Bernie Madoff

The Madoff scheme is the most known Ponzi scheme of the recent years. Bernard Lawrence Madoff started his brokerage activity in the 60s in New York growing till becoming the sixth-largest market maker in the NYSE.

Bernie never made any real investments with the money he collected from investors: he was using them to payback the earlier investors and at the same time running an extremely luxury lifestyle.

It is important to notice that the SEC run several investigations during the years on Madoff's activities and he managed to pass clean all of them. This shows that the SEC has severe limits so it can be trusted up to a certain point.

In 1999, financial analyst Harry Markopolos had informed the SEC that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. According to Markopolos, it took him four minutes to conclude that Madoff's numbers did not add up, and another minute to suspect they were fraudulent. the SEC concluded that all was OK.

The entire scheme was run by Bernie, his family did not do anything and even his sons working with him were not aware about the scam.

When the scheme collapses? Following the 2008 subprime crash most investors got into panic mode and wanted to go to what they though was a safe heaven (in their view the dollar) and more important needed cash to close open positions in the rapidly falling stock exchange. Many Madoff investors went to him asking to liquidate their positions and the Ponzi scheme was over. Most of the investor lost everything and some of them ended up living with food stamps.

Madoff is in prison, one of his son died in 2010 committing suicide and the second one died in 2014 by a cancer which he attributed to the stress caused by the collapse of his father Ponzi scheme.