Bernie Madoff ran the biggest fraud in the history of the United States and was sentenced to 150 years in prison nearly five years ago. The effects of the scheme have been so long-lasting that to this day only a small few of the scheme’s victims have recouped their losses. Madoff was able to persuade thousands of investors to give him their money, telling them that their investment would return steady profits. Madoff conned these investors out of $65 billion over a number of decades. Eventually, Madoff’s scheme was uncovered, and in December 2008 he was charged with eleven counts of fraud, money laundering, perjury, and theft.
Madoff ran a Ponzi scheme. What that means is that he enticed investors by promising massive returns. Madoff, as the central operator, took money from new investors and used it to pay off previous investors, making the investment appear legitimate and successful despite the fact that it did not actually generate any money. Simultaneously, Madoff pocketed the extra cash or used it to grow the scheme.
To keep the scheme running, Madoff encouraged investors to stay in the investment and not to cash out in order to earn more money. He told the investors that the investment strategies had to remain secretive but was able to keep investors in by telling them periodically that their investments were performing well without actually providing any actual returns.
Madoff’s scheme began to fall apart when clients requested $7 billion back in returns, but Madoff only had between $200 and $300 million left. His scheme went undetected for so long because such a prominent and talented member of the financial industry. Madoff cheated clients out of $65 billion dollars but only made off with less than a third of that money.
If you or someone you know has lost money as a result of an investment, please contact Richard Frankowski at 888-741-7503 to discuss your potential legal remedies.