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Bernie Madoff
Convicted Felon; Former NASDAQ Chairman
Architect of the largest Ponzi scheme in history; $64.8 billion fraud
Overview
Bernard Lawrence Madoff orchestrated the largest financial fraud in history; a Ponzi scheme that lasted at least 17 years and defrauded thousands of investors of an estimated $64.8 billion in paper losses ($17.5 billion in actual principal). A former chairman of the NASDAQ stock exchange; Madoff used his industry credibility and social connections to attract money from hedge funds, charities, banks, and individual investors worldwide. His firm; Bernard L. Madoff Investment Securities LLC; fabricated trade confirmations, account statements, and regulatory filings for decades while paying returns to existing investors with new investors' money. The scheme collapsed in December 2008 during the financial crisis when redemption requests exceeded available funds. Madoff confessed to his sons; who reported him to the FBI. He pleaded guilty to 11 federal felonies and was sentenced to 150 years in prison; the maximum allowed. He died in federal prison on April 14, 2021.
Key Affiliations
Controversies & Concerns
Operated the largest Ponzi scheme in history for at least 17 years (1991-2008); fabricating returns of 10-12% annually with remarkable consistency that defied market conditions
The SEC examined Madoff's firm at least five times between 1992 and 2008 and failed to detect the fraud; despite detailed warnings from whistleblower Harry Markopolos beginning in 2000
Madoff's feeder funds; including Fairfield Greenwich Group ($7.5 billion), Tremont Group ($3.3 billion), and Banco Santander ($2.87 billion); funneled money without conducting meaningful due diligence
Charitable organizations devastated included the Elie Wiesel Foundation for Humanity (lost $15.2 million), Hadassah ($90 million), Steven Spielberg's Wunderkinder Foundation, and hundreds of Jewish philanthropies
Multiple suicides linked to Madoff losses; including French financier Thierry de la Villehuchet ($1.4 billion lost; found dead December 23, 2008) and British soldier William Foxton
Madoff's sons Mark and Andrew both worked at the firm; Mark Madoff committed suicide on December 11, 2010; the second anniversary of his father's arrest
The Madoff Recovery Initiative led by trustee Irving Picard has recovered over $14.5 billion of the $17.5 billion in principal losses through lawsuits against feeder funds and net winners
Related Investigations (2)
Criminal Charges & Violations
11 documented violations
18 U.S.C. § 1341Mail fraud(Financial Crime)
18 U.S.C. § 1343Wire fraud(Financial Crime)
18 U.S.C. § 1348Securities fraud(Financial Crime)
15 U.S.C. § 80b-6Investment adviser fraud(Financial Crime)
18 U.S.C. § 1956Money laundering(Financial Crime)
18 U.S.C. § 1957Monetary transactions in property derived from specified unlawful activity(Financial Crime)
18 U.S.C. § 1001False statements(Perjury)
18 U.S.C. § 1621Perjury(Perjury)
26 U.S.C. § 7206False filing of income taxes(Tax Evasion)
15 U.S.C. § 78j(b)Fraud in connection with securities(Securities Fraud)
18 U.S.C. § 371International money laundering conspiracy(Financial Crime)
Known Associates & Connections
Frank DiPascali
Chief Financial Officer; fabricated trading records and client statements for decades; cooperated with prosecutors; died 2015
Harry Markopolos
Whistleblower; financial analyst who warned the SEC about Madoff fraud repeatedly from 1999-2008
Irving Picard
Court-appointed trustee for Madoff victim recovery; recovered $14.5+ billion
Ruth Madoff
Wife; forfeited $80 million in assets; claimed ignorance of fraud
Sources & Documentation
4 documented sources from official records, investigations, and reports
Personal Information
- Born
- April 29, 1938
- Birthplace
- Queens, New York, USA
- Also Known As
- The Wizard of Lies
Education
- •University of Alabama (one year)
- •Hofstra University; B.A. Political Science 1960
- •Brooklyn Law School (attended briefly; did not complete)
Key Timeline
April 29, 1938
Born in Queens, New York to Ralph and Sylvia Madoff
1960
Graduated from Hofstra University; founded Bernard L. Madoff Investment Securities LLC with $5,000 from lifeguarding savings
1970s
Became a prominent market maker on Wall Street; pioneered electronic trading that would become NASDAQ
1990
Elected chairman of the NASDAQ stock exchange
1992
SEC investigates Madoff feeder fund run by Frank Avellino and Michael Bienes; Madoff not charged
1999
Harry Markopolos first suspects Madoff returns are fraudulent; contacts SEC Boston office
2000
Markopolos submits first detailed complaint to SEC titled "The World's Largest Hedge Fund is a Fraud"
2001
Barron's publishes article questioning Madoff's consistently high returns; industry largely ignores concerns
2005
Markopolos submits 21-page report to SEC detailing mathematical proof of fraud; SEC conducts cursory investigation and closes case
2006
SEC examiner finds violations but investigation is closed without referring case for enforcement action
December 10, 2008
Madoff confesses to sons Mark and Andrew that his investment advisory business is "one big lie" and "basically, a giant Ponzi scheme"
December 11, 2008
Mark and Andrew Madoff report their father to federal authorities; FBI arrests Bernard Madoff at his Manhattan penthouse
March 12, 2009
Madoff pleads guilty to all 11 federal charges; tells court "I am actually grateful for this opportunity to publicly speak about my crimes"
June 29, 2009
Sentenced to 150 years in federal prison by Judge Denny Chin; the maximum allowed under sentencing guidelines
December 11, 2010
Son Mark Madoff found dead by suicide in his Manhattan apartment on the second anniversary of his father's arrest
September 10, 2014
Son Andrew Madoff dies of lymphoma at age 48
April 14, 2021
Bernie Madoff dies of chronic kidney disease at Federal Medical Center Butner in North Carolina at age 82