Madoff investment scandal
| Bernard L. Madoff | |
|---|---|
Madoff's mug shot
|
|
| Born |
April 29, 1938 Queens, New York, United States |
| Nationality | American |
| Occupation | , financial adviser at Bernard L. Madoff Investment Securities (retired), former chairman of NASDAQ |
| Known for | Ponzi scheme |
| Criminal charge | Securities fraud, investment advisor trust fraud, mail fraud, wire fraud, money laundering, false statements, perjury, making false filings with the SEC, theft from an employee benefit plan |
| Criminal penalty | 150 years in federal prison and $170 billion in restitution |
| Criminal status | Inmate #61727-054 at FCI Butner Correctional Complex (Medium security) |
| Spouse(s) | Ruth Alpern Madoff |
| Children | 3 |
| Conviction(s) | March 12, 2009 (pleaded guilty) |
The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernard Madoff, the former NASDAQ Chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate Ponzi scheme.
Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its Chairman until his arrest. The firm employed Madoff's brother Peter as Senior Managing Director and Chief Compliance Officer, Peter's daughter Shana Madoff as rules and compliance officer and attorney, and Madoff's sons Andrew and Mark. Peter has since been sentenced to 10 years in prison, and Mark committed suicide by hanging exactly two years after his father's arrest.
Alerted by his sons, federal authorities arrested Madoff on December 11, 2008. On March 12, 2009, Madoff pleaded guilty to 11 federal crimes and admitted to operating the largest private Ponzi scheme in history. On June 29, 2009, he was sentenced to 150 years in prison with restitution of $170 billion. According to the original federal charges, Madoff said that his firm had "liabilities of approximately US$50 billion". Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008. Ignoring opportunity costs and taxes paid on fictitious profits, half of Madoff's direct investors lost no money.
Investigators have determined others were involved in the scheme. The U.S. Securities and Exchange Commission (SEC) has also come under fire for not investigating Madoff more thoroughly; questions about his firm had been raised as early as 1999. Madoff's business, in the process of liquidation, was one of the top market makers on Wall Street and in 2008, the sixth-largest.
Madoff's personal and business asset freeze created a chain reaction throughout the world's business and philanthropic community, forcing many organizations to at least temporarily close, including the Robert I. Lappin Charitable Foundation, the Picower Foundation, and the JEHT Foundation.
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