Pyramid medoff. Secrets of the Bernard Madoff Case

Bernard Madoff is a legend. Hollywood celebrities and European aristocrats carried money into his hedge fund. He had an estimated $65 billion under management. A 12% return over two decades with almost no risk. Dream!

Without Madoff, the world would never have known about the simple American Harry Markopolos. A graduate of a Catholic school, Markopolos served 17 years in the army. He knew how to count very well, which allowed him to start a second career in the mid-1990s - a financier. The employer - the management company Rampant Investment Management - instructed Markopolos to study Madoff's activities in order to create a similar financial product. Markopolos, however, quickly figured out that Madoff was a banal swindler who had built a financial pyramid. He repeatedly reported this not only to his colleagues, but also to the American authorities. Nobody wanted to listen to him.

In parallel, Markopolos and his colleagues created their own financial products (complex combinations of options), which Rampant promoted among investors together with the well-known financier, one of the founders of Access International Advisers, Thierry de la Vilouchet. This French aristocrat worked very closely with Madoff, attracting hundreds of millions of dollars of European nobility to his fund.

After the Madoff scam came to light, on December 23, 2008, de la Villusche committed suicide by taking an overdose of sleeping pills and opening his veins. In February 2009, Markopolos testified in the US Senate about Madoff and the inaction of the authorities. On June 29, 2009, the court sentenced Bernard Madoff to 150 years in prison.

Markopolos continues to operate - he works as an independent investigator, providing services to large investment funds and government agencies. In the spring of 2010, his book No One Would Listen: A True Financial Thriller was published in America, where he spoke in detail about how he managed to bring Madoff to clean water. In Russian translation, the book is called "Bernard Madoff's Pyramid Pyramid: Investigating the Most Grandiose Scam in History", it will be published by Dialectika-Williams Publishing House. In the published excerpt*, Markopolos recalls how, in the summer of 2002, he had the opportunity to go to a big European road show with de la Villusche.

For 10 days, Thierry and I had 20 meetings in three countries. It was a whirlwind tour of Europe. We met with several hedge funds and funds of funds. All the meetings ended up getting mixed up in my head, but the feeling remained that each subsequent office or meeting room was more luxurious than the previous ones. The floors are covered with luxurious Persian carpets, the walls are upholstered in expensive walnut or cherry wood, and paintings hung on many of them, food was served to us exclusively on silver, and the appliances were made of gold. The decoration of these rooms was calculated to impress the clients, to show them that money was not counted here, which, according to the owners of these premises, was an effective means of persuading clients to give them their money.

We met with representatives of many major investment and private banks in Europe. Their system is significantly different from the American one - here wealthy investors use private banks to conduct their business. I went to meet family members of the owners of L'Oreal. At JPMorgan, I met with a member of the Givenchy family who spent a significant amount of time complaining to me about the Herme family, who were suing his family over a failed investment. At dinner one day, Prince Michel of Yugoslavia and I sat at a table next to Mark Rich, the disgraced financier so rashly pardoned by Bill Clinton. All these people knew each other. We meet these people every day. In Geneva, Thierry and I were supposed to meet with Philippe Junot, a playboy who married Princess Caroline of Monaco, but he canceled the meeting. I was told that he considered my strategy too risky and preferred to stay with Madoff.

Thierry was born into high society. His clients were people of his class: they were not very good in finance or even in mathematics, but they completely trusted Thierry, with whom they had a long relationship. In some cases, their families have been in business together for two hundred years. The deep trust that developed between them meant much more than any financial audit. At this level, the word of a man is of paramount importance. Thierry understood this; this was his way of life, and he believed in it. He was an amazing person. In the United States he was amiable and personable, but in Europe he felt like an aristocrat to the fullest. Here he returned to his roots. That was great.

Thierry began each of our 20 meetings with the same words: “Harry is the same Madoff. This is a derivatives strategy that emphasizes options, only Harry offers higher risk and higher return. But it differs enough from Madoff's strategy for you to include this product in your portfolio. If you're already an investor in Madoff and want variety, this strategy gives you that opportunity."

And each time these words caused me a fit of rage. I wanted to yell that I was offering higher returns than Madoff because my returns were real and his was not. The risk of my strategy was even lower, so the most I could lose was 50% of their money, and with Bernie they lost everything.

But I didn't. Instead, I smiled and explained how my strategy worked. After that, we delved into the details. I went through our presentation. Then they asked the usual set of questions. How do you control your risks? What are your trading rules? How often do adverse events occur that could harm you?

They were afraid of the potential risk. I told them that less than 1% of the time the product could be damaged, although I added that if it did, the consequences would be catastrophic. I was frank: "You can lose half your money very quickly." I didn't bother to describe the last financial market crash that my partner and I experienced, which was a lesson for us.

The only foundation whose representatives asked, I think, the right questions about my trustworthiness, was part of the Societe Generale group. The people I met knew the mathematical models for their derivatives. They told me, “We like your risk management. You are the only person who ever came here and asked what we could lose. But this risk is too high for us.” Ironically, in January 2008, we discovered that they were not really managing their risk all that well when an employee named Jerome Kerviel defrauded them of more than $7 billion through a series of "elaborate, unrecorded transactions that bypassed the bank's internal controls." ".

