former Nasdaq chairman arrested for $50B Ponzi scheme

[hannibal]

I am now convinced that Wall Street is dead.

http://money.cnn.com/2008/12/1...x.htm

Bernard Madoff was arrested for allegedly operating a massive Ponzi scheme. A Ponzi (or pyramid) scheme is where the violator collects funds from new investors and uses these funds to provide a return to earlier investors. Meanwhile, the company soliciting all these investors develops no product or provides no service.

There was no timeframe mentioned in the article. I imagine this had to be going on for almost a decade to take in $50 billion.

[HashiriyaS14]

I couldn't believe this.

They're saying it's likely the largest single instance of fraud ever recorded.

Wow.

[480sx]

It just seems that people in a position of power cant help but to abuse it.

[Urabus GodofTraction]

It just seems that people in a position of power cant help but to abuse it.

Power magnifies a person's true intentions. The good do better and the bad do worse.

[bobotech]

I think this one is gonna have HUGE repressions across the board for common people.

On another board that I frequent that has a large amount of middle aged members, this is a huge story.

One guy lost 2/3rds of his ENTIRE retirement account to this bastard. His parents are even far worse of than he is. They lost almost all their income that they live off of. They are going to have to sell their home and other things.

Scary as hell.

Its one thing when the massive ripples in the weakening economy affect people that you read about in the paper, but when it starts affecting people hard who are just average common middle folk, look out.

Paper losses are one thing (say Billy Bob lost 15k out of his 401k because of stock losses) because he still has the asset that could possibly regain in value but its a whole nother ball of yarn when Billy Bob loses his entire portfolio due to this bastard. Its not like he can hope that it will eventually regain in value, its just flat out GONE.

[HashiriyaS14]

This is why my firm (private real estate investment) makes such a big deal out of providing EXHAUSTIVE audits of our dealings.

We let the board vote on who the auditor will be, as the board is made up of our largest investors. For the last decade, they've stayed with a small family-run accounting firm in North Carolina to supervise US operations, as some of our Dutch bigwigs are buddies with their principals.

There's no replacement for knowing people personally for a long period of time.

That said, I really feel for the people who lost out in this scheme because it really and truly wasn't their fault. I'm sure it looked and seemed entirely legitimate, and it had been going on for decades. This wasn't bad investment decisions on the investors part, it was just out-and-out crime. Huge shame.

[smockers83]

That said, I really feel for the people who lost out in this scheme because it really and truly wasn't their fault. I'm sure it looked and seemed entirely legitimate, and it had been going on for decades. This wasn't bad investment decisions on the investors part, it was just out-and-out crime. Huge shame.

As do I, and it may have looked legit, however there were many, many red flags, in which the investors chose to ignore in pure stupidity. In hindsight we can call it stupidity because questions should have been coming up for years about the fund. As the saying goes, if it sounds too good to be true, it probably is.

The purposed strategy used in the fund limits both its growth and fall, however it moves in tandem with the market. So to guarantee a 12% return every year, if the market was up, how much could have the fund made without the purposed strategy and why didn't it fall when the market was previously down?

All of the old people in retirement, I feel deeply for them, I do. They entrusted their life savings to this man and it's poof, gone. Everything. They just became part of the generation of "Hello, welcome to Wal-Mart," without ever having to previously. However, if they were truly smart investors, they would've been more invested in fixed-income investments instead of stocks, which seems to be what the fund said it was invested in mainly. They shouldn't have been exposed to the risk of the stock market at that point in their lives. This goes to show again that you don't put all of your eggs in one basket and why you get two or three financial opinions. My girlfriend's company does its retirement with two different companies, and in starting your 401(k), you have the option of choosing 100% in either or 50/50. I made sure she went 50/50 to minimize risk as one company invests different than the other.

[Cold_Zero]

Hannibal,Wall Street is not dead, they probably said the same thing about Wall Street after the 1929 Crash.

But we will need to terminate the term Ponzi and replace it with Madoff. So Amway is a Madoff scheme.bud

[Urabus GodofTraction]

But we will need to terminate the term Ponzi and replace it with Madoff. So Amway is a Madoff scheme.bud

Hell, so is Social Security!