The Ponzi Scheme
Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960, and was its Chairman until his arrest. At his firm he employed his brother Peter as Senior Managing Director and Chief Compliance Officer, Peter's daughter Shana Madoff as the firm's rules and compliance officer and attorney, and his sons Andrew and Mark.
Alerted by his sons, federal authorities arrested Madoff on December 11, 2008. On March 12, 2009, Madoff pled guilty to 11 federal crimes and admitted to operating the largest Ponzi scheme in history. On June 29, 2009, he was sentenced to 150 years in prison with restitution of $17 billion. According to the original federal charges, Madoff said that his firm had "liabilities of approximately US$50 billion". Prosecutors estimated the size of the fraud to be $64.8 billion, based on the amounts in the accounts of Madoff's 4,800 clients as of November 30, 2008. Ignoring opportunity costs and taxes paid on fictitious profits, half of Madoff's direct investors lost no money. It is also the largest accounting fraud in American history.
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