Our meetings usually lasted about an hour and a half, and Thierry ended each of them the same way: “When should I expect your answer? When can I call you to find out how much money you want to invest? He never said "if you want to invest", always "how much". He was a professional salesman.

The purpose of the trip was to introduce my product to European fund managers, but it also taught me a lot. I got more information about Bernie Madoff than I expected and what I learned changed my life.

My team had no idea how high Madoff's influence was in Europe. European funds and funds of funds invested in it, but we never thought about the number of these funds and the size of these funds. During this trip, it became clear to me for the first time that Madoff was a clear and present threat to the US stock markets and the reputation of the Securities and Exchange Commission (SEC). Although I myself had lost confidence in the SEC, I knew that investors around the world believed that it offered them a high level of protection and security for their money. This was one of the reasons they invested in the USA. When they found out that this was not true, the belief in the safety of the American markets, which encouraged people to invest, was seriously shaken. When Madoff went bankrupt (and it was inevitable), the reputation of the American financial system took a hit on a global scale. The main incentive to invest in the United States has disappeared.

Of the 20 funds we visited, fourteen managers told me they trusted Bernie. When I listened to them, I got the feeling that this is not so much an investment as a kind of financial cult. But I couldn't help but be horrified by the fact that each of these 14 funds, according to the managers, had a special relationship with Madoff and was the only one from which Bernie continues to accept new money. At first, I thought the only reason they shared with me, a stranger, their secret that Madoff was managing their money was because they trusted Thierry. But then I began to realize that they were telling me this to impress me. In each of the 14 meetings, the message was the same: “We have a special relationship with Mr. Madoff. It is closed to new investors and only accepts money from us.”

When I heard it for the first time, I took note of it. When I heard the second, I began to have suspicions. And when I heard the same thing 14 times in less than two weeks, I already knew it was a pyramid scheme. I didn't tell anyone that I had heard this same exclusivity claim from several other foundations. If I did, or if I tried to warn anyone, they would trample me. Who am I to attack their god?

What particularly surprised me was what was going on in Thierry's head. He, like me, had heard the bluster of these fund managers, and he, like me, knew it was a lie. But we never discussed it. Like Frank (Frank Casey, one of Markopolos' colleagues), I'm tired of admonishing him. Before we flew to Europe, I told him verbatim, "You know Madoff is a scammer, don't you?" And, as was the case when Frank told him, Thierry took a tough defensive stance. "Oh no, that's impossible," he told me. - He is one of the most respected financiers in the world. We checked every transaction registration form. He faxed them to us and we entered them into a log. He's not a scammer."

I wanted to ask him to show me those registration forms, knowing that by using them I could prove to Thierry that I was right, but I didn't. I was afraid that if I asked him to show me the papers, he might think I wanted to use them to open up Madoff's technology, and I knew he wouldn't let me kill the goose that lays his golden eggs.

I was worried about Thierry and wanted to save him. After it became clear to me that Thierry would not listen to me, I called the head of analytics at Access, who was a smart guy and understood the mathematics of derivatives, and told him that I had collected enough evidence that Madoff was a fraud. “I arrive at the office at 6:30 in the morning,” I told him. “If you arrive half an hour before the meeting scheduled for tomorrow, I can use mathematics to prove to you that Madoff is a fraud.”

He never showed up. And then it dawned on me. He just didn't want to know. And Thierry didn't want to know. They trusted Madoff; without it they could not exist. It was thanks to access to Bernie Madoff that Access International flourished. So when Thierry heard each of the European foundations claiming their exclusive relationship, there was nothing he could do about it. It still wouldn't change anything. I also felt absolutely no need to tell any of the 14 asset managers that Madoff was a scammer. I didn't have a close relationship with any of them, and I certainly didn't want Bernie Madoff to know that we were investigating him. Like Access, these funds needed Bernie to survive, but they didn't need me. And what would happen to me if Madoff found out that I warned them?

I knew perfectly well that they were trapped. They needed Madoff to stay competitive. No one had the risk-reward ratio that Bernie had. If it wasn't in your portfolio, your earnings were no match for those competitors who had it. Imagine you are a private bank and the client tells you that someone they know has invested in Madoff and is making 12% annually with ultra-low volatility, what choice do you have? You either find an opportunity to invest this client's money in Madoff, or you lose the client to a banker who worked with Bernie. And Madoff didn't just make it easy, he made it profitable. It allowed partner funds to earn higher fees and always turned a profit.

It is for this reason that so many European foundations gave him their millions. After these meetings, I began to strengthen my opinion that Madoff's influence in Europe is even stronger than in the US. I estimated that the minimum amount of funds that Bernie received from Europe was $10 billion, and looking back, I understand that I probably underestimated this figure.

