"No money left. This is one big deception." The founder of the largest pyramid scheme in history, Bernard Madoff, has died

The creator of the largest pyramid scheme in history, Bernard Madoff, has died in prison at the age of 82, reported Bloomberg . In February 2020, after serving more than 10 years, he applied for release due to end-stage kidney disease, but it was not granted.

What you need to know about Bernard Madoff

In the history of financial fraud, he is second only to Carl Ponzi in terms of fame, after whom (the “Ponzi scheme”) the scheme is named when old investors are paid off with money received from new ones.

Madoff was a real Wall Street financier - he founded his own trading firm (Bernard L. Madoff Investment Securities) at the age of 22, was known as a financial innovator and visionary, was at the very beginning of the Nasdaq technology exchange and was its chairman from 1990-1993.

Madoff's descent into fraud began with Black Monday in 1987 and synthetic deals to hide the profits of large clients, writes Bloomberg. Actually the pyramid started no later than 1992, in a hopelessly "bear" market, the financier himself said. He explained to investors that he was making money on a special quick entry-exit scheme with shares of S&P 100 companies using options on the same securities. In reality, his financial activity was reduced to repaying new investors with old money, and the essence of his activity helped to hide a small “real” business.

The financial pyramid founded by Madoff operated for more than 20 years and affected more than a hundred countries. Thousands of high-profile investors, including investment funds, high-profile financiers and celebrities, have entrusted him with more than $19 billion, which should have turned into $65 billion by the time the pyramid collapsed.

Madoff's reputation was so stellar that regulators turned a blind eye to obvious inconsistencies, and he himself was forced to turn down investors who were too big and caustic. He and his family led a luxurious lifestyle - with a Bull yacht ("Bull"), estates and jewelry.

The pyramid collapsed in December 2008 at the height of the mortgage crisis. "No money left. This is one big scam,” Madoff allegedly told his sons and business partners Andrew and Mark. They reported to the FBI, and already in March 2009, Bernard Madoff pleaded guilty and was sentenced to a maximum term of 150 years for fraud, money laundering, theft and perjury. After Madoff, his brother Peter (sentenced to 10 years, released in 2020) and several top managers were jailed for more modest terms.

Madoff later said that the confession and refusal to sue was his huge mistake. In an interview from prison, he claimed that he went into fraud under pressure from clients who expected him to consistently high returns, and sincerely hoped to "recoup" after the recession of the early 1990s. “But as the years passed, I realized more and more clearly that the day when I would be arrested was inevitable, and only approaching,” Madoff said.

After the verdict, a series of personal tragedies awaited him. In December 2010, 46-year-old eldest son Mark Madoff, the former head of sales at the company, commits suicide. After that, his wife Ruth Madoff terminates all relations with him. In a letter to the widow, Mark Madoff writes that "he only blames himself for everything that happened, but nothing can be changed." In 2014, Bernard Madoff himself is experiencing a stroke. In the same year, his second son Andrew dies of cancer, in 2015 - the closest business partner Frank Dipascali.

The real hero of the story was a hired lawyer, Irving Picard, who, contrary to expectations, managed to return more than $ 14 billion from the lost funds to the pyramid investors. You can read a lot of material about it here .

Robert De Niro portrayed Madoff in the HBO biopic The Wizard of Lies.

Cover photo: Timothy A.Clary/EastNews