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Bernard Madoff: The Largest Ponzi Scheme in History — $65 Billion Vanished
How the former NASDAQ chairman built the biggest financial fraud in American history for decades
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MarketPedia Editorial
10 min read·December 11, 2024
In December 2008, Bernard Madoff confessed to his sons that his hedge fund was a $65 billion Ponzi scheme. He had deceived banks, funds of funds, and thousands of investors for nearly 20 years.
Credibility as a Weapon
Bernard Madoff was a prominent figure on Wall Street: former NASDAQ chairman, pioneer of electronic trading, and respected philanthropist. This credibility was his most powerful weapon.
The Ponzi Scheme
Madoff did not invest client funds. He deposited them into a bank account and used deposits from new clients to pay off existing ones. On December 10, 2008, he confessed to his sons. Actual losses were estimated at $17 billion.
Lessons
- Consistent returns in any market condition are suspicious.
- Due diligence cannot be delegated to reputation.
- Separate asset custody is non-negotiable.
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