Once I realized how much money he received - and continued to receive - from the Old World, I no longer doubted that his strategy was not to beat the market. His strategy is a pyramid scheme. If he were trying to beat the market, he would not need new cash inflows, since they would lower his return on investment. The money to pay out in his hedge fund had to come from investors in his brokerage firm. The more money he invested in the fund, the more money he had to pump out of the brokerage firm. Ultimately, some of his more seasoned investors might find out. And as soon as investors knew their trades were badly priced - as they were bound to happen sooner or later - the whole business would quickly go under, making it impossible for Bernie to continue making large payouts to clients and compensation payments to hedge funds.

Bernie didn't beat the market, that's for sure. If you're running a pyramid scheme, then to survive you need to deposit new cash faster than it drains because you're robbing Peter to pay Paul. The more Pauls you have to pay, the more Peters you need to find. This is a gluttonous monster that needs to be constantly fed.

I finally became convinced that the Europeans believed that Madoff had the ability to outperform the market, and this reassured them. They considered this phenomenal, because it meant that their incomes were real, high and stable, and they themselves were the happy owners of such an exclusive service. They never bothered to look a little deeper and see if he was swindling other customers just like themselves. What they didn't understand was that a big swindler was deceiving everyone and everyone. They thought they were too respectable, too important to be fooled. Madoff was useful to them, so they used him.

They were drawn to Madoff like moths to a fire. Like all Americans, they knew. They knew. Several people confessed to me: “Yes, of course, we do not believe that he is actually using a complex option game. We think he has access to the order flow." These words were accompanied by a characteristic wink and nod - we know what he's doing. And if the American Madoff gets caught, well - c'est la vie. They believed that the worst thing that could happen was that he would be caught and put in jail for a long, long time. And they will continue to receive their ill-gotten gains and return their capital, because they are foreign investors and are not subject to the jurisdiction of the United States judicial system.

But the most amazing discovery of this trip for me was the fact that many of the funds worked through offshore companies. This was not said out loud, but I understood it in the course of the conversation. In offshore funds, people can safely hide money without the government knowing about it. This means that they bypass law enforcement and financial authorities. Such funds are very popular in countries with high taxation, in France for example. While offshore funds may be completely legal, using them is a sign to me that at least some of the funds are dealing with dirty tax money.

An offshore fund allows investors from countries with high levels of taxation to pretend that their profits come from countries with low or no taxation. Of course, I did not catch anyone by the hand, but I certainly do not believe that all offshore receipts are ultimately declared in full at home. But what frightened me much more was the fact that very dangerous people who want to launder income work through offshore companies - members of criminal organizations and drug syndicates who have billions of dollars and no legal place where they could invest them.

For me, this meant the emergence of a new, dangerous perspective. When Madoff is arrested, not only people from luxurious European offices will lose their wealth, but also some of the notorious villains. I was pretty sure that the Russian mafia had invested their money through one of these funds. I wasn't sure about Latin America's drug syndicates, but I knew their money was going offshore and possibly ending up with Madoff. So Bernie had something to worry about besides the fact that he could be sent to jail. These people had their own ideas about those who reset their accounts. Bernie might have been a billionaire in five minutes - we had no idea how much money he was keeping for himself - but we knew that even he could not cope with such people.

The realization that offshore funds had invested huge sums in Madoff shocked me, absolutely shocked me. Before this trip, I did not feel that my life was in danger. People kill to protect their money, and if my team succeeds, a lot of people will lose money. And although I didn't know the names of these investors, I was absolutely sure that if these people found out what I was doing, they would try to take me out of the game. I was a real threat to them. Even Bernie Madoff, the respected Mr. Madoff, was a potential threat to my life. He was playing a dangerous game of incredible difficulty. How will he react if he finds out that I'm trying to take him out of the game? Wouldn't it be easier for Bernie to get rid of me? Or will he let offshore investors get rid of him?

On December 11, 2008, in the midst of the global financial crisis, Bernard Lawrence Madoff, beloved and revered on Wall Street by the friendly deminative "Bernie", was arrested. He was arrested on charges of creating a financial pyramid, which turned into the largest embezzlement of funds in history - $ 50 billion.

At the same time, in hot pursuit, I investigated this case in detail (using, of course, only those materials that were available at the beginning of the trial) and wrote an article for Business Journal, to which I refer readers for an introduction to the course of events.

Since then, 7 years have passed. Bernie Madoff received 150 years in prison, and both of his sons, who worked in the family financial business, passed away: Mark hanged himself two years after his father's arrest, Andrew died of lymphoma in 2014. As for the amount of alleged embezzlement, it swelled up to $65 billion in the admiringly envious eyes of the public.

And here's what's amazing: for 7 years, no one has ever dared to publicly start a conversation about the version of events, which, in my humble opinion, is the only one worthy of discussion by people who consider themselves to be of sound mind and able to resist unscrupulous zombies. The version, which, as it seemed to me in 2008, lies on the surface, was not heard in the Public Broadcasting Service film investigation “Frontline: The Madoff Affair” (2009), it is not in the documentary of the French Third Channel “Madoff, l'homme qui valait 65 billions" (2014). The authors of monographs do not doubt the officially sanctioned script: neither Gerald Strowber ("Catastrophe: The Story of Bernard L. Madoff, the Man Who Swindled the World", 2009), nor Jerry Oppenheimer ("Madoff with the Money", 2009), nor Diana Enriquez ("The Wizard of Lies: Bernie Madoff and the Death of Trust", 2012).

