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Bernard
Madoff
was once the head of one of the largest
and seemingly most successful investment
firm on Wall Street, Bernard Madoff was
charged in December, 2008 with investment
fraud and exposed as leading one of the
largest Ponzi schemes of all time. As
the head of the Bernard L. Madoff Investment
Securities LLC, Madoff reportedly lost
over $50 billion in investor wealth in
his scheme.
Bernard
L. Madoff was born on April 29, 1938 in
Queens, a borough of New York City. He
grew up in a Jewish household and attended
the Far Rockaway High School followed
by Hofstra University where he studied
political science. He graduated from Hofstra
in 1960 and began his investment firm
in that same year. Madoff also married
his high school sweetheart, Ruth Madoff,
with whom he had two sons, Andrew and
Mark.
Madoff
started his investment company with $5000
of his own money and used emerging technologies
to quote bid and ask prices on the New
York Stock Exchange. As a "market
maker", Madoff's technologies set
him apart from the competition and eventually
led to advances in developing the NASDAQ.
Bernard
Madoff's firm grew and he began branching
out into other investment areas. After
hiring a number of family members and
employees, Madoff began heavy trading
on the Stock Market. His original plan
was based on trading blue-chip stocks,
large-cap stocks, and futures, but none
of these were as profitable as he had
hoped. According to the investigations,
Madoff may have started his Ponzi scheme
as early as the 1970s in order to pay
investors and keep his firm running.
Although
employees were suspicious about Madoff's
ability to handle billions of dollars
in investments with a relatively small
staff, few suspected Madoff or the company
of committing fraud. The market maker
division of the company was still strong
and traded up to 5% of the total trades
on the NYSE and by 2000 Madoff Securities
held around $300 million in assets and
had offices in both New York and London.
But it was steady returns of 10% or more
over the course of decades that eventually
tipped investigators onto Madoff's schemes.
Even with the market crashes in November
of 2008, Bernie Madoff was still touting
investment growth of more than 5% over
previous years.
The
Securities and Exchange Commission investigated
Madoff's firms numerous times over the
years and rarely found anything of suspicion
prior to December of 2008. Questionable
accounting practices, hidden investment
auditing and reluctance to supply online
access to accounts were among the reasons
why different firms suggested that Madoff
be investigated. But the company continued
to grow and lure in exclusive investors
year after year. With billions in investment
and international customers, all of Madoff's
investors believed in his ability to manipulate
the market for profit.
But
after the stock crash in November 2008,
many investors wanted to cash out their
funds. In fact, individuals and institutions
wanted to withdraw over $7 billion from
the firm, a sum that was impossible to
pay. Madoff tried to salvage his own future
and family by suggesting that the firm
pay out bonuses early instead of waiting
for the arrival of 2009. Bernie Madoff's
sons, Andrew and Mark Madoff who had been
working with the firm for decades, questioned
his motivations behind paying bonuses
if they couldn't afford to pay investors.
Madoff then opened up to his sons, exposing
the entire Ponzi scheme in the asset management
arm of the firm. The brothers immediately
contacted the authorities and Madoff was
arrested the next day, December 11, 2008.
Madoff was charged with securities fraud
but the FBI found no evidence of fraud
involving his family members.
According
to the Wall Street Journal, Madoff lost
approximately $50 billion of investor
funds by simply paying investors with
"money that wasn't there."
This
Bernard Madoff biography may not
be reproduced online.
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