Madoff Heads to Jail

In his own words, Bernard Madoff today explained the inner workings of his $50 billion Ponzi scheme and the details are shockingly simple.

Step 1: Get investors to give you cash. Pretend to trade. Lie about your returns.

Step 2: Put the cash in a bank account (his was at Chase Manhattan).

Step 3: Cover up questions by moving cash between New York and London, and pay out the few investors who ask for redemptions (until one too many come calling). Occasionally lie to the SEC, and operate a legitimate market-making business to keep up appearances. Falsify audit reports.

That's basically it. That, plus the ability to charm $50 billion from credulous investors. Amazing.

The WSJ has the text of Madoff's statement following his guilty plea to 11 criminal charges. Madoff told the judge he was "grateful" for the opportunity to comment publicly about his crimes, saying he was "deeply sorry and ashamed."

Related: Bloomberg says Madoff might be in for a tougher time in prison than your average white-collar felon.

Comments

[samwise:]

it's the government itself that's in for the tougher time. the only reason uncle sam is letting this guy off scott free (life in prison? big deal) is because he's claiming to be implicating everyone. apparently it's working. unless the government has decided to chuck his wife out of her fancy pants apartment and give him this pictures, he has no reason to talk now, does he? sure they can kill him prison--but then the 50,000 rich americans who lost their life savings never find out what happened to their money and who stole it. Bernie Madoff? Yeah, right. That guy isn't smart. He's an idiot.

Mar 12 04:06 PM

[367851:]

The government, the SEC or whoever were supposed to regulate this stuff are as much to blame as Bernie himself. If they'd investigated at the first sign of trouble they could have caught and taught Bernie a lesson, gave him a stiff fine and he probably would have gone down the straight and narrow, like a junior high kid busted for some minor infraction. Instead, they let it go and he got more brazen, eventually turning it into something much bigger.
Bernie is a junior high school student who, for some reason, was never sent to the principal's office.

Mar 12 04:21 PM

[Spokaneman:]

Has it ever been reported of the $50 billion or so purported lost, how much is "hard dollars" eg. actual investments on the part of investors and how much is illusionary or falsified gains? In other words, if I invested $1 million 15 years ago and was being told I was getting a 12% a year return, my account "balance" would be somewhere around $5.5 million, but the loss would only be my original million.

Of course it doesn't make the crime any less onerous, but it would be interesting to know.

Mar 12 05:31 PM

[367851:]

Bernie is a talented guy and we need these kind of people doing good things in our community. Instead he is in jail doing nothing, what a waste.


On Mar 12 04:21 PM 367851 wrote:

> The government, the SEC or whoever were supposed to regulate this
> stuff are as much to blame as Bernie himself. If they'd investigated
> at the first sign of trouble they could have caught and taught Bernie
> a lesson, gave him a stiff fine and he probably would have gone down
> the straight and narrow, like a junior high kid busted for some minor
> infraction. Instead, they let it go and he got more brazen, eventually
> turning it into something much bigger.
> Bernie is a junior high school student who, for some reason, was
> never sent to the principal's office.

Mar 12 07:37 PM

[jse17:]

Free Bernie NOW!

Objective observers must respect Bernie’s ability to swindle folks that regard themselves as the world’s shrewdest investor’s! Furthermore, the chutzpa “Ole” Bernie displayed in clipping his sister as well as his defense lawyer’s (Ira Sorkin) sons is nothing short of world class! Yes, thieves are ultimately common but Bernie is a virtuoso and likely will be enshrined in Madame Tussauds

Mar 12 07:57 PM

[User 371080:]

Madoff is falling on his sword to keep his family alive, not out of jail. Madoff's co-conspirators are from in a small country at the edge of the eastern Mediterranean Sea. After Madoff dies from a stroke or heart attack in prison his family will likely become statistics.


On Mar 12 04:21 PM 367851 wrote:

> The government, the SEC or whoever were supposed to regulate this
> stuff are as much to blame as Bernie himself. If they'd investigated
> at the first sign of trouble they could have caught and taught Bernie
> a lesson, gave him a stiff fine and he probably would have gone down
> the straight and narrow, like a junior high kid busted for some minor
> infraction. Instead, they let it go and he got more brazen, eventually
> turning it into something much bigger.
> Bernie is a junior high school student who, for some reason, was
> never sent to the principal's office.

Mar 13 10:08 AM

[notsosmart:]

congrats taxpayers.you are now paying $70,000-80,000 a year to jail made-off.ponzi should be as legal as wall st.(another ponzi).if your greed gets you to fall for it you should be responsible.not blame the gov. or sec who can never get ahead of this curve.lazy greedy investors.i dont feel sorry for them.

Mar 13 12:11 PM

[dieuwer:]

Ponzi scheme - "an operation that pays returns to investors from their own money or money paid by subsequent investors rather than from any actual profit earned."

Social Security - "an operation that pays money to citizens from their own money or money paid by subsequent citizens (coming into the workforce) rather than from any actual income earned."

Oh My!!!

Mar 13 01:40 PM

[stox:]

I'm not shedding a single drop of tear for his clients, those people knew he was doing something illegal to get that kind of return and that was exactly why they love him to manage their money.

I say they were all criminals just like Madoff and they all deserve their loss...BOOYAHHHHH...

Mar 13 01:48 PM

[xsellside:]

Said it once, but I'll say it again. What's stunning is how many investors gave ALL THEIR MONEY to Madoff. This violates the most BASIC rule of investing, diversification. Investors have learned NOTHING from past bubbles.

Mar 13 01:57 PM

[henarl:]

jse17 wrote:

"Free Bernie NOW!

Objective observers must respect Bernie’s ability to swindle folks that regard themselves as the world’s shrewdest investor’s! Furthermore, the chutzpa “Ole” Bernie displayed in clipping his sister as well as his defense lawyer’s (Ira Sorkin) sons is nothing short of world class! Yes, thieves are ultimately common but Bernie is a virtuoso and likely will be enshrined in Madame Tussauds"

He's a classic alright but , instead of freeing him, let's put up a big bronze statue of him on Wall St. as he's really one of them. And, that way the pigeons can crap on him like he crapped on his pigeons.

Mar 13 02:19 PM

[Neil459:]

This is not about Madoff! The SEC, the Treasury, the House Finance Committee, the Senate Banking Committee, House, and Senate were all to blame. We pay tremendously for these government services. Where are the reporters uncovering the back door deals? Where is the rage? Why does everyone just accept that he was a bad guy. He only got away with it because the people that were supposed to look out for us were asleep. These things happen because we tolerate incompetent government officials (unless they are Republican).

Mar 13 03:10 PM

[User 371080:]

Madoff's co-conspirators are from in a small country at the edge of the eastern Mediterranean Sea. Doubtful they'll be revealed much less prosecuted.


On Mar 13 03:10 PM Neil459 wrote:

> This is not about Madoff! The SEC, the Treasury, the House Finance
> Committee, the Senate Banking Committee, House, and Senate were all
> to blame. We pay tremendously for these government services. Where
> are the reporters uncovering the back door deals? Where is the rage?
> Why does everyone just accept that he was a bad guy. He only got
> away with it because the people that were supposed to look out for
> us were asleep. These things happen because we tolerate incompetent
> government officials (unless they are Republican).

Mar 13 03:16 PM