Maybe, of course, I missed something, but in all the mainstream listed above, I did not find anything other than the repetition of a dreary monotonous mantra: Ponzi pyramid, 65 billion, stole, deceived those who trusted, scoundrel, how could you, Bernie etc. Even somehow it became uncomfortable for colleagues. For their stubborn, downright deliberate superficiality and militant lack of curiosity. Didn't it really occur to anyone, at least for a moment, to throw off the blinders imposed on their eyes and try to evaluate the history of Madoff - no, not from the position of conspiracy theory, God forbid! - but just common sense?! Everything is also on the surface, sewn with white threads.

Apparently not destiny. And if so, I have no choice but to again and again draw the attention of readers to what seems obvious. I do this on Insider.pro for at least two more reasons. Firstly, the very name of the portal obliges to go beyond the square-nested system of thinking allowed by someone from above. Secondly, the details of Madoff's story shed light on the organization of a considerable number of structures, vaguely denoted by the term "hedge fund", so popular today and so far from being an adequate public interpretation.

In order not to repeat myself, I refer readers for the details of the arrest and biography of Madoff to my essay, from which I borrow the key points of my hypothesis. Here they are:

• the reason for all the charges, as well as for the arrest, was a voluntary denunciation of the father, made to the FBI agent by Madoff's sons Mark and Andrew, employees of the family financial business. That is, the sons with their own hands not only sent their father to jail, but also deprived themselves of the future (by also going to the bunk);
• The information contained in Mark and Andrew's denunciation was based from beginning to end on what their father had told them. Yes, that's right: Bernie Madoff accused himself of creating a "Ponzi scheme", called his half-century financial business "one big lie", and - sic! - announced the figure of $ 50 billion, the absurdity of which is already characterized by the fact that in all the financial statements of Bernard L. Madoff Investment Securities LLC there was not even a hint of such amounts - either at the entrance or at the exit from the hedge fund. This also explains the wild approximation of damage - from 7 billion to 65;
• version of the financial pyramid (Ponzi Scheme, - I described in the book "What is the name of your god"), invented by Madoff himself, for any person, even remotely representing its device, is an intellectual insult. On this basis, I left the explanation behind the scenes of "Barium Porridge", however, it seems that I did it in vain. Well, I'm making up for lost time.

Any financial pyramid has not only a primitive interpretation of its mechanism - the payment of income to old members is carried out at the expense of funds received from new members - but also objective circumstances that only allow it to stay afloat:

• a financial pyramid can attract investments only with promises of high returns. Otherwise, no one will bring money into it, especially in a situation where no one gives any guarantees;
• the financial pyramid always develops and only due to pure outward expansion: the more participants it involves in its networks, the longer it will last;
• no financial pyramid in history lasted more than three years, because this contradicts simple arithmetic: remember the tale of the creator of chess and wheat grains (“put one grain on the first cell, two on the second, four on the third, eight on the fourth " etc.)

Bernard L. Madoff Investment Securities LLC has never had a hedge fund run by Bernard L. Madoff Investment Securities LLC: on average, throughout its history, the hedge fund has shown a return of 10% per annum, in the best periods - 13%. If you imagine the structure of the stock markets, then you simply have to admit that such numbers are the absolute mainstream. You don't have to be a pyramid scheme to give 10% a year, you just need to be... the most ordinary, most ordinary mutual fund investing in corporate and municipal bonds near investment grade. 10% per annum for Wall Street is a daily occurrence, almost devoid of risk. And only in the case of Bernie Madoff, the public does not get tired of chanting for seven years, “Pyramid! Ponzi! A crime!"

Further. Pyramids live by maximum expansion and attracting the money of any passerby. Bernard L. Madoff Investment Securities LLC is a completely closed and elite financial structure, which is also strictly racially tinged: Madoff generously accepted money only from his fellow believers, moreover, almost always only from Orthodox and deeply believing Jews. Every day, long queues of those wishing to give their savings to the one who received the nickname Jewish T-Bill, "Jewish treasury bill", which emphasized the reliability and reliability of investments, lined up to him. Every second Madoff refused. And this despite the fact that the minimum contribution to the hedge fund was $ 1 million. Such a good pyramid, isn't it?

Finally, the duration of existence. Pyramids live up to three years. Bernie Madoff's hedge fund has been in business for... 48 years! 48 flawless years with a consistent 10% annual return, with countless financial scheduled and unscheduled audits by all relevant government departments from the Securities and Exchange Commission to the Treasury Department. Nobody ever found anything. Not a single violation! The perfect model hedge fund owned by the most powerful man who, by the way, founded the Nasdaq exchange and served for decades on its Board of Directors.

For 48 years, no “pyramids” were heard, and then Madoff himself came and said: “All this, guys, is one big lie. I created a pyramid scheme and stole $50 billion." And society unanimously believed, condemned, cursed and gave 150 years in prison (the maximum possible term under the law).

