Banks knew of Ponzi scheme: Madoff

Discussion in 'Economics' started by bearice, Feb 16, 2011.

  1. Convicted fraudster Bernard Madoff has blamed others for being "complicit" in his scheme, which fleeced investors of billions of dollars.

    Madoff is serving 150 years in jail in the US for a $65bn (£40bn) fraud which deprived thousands of investors of their savings.

    Now he has told the New York Times a variety of banks and hedge funds "had to know" about his Ponzi scheme.

    Such schemes pay out using new investor money rather than from any profits.

    Madoff claimed banks and hedge funds who had dealings with his investment advisory firm showed a "willful blindness" toward his activities.

    He also alleged they failed to examine discrepancies between his regulatory filings and other information.

    "But the attitude was sort of, 'If you're doing something wrong, we don't want to know'," he said.
  2. There is little bit of ponzi in everybody's life

    There is little bit of steel in everybody's life.

    Ponzi is the steel of the financial world (not sure)
  3. It appears Madoff was untouchable do to political patronage and connections in high places. Just because some people new or strongly suspected the truth does not mean they had any power to change things. Likely if they had insisted too strongly they would have been viciously attacked and perhaps lost their position.

    The firm Rentech uncovered extremely strong evidence of the fraud (when they were apparently attempting to reverse-engineer the strategy) yet continued to be an investor for several years after discovering this.
  4. Madoff goes to prison for swindling several hundred people in his ponzi scheme, congress gets applauded in the media for swindling 300 million people in their ponzi scheme.

    Translation: The ponzi scheme will collapse without more money being pumped into the system to pay the bonds coming due.