Bernard Bernie Madoff

1
Bernard Bernie Madoff

• Wednesday, February 25, 2009

2
Madoff Background

• Bernard L. Madoff Investment Securities LLC
  started in the 1960s
• Madoff and BMIS have additionally conducted an
  investment advisory business providing investment
  services for wealthy clients, institutions,
  schools, and charities.
• Guaranteeing double digit returns even during the
  worst of markets
• Red flagged by SEC in the 1990s numerous times

3
Ponzi Scheme

• A Ponzi scheme is a fraudulent investment
  operation that pays returns to investors from
  their own money or money paid by subsequent
  investors rather than from profit.
• Did not invest for 10 years and gave quarterly
  reports that showed a 12 return
• 17 Billion dollars and climbing
• Banks and hedge funds around the worldin the US,
  Britain, Italy, Spain, France, Switzerland and
  Japan
• University endowments, charities and other
  institutions that entrusted their money to Madoff
  
• Prominent and wealthy individualsincluding J.
  Ezra Merkin, the chairman of GMAC, Fred Wilpon,
  the principal owner of the New York Mets, Norman
  Braman, the former owner of the Philadelphia
  Eagles professional football team, Frank
  Lautenberg, the multimillionaire Democratic
  senator from New Jersey, and Mortimer Zuckerman,
  the owner of the New York Daily News

4
Stretch Far and Wide

• Banks and hedge funds around the worldin the US,
  Britain, Italy, Spain, France, Switzerland and
  Japan
• University endowments, charities and other
  institutions that entrusted their money to Madoff
  
• Prominent and wealthy individualsincluding J.
  Ezra Merkin, the chairman of GMAC, Fred Wilpon,
  the principal owner of the New York Mets, Norman
  Braman, the former owner of the Philadelphia
  Eagles professional football team, Frank
  Lautenberg, the multimillionaire Democratic
  senator from New Jersey, and Mortimer Zuckerman,
  the owner of the New York Daily News

5
Implications

• What is being widely reported as the largest
  financial fraud in history goes far deeper and
  extends far wider than the machinations of a
  single broker and fund manager. It marks a new
  stage in the disintegration of the US and world
  financial systemthe convulsive outcome of
  decades in which a vast accumulation of personal
  wealth at the top has been achieved on the basis
  of semi-criminal forms of financial manipulation
  unrelated to production and the creation of real
  value. To a great extent, the entire economy has
  been transformed into a giant Ponzi scheme. The
  collapse of trillions in paper assets will assume
  ever more malignant forms.
• http//www.wsws.org/articles/2008/dec2008/pers-d16
  .shtml