Why did no one question the appropriateness of self-blame in creating a pyramid? After all, the absurdity lies on the surface. Instead, all monographs, all video-documentary "journalistic investigations" take the version of Madoff himself on faith and dig as far as they can in the direction of "stole - deceived", in the hope of raising the bar of theft as high as possible (seven years ago, Bernie's figure - 50 billion was the maximum , and today the common figure is already 65).

I have no doubt that the hypothesis expressed by me in "Barium Porridge" occurred to thousands and thousands of financially sane people around the world. Maybe someone somewhere made it public, but it didn’t leak into the mainstream media.

Bernard Madoff was not a banker, not because he was a beach lifeguard by profession, but because he always had a different public role. Bernie was a “gizbar”, exactly the same as Edmond Safra was for European Sephardim (the story of his murder, attributed by the same vigilant mainstream media to either the “Russian mafia” or the “Medellin cartel”, and the essence of the “treasure keeper” phenomenon, I described in ).

Madoff's financial family contract was not a pyramid scheme or a hedge fund, but a safe parking lot of money belonging to the richest families of the American Orthodox Jewish community. This money was not invested at all in option “condors” (as Bernard Madoff himself tried to convince the court), but was kept on reliable bank deposits, or invested in no less reliable fixed income securities. Under conditions of complete openness and awareness of the beneficiaries themselves - as soon as it is possible to work as a treasure keeper.

I have no doubt that from time to time Bernard Madoff performed (with the knowledge and for the benefit of his clients!) Super-profitable insider deals, because he was known and was probably the most informed person on Wall Street. Most likely, these transactions provided the same 10% per annum that the hedge fund showed in its financial statements.

It is believed that Madoff's problems arose after one of the clients wanted to withdraw his money - $ 7 billion. Bernard L. Madoff Investment Securities LLC did not have free funds and ... away we go! The version, in my opinion, is ridiculous, assuming that the Madoff structure was a simple hedge fund. If anyone has forgotten, then in the fall of 2008, at the peak of the financial crisis, almost all non-racial hedge funds organized the so-called fundraising for their clients. redemption halt, a withdrawal ban that lasted until spring 2009. Why didn't Bernard Madoff do this? All in the same way: he was a gizbar, not an indifferent and irresponsible financier.

As for the real reason for Madoff's self-accusation and, in fact, sacrificing himself and his family, for 7 years, in the absence of at least some more or less convincing alternative versions, I have not changed my mind: Madoff took it upon himself " theft" and announced a completely wild figure of $ 50 billion so that his clients had the opportunity to record and write off (non-existent) losses to Madoff, which can then be deducted from taxes for a long time and in detail.

In favor of this - I confess, conspiracy theory! - the version indirectly speaks of the enthusiasm with which the trustees of the gizbar, with the help of the mainstream media hired by them to protect the "common cause", began to inflate the "catastrophe". Let's pay tribute to diligence: in seven years they have inflated quite well: from 50 to 65 billion dollars!

Bernard Lawrence Madoff is an American broker, financier and investment professional. He is best known as the organizer of the largest financial fraud in the history of the United States.

Madoff was born in Queens, New York (Queens, New York City, New York), in a Jewish family. Bernard received his education first at the University of Alabama, then at Hofstra University; Madoff graduated in 1960 with a bachelor's degree in political science. He briefly studied law in Brooklyn, but later switched to entrepreneurial activity, creating Bernard L. Madoff Investment Securities LLC. Initially, this company was engaged in small-scale stock trading - its entire capital was earned by Madoff as a rescuer and assembler of irrigation systems 5,000 dollars. Bernard later borrowed another $50,000 from his father-in-law. Father-in-law greatly helped the Madoff cause - primarily with connections and recommendations. The company was doing well; Bernard experimented with new approaches and solutions - for example, he became the first well-known broker to accept payments from dealers for the right to execute certain customer orders.

Madoff paid great attention to connections; so, since 1991, he and his wife have donated to various politicians, parties and committees a total of about $ 240,000. Madoff's family held leadership positions in the largest securities market organization, the Securities Industry and Financial Markets Association.

Madoff's name first surfaced in the context of a fraud story in 1992, when the SEC received a complaint from two clients of the Avellino & Bienes investment company. Eventually Madoff returned the clients their money and the case was closed.

In 2004, Genevievette Walker-Lightfoot, one of the SEC Complaints and Investigations lawyers, told her superiors that there were a number of frankly dubious issues in Madoff's cases; the authorities, however, demanded that the investigation be stopped, and that the materials already discovered be handed over to them. One of the leaders, Eric Swanson, met Shana Madoff, Bernard's niece, back in 2003; They got engaged in 2006 and married in 2007. However, this did not help Madoff himself much. Suspicions against him began to be voiced back in 1999 - then financial analyst Harry Markopolos (Harry Markopolos) said that neither legally nor mathematically the profits declared by Bernard were simply impossible. The "SEC" ignored these statements; however, the largest players in the derivatives market preferred not to contact Madoff - his reports really looked suspiciously good. Nor did the largest Wall Street players invest in Bernard's companies.

