Bernard Madoff and his scam

2024 Author: Henry Conors | [email protected]. Last modified: 2024-02-12 02:54

Today it is difficult to deceive businessmen, and even the common people to be drawn into any dubious deal. But a few decades ago, financial pyramid schemes were created very successfully, because of which millions of people suffered. Some lost only a fraction of their savings, while others lost a fortune. A prime example of such a ruinous scheme is the Bernard Madoff scam. It affected not only American society, but also the largest foreign companies.

Biography

Probably, many have heard that there was such a swindler Bernard Madoff. Who is he, where is he from and where did he study? He was born and raised in a Jewish family. In the late 50s of the last century, he graduated from high school, after which he decided to graduate from Hofstra College, which is located in New York. Upon graduation, he received a bachelor's degree in politics. During his student years, Madoff wasted no time and worked part-time in several places. As a result, he collected an amount of five thousand dollars, which was used to create his own company calledMadoff Investment Securities. Later, when things went well, the businessman invited his brother Peter to work with him, and then two nephews and two of his sons.

What did Madoff do?

Bernard Madoff participated in the creation and operation of one of the American stock exchanges - NASDAQ. Its main task was to buy and sell shares, various securities, which was supposed to bring profit to investors.

Interestingly, Madoff's firm was one of the 25 largest participants in the trading operations of this exchange. In addition, he is rightfully considered a pioneer of electronic trading. After all, the first who transferred the entire document flow to electronic mode was Bernard Madoff. Who is he, if not an innovator? After him, other companies gradually began to apply computerization.

Career takeoff

In the 90s, the company of a successful businessman noticeably began to go up. At this time, he managed to take the post of chairman of the board of directors of the exchange, and also headed the board of directors (BoD) of the Madoff Securities International hedge fund, which was founded in 1983. Madoff's high posts do not end there - in 1985 he participated in the founding and was a member of the Board of Directors of International Securities Clearing. The latter was known for its financial clearing operations, settlements between firms and even countries on a non-cash basis.

Charity activities

Besides commerce, Bernard Madoff was involved in charity work. He embarked on this path afterhow one of his nephews died of leukemia in the early 2000s. Since then, Madoff has often donated handsome sums to medical research to fight cancer. Together with his legal wife, the businessman founded his own fund, which allocated donations to various Jewish charitable events, actions, educational institutions, theaters, etc.

Considerable sums were also invested in the election campaigns of some American politicians. So, for various reasons, Bernard Madoff financially supported the representatives of the Democratic Party. In addition, he was in charge of the Treasury of the Yeshiva University Business School Board of Attorneys.

World famous scam

In the early 2000s, the swindler Bernard Madoff, whose pyramid is considered the largest in history, became known to the whole world. According to statistics, there are up to three million affected people, and several hundred financial institutions. In total, the damage was estimated at almost $65 billion.

How did it all start? The Madoff Investment Securities fund was a reliable and profitable investment, as its investors received a decent and stable return - about 13 percent per year. The fund's clients included both individuals and various organizations, banking institutions, corporations, etc. At that time, Madoff's company, according to experts, was considered one of the best market makers in the stock market, so no one had any suspicions.

The revelation came in 2008 when Madoff confessed to his sons that his investment fund was a huge lie. They told the authorities everything, and soon the founder of the scam was arrested. As it turned out, the investments entrusted to him had not been used for their intended purpose for the past thirteen years. And the police found out that the fund did not make transactions on the stock exchange at all, since there is no data about them anywhere. Also, the request of large investors to return the invested funds in the amount of $7 billion led to the collapse of the whole scheme, but there was no such money in the fund.

The businessman was accused of creating a pyramid scheme in 2008, and the following year Bernard Madoff was sentenced by a court to 150 years in prison. The list of indictments included perjury, money laundering, fraud and more.

Many people believe that the businessman had accomplices, since it is impossible to do such a thing alone.