Strange Facts About The Biggest Fraud in American History

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Bernard L. Madoff died of natural causes at the age of 82 in North Carolina prison.

The name rings a bell for many, but some individuals may never forget this financial fraudster. He singlehandedly constructed and operated the largest Ponzi scheme in human history, reportedly. His companies and feeder funds ran for more than 50 years.

Madoff discriminated against no one. He scammed rich and poor, old and young, American and foreign, New Yorkers and Parisians, investors from Brooklyn, Bronx, Queens, and the elite on the fifth avenue.

Madoff officially defrauded 37,000 people in 125 countries worldwide by the time of his arrest on December 11th, 2008.

Here are five unbelievable fasts from the historic New York fraud case.

1. If Great Recessions didn’t uncover Madoff’s business, he could run it to this day.

Bernie Madoff operated a sophisticated Ponzi scheme. For those who are not savvy with the financial jargon, a Ponzi scheme is a form of financial fraud.

The scheme takes money from later investors to generate profits for early contributors. Ponzi schemes usually don’t have any real products or services and sell mostly lies. Once the music stops, the investors lose their money.

Madoff would deposit money into his business account at JP Morgan and then withdraw the amount needed to pay off redemption to investors who got cold feet and wanted their investment back. He’d take money from feeder funds and charities that could invest long-term, so the scheme would be sustainable for decades to come.

When push came to shove in 2008, investors panicked and wanted to redeem $7 billion from Madoff’s company. If the financial crisis didn’t happen, Madoff could still be out there, running his Madoff Scheme.

2. Nobody was found guilty of knowing about the scheme, except Madoff himself

Only five people from Madoff’s close circles were found guilty of financial crimes, but nobody allegedly knew about the largest Ponzi Scheme in history. Trials couldn’t pin a single co-conspirator.

His two sons and wife were not found guilty of having any implications with the Ponzi scheme. Mark Madoff and Andrew Madoff actually tipped the FBI and helped with Bernie’s arrest. Both sons died in the following years, and his wife barely survived the suicide attempt.

Many affluent individuals connected to the fraud ended up dead under various circumstances. Some swallowed pills, while others sunk to the bottom of their garden pools.

Madoff’s whole story reads like a Greek Tragedy.

3. Madoff didn’t actually steal $65 billion

Madoff effectively stole $17 billion in municipal funds.

However, the company projected winnings and claimed it holds assets worth up to $65 billion. Many of Madoff’s victims believed they were rich. He effectively downgraded a few billionaires, most notably a French aristocrat Rene-Thierry Magon de la Villehuchet. After hearing he lost $1.4 billion in Madoff’s swindle, the man swallowed a handful of sleeping pills.

4. Bernie Madoff is one of the electronic trading pioneers who developed NASDAQ — the second-largest stock exchange on the planet

Bernie Madoff started off selling and buying penny stocks in 1960. He grew his company to become a financial market maker, meaning he’d buy and sell just any stock to help the markets stay liquid.

Madoff’s company developed a unique quoting system that was used to create NASDAQ, the second-largest stock exchange in the world and the first place to buy tech companies’ stocks. You can buy Apple, Tesla, and Microsoft exclusively on NASDAQ. Madoff became a chairman of NASDAQ in the early 90s and helped build automated trading systems.

5. Madoff was amazed at the SEC’s incompetence

If the SEC only dared to look at Madoff’s business, the whole thing would fall apart quickly, according to Bernie Madoff. He called the SEC a “waste of time” and complained about their incompetence in an interview with no other than SEC themselves.

Everything the SEC did prior to 2006 was a waste of time. It never entered the SEC’s mind that it was a Ponzi scheme,” Madoff said in one of his interviews. The investigators only had to call a few numbers, and they “would’ve seen it.”

The man carried himself with cold courage. He admitted to his crimes straight up and apologized to his victims by saying, “I’m sorry, I know that doesn’t help you.” Madoff exposed how truly complacent government organizations can turn to become in the financial world.

6. Madoff’s son wrote “f*ck you” dad in his suicide letter

Madoff apparently never got over the suicide of his older son, Mark Madoff. He wrote a suicide letter for his first attempt

“Now you know how you have destroyed the lives of your sons by your life of deceit. F*ck you,” wrote Mark Madoff in his letter before the 1st suicide attempt. He didn’t leave a note the second time around.

7. Madoff was well respected in prison

The man had cold courage, which he later took to prison, where he enjoyed his last years.

Bernie took prison as a retirement home. He enjoyed popularity among Butner’s inmates who would come to Bernie for financial and business advice. He also started a chocolate business that would be highly illegal on the outside. He bought all the chocolate in Butner, created a monopoly, and then resold it back at a higher price.

Bernard L. Madoff died at the ripe age of 82 in Federal Medical Center, Butner, North Carolina. His wife says he wouldn’t be missed, and his victims think death was too good for the guy.

Are you worried that something like this could happen again?

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