Bernard Madoff was charged with securities fraud only on December 11, 2008; apparently, his children handed him over to the federal authorities - to whom Bernard shortly before admitted to the deeply fraudulent nature of the entire fund and its complete failure.

Madoff posted $10 million bail and remained under 24/7 surveillance for some time. On March 12, 2009, Madoff pleaded guilty to violating 11 federal laws. Bernard did not make a deal with the government, although this could have reduced his term; there is reason to believe that Madoff simply did not want to hand over his accomplices and assistants. In his confession, Bernard explained that he started cheating in 1991; the company did not make any investments in it - in fact, Madoff created a financial pyramid according to the classic Ponzi scheme. Bernard deposited the funds received into a personal bank account; from there, if necessary, he withdrew money to pay dividends. Madoff stated that he planned to eventually switch to normal investment activity, but never managed; Bernard knew about the inevitable collapse of his enterprise, but he was no longer able to change something.

On June 29, 2009, Madoff was sentenced to 150 years in prison; lawyers initially asked for a much more modest term - 7-12 years - emphasizing the respectable age of the defendant.

On October 13, 2009, Madoff got into his first prison fight. It is known that in prison he generally has a rather hard time - from stress alone, the swindler began to have skin problems. Other prisoners did not make it easy for Bernard to serve his term - for example, in December 2009, Madoff was taken to the hospital with a number of facial injuries (and, according to rumors, broken ribs and a punctured lung); the exact origin of these injuries is unknown, but one of the prisoners hinted at another fight. Madoff himself, however, claimed in letters home that he was being treated "like a mafia don" in prison.

Scam of the century. The biggest scam in history. Bernard Lawrence Madoff is the master of the pyramid scheme. Such headlines in American newspapers, magazines and television news accompanied the investigation and trial of the largest financial fraud case in the history of the United States, and possibly the world.

The name of the American financier Bernard Madoff seems to have become a household name. He managed to deceive millions of citizens of the United States, including the very wealthy and influential. And the amount of damage from his scam is estimated by some experts at 50 billion dollars.

By the time of his arrest in December 2008, Madoff had earned a reputation as one of Wall Street's most powerful and successful financiers. Bernie, as his acquaintances and journalists called him, was considered one of the founding fathers of the modern financial market, says Alexandra Lozova, asset manager at TNO Capital:

"The key success of the scheme that Bernard Madoff built was his reputation. The man had an excellent education. More than 50 years ago he organized his own investment company, which was registered on Wall Street, had connections with the business elite and the richest people in the United States "The whole style of his life demonstrated this approach: I managed to earn for myself, I can earn for you. This was the principle of his success. It was with this that he "took" investors and attracted money to his fund. "

The future symbol of greed, deceit and stupidity by 2008 managed to work as a trader, investment advisor, and also held positions on the board of directors of one of the largest US exchanges Nasdaq and International Securities Clearing Corporation. The latter was responsible for non-cash payments between private companies and even states.

But Bernie Madoff's life's work was his own corporation, Madoff Investment Securities, an investment hedge fund. He founded it back in the 1960s of the last century with an honestly earned 5 thousand dollars. But then - with the growth of the stock market and the introduction of computer technology, the fund has become one of the leading players in the investment industry. In 2008, the company ranked 6th on Wall Street in terms of operations.

But it turned out that it was all just an appearance. A spectacularly created image that covered up a banal financial pyramid. According to Igor Nikolaev, Director of the Strategic Analysis Department at FBK, Madoff's activities differed little from those of Sergei Mavrodi:

"The reason for the success of Madoff's company, like that of Mavrodi's, was a simple thing - people are gullible, they are not taught mistakes. They want to make money quickly and a lot. And what's the difference - well, after all, Mavrodi acted on a larger scale, millions of people were involved "And Madoff has a narrower circle of people, more acquaintances and more wealthy. But from the point of view of human motivation - both wealthy and poor - everyone has the same thing: they want to make money quickly, get cheap. As a result, both there and there pyramid, and as a result, a completely logical end: it collapses, and their organizers end up in prison."

Madoff's company promised its clients 10-12% annual guaranteed income. It was believed that Madoff and his subordinates successfully play the stock market. But everything turned out to be simpler: according to the principle of a financial pyramid, payments to old customers were made at the expense of newly attracted investors. And the case was put on stream. And the fraud itself was like a family contract: Madoff hired his sons, brother and niece.

It is noteworthy that the exact amount of damage is unknown to this day. According to the most negative estimates, the total size of Bernie's financial pyramid could reach 65 billion dollars. However, most experts and government officials agree on a more modest estimate of $20 billion. Overall, between 1992 and 2008, Madoff's empire was checked at least six times, but nothing suspicious was found. However, many researchers are sure that Madoff had powerful patrons.

It is interesting that the whole fraudulent scheme was revealed almost by accident. According to the official version, in December 2008, Madoff himself confessed to his sons that all his work and the fund were “one big lie,” and that the company was working on a pyramid scheme. Peter and Mark immediately went to the FBI and "turned in" their daddy. Madoff was arrested the next day. The trial of the former financier took two years. Bernie received the maximum possible sentence - 150 years in prison. And he has no right to parole.

