It did not.

The cheers erupted when Federal Judge Denny Chin ordered the maximum sentence for ‘extraordinarily evil’ crimes.

Ross, a former mayor of Fort Lee, New Jersey, who testified at the trial, told Chin: “Commit Madoff for the rest of his life in prison. May Satan grow a fourth mouth where Madoff rests of eternity. “