The loudest and most dimensioned financial pyramid in history turned out to be the one of Bernard Madoff. It resulted in more than three million of victims with the general loss of 50 milliard dollars. The pyramid existed for minimum 16 years that is surprising for a project of this kind. Many investors managed to make great fortunes during this period, but when the pyramid reached the bottom, millions of depositors were left with nothing. So, who is this Madoff? How did he manage to create such a truly great pyramid? Let us review his biography in detail.
Madoff was born on the 29th of April, 1938, in New York, USA, in the Jewish family. In 1956 Bernard graduated from a prestige school, in 1960 he graduated from the college of Hofstra. During studies in the college he earned additionally as a rescuer at the beach and as a fitter of the irrigation systems in the garden. Unlike his coevals, Madoff didn’t squander his money, but put together a dollar to a dollar. Probably, he already had immense plans at that period of time. For a start in the world of finances he managed to put by $5000. And in 1960, at the age of 22 he organized firm Madoff Investment Securities for these five thousand. Initially, the company was engaged in the purchase and sale of securities and in the participation in large financial auctions. An attractive girl named Ruth worked as an accountant at his firm. She took the fancy of Bernard and they got married. They gave birth to two sons Andrew and Mark.
In ten years of rather successful firm’s work Madoff engaged his brother, nephews and sons into his company. In time, banks and hedge-funds started depositing their finances into Madoff’s company. Later, investments could be made by private persons as well who in addition received good dividends. The percents ware paid out owing to new investors, and company Madoff Investment Securities turned into a classical pyramid of Ponzi scheme as it is called in the USA. Seeing that the firm of Bernard Madoff employs all his family, including his brother and nephews, depositors had no slightest doubt in the honesty of the bargain.
Madoff participated in the creation of the financial exchange Nasdaq that was engaged in securities, their purchase and sale. The investors received profit from these operations. The company of Bernard Madoff was one of 25 greatest participants of this exchange. Bernard was the first one who started introducing auctions on the exchange in the electronic variant and he computerized the turnover of the documents of his firm.
In 1983 Madoff was the head of the Counsel of Directors of Madoff Investment Securities, the residence of which was located in London. In 1985 he participated in the creation of company International Securities Clearing that was engaged in cashless money operations inside the country as well as abroad. In 1990 Bernard Madoff was the member of the Counsel of Directors of company Nasdaq, and a bit later he became the head of the Counsel.
Madoff was engaged in charity much. He sponsored theatres, museums, invested millions into educational establishments, as well as into Jewish schools of business, universities and charity organizations. Here, probably, the leading role was played by the factor that Bernard Madoff originated from the Jewish people. And after his nephew died from leucosis in 2006, Bernard started to donate much money into medical researches and in particular into researches of blood. Family charity fund Madoff Family Foundation was organized by Madoff and his wife. Madoff also sympathized with the Democrats and endowed big sums in support of their political activity.
Мadoff had very much money and didn’t deny himself anything. He was the member of several elite ski clubs and of golf clubs. He had a private residence in Manhatten, several houses in Palm Beach and France, a yacht on the Bahamas.
In 2008 Madoff Investment Securities suddenly stopped payments, having not celebrated its half-century anniversary, and its founder Bernard Madoff was imprisoned. The reason of the collapse of Madoff’s pyramid was the crisis that started at the end of 2008 and swept not only across the USA but also all over the world. New investors stopped depositing money into the company that entailed impossibility of percent payments to previous depositors.
Bernard Madoff came to his sons and honestly confessed that the company was nothing else but a financial pyramid. After that Andrew and Mark went to the police and told them everything.
On the 11th of December, 2008, Bernard Madoff was arrested on suspicion of fraud, but some time later he was released on bail. Bernard Madoff’s wife Ruth shortly before her husband was arrested drew out big sums of money from the accounts of the company several times. She probably suspected of the arrest and prepared the money for the bail and lawyers. The day before Christmas Madoff together with his wife Ruth tried to commit suicide. They got tired of constant telephone calls and threats and tried to stop it all by taking a great amount of soporific. But in the morning they woke up as if nothing had happened and were grateful to their fate for it.
On the 29th of June, 2009, the court brought in a verdict on Bernard Madoff and sentenced him to 150 years of imprisonment. The members of his family got under examination as well: sons and two grandsons at the age of two and four years. Altogether, they must pay the debt in the amount of $80 million. After his son Mark was acknowledged to be a respondent he couldn’t bear it and committed suicide. He was found hung in his house on the 11th of December, 2010. The court didn’t allow Bernard Madoff to be present at his son’s funeral. Bernard considered it for the better, otherwise parting with his son would be turned into the show for Mass Media, and he couldn’t act with his close people in this way.
In the conversation with the correspondent of The New York Times and in personal letters Madoff contended that big banks as well as hedge-funds knew about his affairs and that Madoff Investment Securities is a pyramid, but for all that, they boldly deposited their clients’ money into the company. «If you take part in any reckless scheme, we don’t want to know of it anything», this is an approximate position taken by the banks. The depositors of the pyramid were big banks and companies, as well as private persons. One of the victims of Madoff’s company was famous film director Steven Spielberg.
Madoff’s pyramid is the most long-playing and enduring one among all pyramids known to us. And who knows how long it could exist, if it were not global financial crisis.
Other articles of the category "Fathers of Great Pyramids"
Charles Ponzi. Read=>
Sergey Mavrodi. Read=>
Article views: 4678
[ Return to menu | Return to main page ]
© GS Monitor. Reproduction of this article without proper linking to the source is strictly prohibited.