Prosecutors and lawyers for the victims of the fraudster did everything possible to hold his relatives accountable. Madoff's wife had to give up all luxuries, apartments, cars and bank accounts. All the money went into the compensation fund. Bernie himself is now spending his days in a cell in an ordinary prison. He even tried to organize investment courses there. But the authorities did not appreciate the idea and banned it. One of his sons - Peter - was sentenced to 10 years in prison, and the second - Mark - committed suicide in 2010.

Section 1. Biography of Bernard Madoff.

Bernard Madoff is an American businessman, former chairman of the board of directors of the Nasdaq Composite stock market.

Biography Bernard Madoff

In 1960, he founded Bernard L. Madoff Investment negotiable paper LLC on Val Street and headed it until December 11, 2008, when he was accused of creating what is possibly the largest pyramid scheme in history. On June 29, 2009, Bernard Madoff was sentenced by a New York court to 150 years in prison for his scam.

Bernard Madoff was born April 29, 1938 in New York to a Jewish family. In 1956 he graduated from the prestigious Far Rockaway School, where he was not considered an outstanding student. Enjoyed swimming. He graduated from Hofstra College in New York in 1960 with a bachelor's degree in political science. During his studies, he worked as a lifeguard on the beach and as an installer of garden irrigation systems and managed to save up 5 thousand dollars from this. On these in 1960 he founded his organization Madoff Investment negotiable paper.

After 10 years, he involved his brother Peter in his business, and later his nephews Roger and Shana, and both of his sons: Mark and Andrew.

Madoff was involved in the creation of the American stock market Nasdaq Composite involved in buying and selling valuable papers for the benefit of investors.

Madoff Investment negotiable paper was one of the 25 largest bidders of this exchange, its creator was called a pillar Wall Street and a pioneer of electronic stock trading: he was one of the first in New York to completely computerize the workflow of his companies.

Madoff served on the board of directors Nasdaq Composite and served as its chairman in the early 1990s. In addition, Madoff was the chairman of the board of directors of Madoff negotiable paper International, a hedge fund founded in 1983 and headquartered in London. Also in 1985, he was one of the founders and a member of the board of directors of the International Negotiable Paper Clearing Corporation, which was engaged in financial clearing, cashless payments between companies and states.

Madoff has been known for his philanthropic work: since the death of his nephew Roger from leukemia in 2006, he has regularly donated to cancer and diabetes research. Together with his wife, he founded the Madoff Family Foundation, which donated millions dollars theaters, museums, educational institutions and Jewish charitable firms. In addition, Madoff has served as Treasurer of the Board of Attorneys at the Yeshiva University School of Business and a member of the Board of Attorneys at Hofstra University. In addition, Madoff made donations to the election campaigns of American politicians, mostly members of the Democratic Party.

Madoff lived "in a big way" - he was a member of several elite ski and golf clubs, owned apartments in Manhattan, houses in Palm Beach and in France. He had his own yacht in the Bahamas.

In 2008, he was accused of creating the largest pyramid scheme in history. On June 29, 2009, Madoff was sentenced by a New York court to 150 years in prison for his scam.

Mark Madoff, one of Bernard Madoff's sons, was found hanged at his New York home on December 11, 2010. According to preliminary data, he committed suicide. Mark was a witness in his father's case and was not charged as an accomplice. But in 2009, he was charged with illegally purchasing luxury housing in New York and Connecticut, totaling $66 million.

The Bernard Madoff Affair

The creator of the world's largest pyramid scheme, Bernard Madoff, who is serving a 150-year prison sentence in North Carolina, sent a "Christmas" letter to CNBC, saying that insider trading will exist "forever". This is reported by Business Insider.

"Someone is led to believe that with the recent wave of persecution ... an insider trade became something new. It's a lie. It has always existed, but it has rarely been held accountable," the letter says.

The market "lacks transparency", he said, resulting in a growing number of so-called dark pools - events that take place outside the equity markets and allow parties to trade shares privately and only then disclose details. agreements.

"Institutions have always tried to protect information about the sale and purchase ... Of course, they have the right to confidentiality. As they say, the more secret, the more valuable it is for someone who wants to receive it," writes Madoff.

He also believes that the growth hedge funds encourages speculators to market take high risks to have a decent one.

As a result of the collapse of the financial pyramid, large and medium-sized banks, financial and investment firms, insurance and charitable funds suffered USA, France, Spain, Italy, Netherlands, Switzerland. The losses of the most famous of them are:

hedge fund Fairfield Sentry Ltd - $7.3 billion

Kingate Global Fund Ltd - 2.8 billion

"Tremont Holdings Inc's Rye Investment management" - about 3 billion

Banking group "Banco Santander" () - 3.1 billion

"" - 600 million

Bank BNP Paribas () - 460 million

Robert I. Lappin Charitable Foundation, Boston, Bankrupt

Bank South Korea - 63 million.

Taking into account the depositors of large banks and investment funds, the number of victims is several million people.

As for the sons, Mark and Andrew, today really the most common version is that it was they who “surrendered” the father to the FBI. This looks plausible - on the evening of December 11, 2008, he admitted to them that all the activities of the fund, in which, by the way, they also worked, - financial pyramid according to the "Ponzi scheme" of money there is no payout to clients, and the organization is about $50 billion; and on December 12, he was arrested by the FBI. However, almost immediately released on security of a debt of $ 10 million, which a few days before that Ruth Madoff prudently and very timely withdrew from the company's accounts - just 5 days later the accounts were arrested.

Spanish banking group Banco Santander and BBVA, British Royal bank of Scotland, Italian UniCredit, French BNP Paribas and Bank Societe Generale, banking group HSBC, the Japanese bank Nomura Holding, the Swiss bank Credit Suisse and others were included in the list of victims of the Madoff pyramid.

Among the victims are the richest woman in the world - the heiress of the cosmetics empire L "Oreal Lillian Betancourt, American media mogul Mortimer Zuckerman, actor John Malkovich and the famous CNN TV presenter Larry King.

One gets the feeling that Bernard Madoff knew what he was getting into. Only, perhaps, did not suspect that events would develop so rapidly. And in general, if it weren't for the crisis... When the depositors in the fall of 2008 demanded the return of 7 billion at once, it became impossible to put on a good face in a bad game.

I willingly believe that Madoff was relieved after the confession and even after the arrest - to keep such a colossus on his shoulders for so many years and understand that it could collapse at any moment! There are only two "buts": firstly, another brother and niece were present during the conversation; secondly, hardly authorities would immediately arrest such a respected person, without pre-collected materials and evidence.

Whatever it was, the machine of justice spun very, very quickly. On March 12, Bernard Madoff fully pleaded guilty in federal court in Manhattan. The New York court immediately appointed an interim fund manager, Irving Picard, who began to seek and return the fund's funds to pay depositors around the world. Money in accounts and proceeds from sales Madoff's property gathered about 1 billion. Not only yachts and, but even his subscriptions to baseball games were sold. Today, Ruth Madoff is required to report to authorities for any spending over $100.

The charges did not affect the sons and relatives of Madoff, but they were extremely upset by what was happening. The eldest son, Mark, even planned to change his last name, worried for the safety of the family. Further events developed dramatically - 43-year-old Mark was found hanged in his New York apartment on December 11 last year. The main version is suicide, although investigators noted that he was wearing a suit, as if he was going out somewhere. According to American publications, Mark has not spoken to his parents for the past two years.

Bernard Lawrence Madoff is

Mark Madoff is not the only victim of the collapsed pyramid. December 23, 2010 committed suicide founder American consulting organization Access International 65-year-old Thierry de la Villeuche, who could not come to terms with the loss of 1.5 billion invested in the collapsed pyramid.

The case ended on June 29, 2009. Bernard Madoff was sentenced by a New York court to 150 years in prison. The harshness of the punishment is most likely due to the indicative nature of the process, because the financier's lawyers asked for 12 years in prison for their client and expected a maximum of 20. Carlo Ponzi, mentioned above, received 5 years in prison, of which he served 11 months.

And then, according to all the laws of the genre, the tragedy began to turn into a farce. Madoff's page collapsed from the number of people who wanted to visit it. At the online auction, various goods with the Madoff Investment negotiable paper logo are gaining popularity. Yes, for $20 eBay you can buy T-shirts with the foundation's logo, a picnic bag with its logo is available for $18, and for about the same amount you can buy an umbrella once owned by an employee of the Nasdaq Composite exchange.

In August 2010, Sheryl Weinstein's book Madoff's Other Secret: Love, Bernie and Me was published. Cheryl served as the chief financier of Hadassah, a women's charity, and was one of the witnesses in the case. Their affair with Madoff, Weinstein claims, lasted more than 20 years, despite the fact that they were both married.

And Hollywood would not be Hollywood if it had not avenged its losses on Madoff in the usual way: by making the movie "Madoff: Made Off With America" ​​(play on words, translated - "Madoff: End America").

Madoff himself was known in prison as a hero and almost Robin Hood. “To hell with my victims - I rushed with them for 20 years”, “People just threw money at me. Some guy wanted to invest, and what would happen if I turned him down? He would ask what he did not please me, ”such statements earned Madoff respect among the prisoners of the Butner prison in North Carolina. “A hero,” says life-sentenced Robert Rosso. "He is definitely the greatest swindler in history."

Bernard Lawrence Madoff is

Here I would like to express righteous indignation, and again “but” ... Six months between the first arrest and the verdict of the court, Bernard Madoff did not spend in vain - he attended a special course on survival in prison. And today's bravado and authority in the eyes of criminals may just be a way to survive. After all, he refused to appeal for a reduction in the prison term. And during the trial, he repeatedly asked his depositors for forgiveness.

Sources

Wikipedia - The Free Encyclopedia, WikiPedia

vesti.ru - Vesti

migdal.ru - Migdal

jewish.ru - Global Online Center

Encyclopedia of the investor. 2013 .