WHY? I can not fathom why this man did what he did. He had access to BILLIONS upon billions of dollars and could have collected fees on that every year (a tidy sum)and easily obtained at least market returns for his clients. Why create a ponzi scheme? To impress people with fake high returns? This guy didn't even try to invest/trade. He hadn't made a trade for over a decade. That's Crazy shit. Just go out and buy the market and get market returns. Taking $$$ from very vulnerable people (old folks life savings) even as it all was about to collapse. I don't get it. The only thing I could come up with is this man was mentally disturbed and or had some desire to hurt people.
he is actually not much different from a guy running a high return hedge fund. the hedge fund guy knows fully well that one day he will likely to blow up. but he does not risk his own money and he is making good money for himself, so why not keep doing it for year if possible? madoff did the same thing. not sure what caused his "blowup". maybe too many people wanted to withdraw given the market conditions and he was not able to pay up. several hedge funds must have blown up during sep-nov 08 just because they kept selling volatility. black swan for them, black swan for madoff.
wallstreet is made up of fund manages who don't know how to invest/trade. But they're excellent con men and smooth talkers
Several folks have posted pretty good information about Bernie. Someone posted a pdf written by the original whistle blower, explaining in detail how it was impossible to get those returns he was giving out and counting it up to two different (illegal) market tactics: 1. He was front running real orders. 2. He was running a huge ponzi scheme. It turns out that he had actually been front running real orders years ago and had graduated to just running a full-blown ponzi scheme type of hedge fund. He got away with it because he realized that people are stupid and lazy (and greedy) when it comes to investing, and it was relatively easy for him to "pull the wool" over people's eyes. As far as WHY did he do it? I was curious and tried to "profile" him and step into his mind (see things from his perspective) and it was pretty scary. The man is a complete sociopath ... he doesn't have any feelings for or caring for the people he ripped-off. Hell, he doesn't even see them as being "people" ... they are "tools", "pawns" "marks". It's evil and cruel, but that's the way it is and that's how he sees things. I personally think the laws should be changed so that when someone creates a crime on this level which requires such strong government intervention it should be considered a "capital offense", with the threat of an extraordinary amount of time in prison for all parties concerned and/or the death penalty.
My first idea on the history was that there just is no ponzi scheme and it's all aranged so that it's going to be easier to push new regulations on hedge funds. If this guy does not go to jail my point is proven and I refer you to the conspiracy theories, lol.
he could have viewed himself as a tool for a higher authority thus he is not responsible for his own actions.
madoff simply figured that the fewer know about the scam the longer it will survive. he was planning on faking trades until becoming senile.
Perhaps he was delusional. Perhaps he really thought his fund was an investment in and of itself. And as more people bought into it, the value of fund went up and people who bought in early were actually entitled to a profit. Why bother investing in real assets that could go down due to redemptions when here was an 'asset' (his fund) that always went up in value (the amount of funds under managment) every year.
Fraud almost invariably starts when somebody has a large problem eg large unpaid bill or gambling debt and in their mind temporarily borrows from their employer/company with an initial view of covering it at a later date - but many do not.
The above is the first post on ET that I've seen that explores the just sentence on this monster. If he is seen to just spend a few comfy years in an en-suite cell somewhere then the philosophy of " greed is good " and " crime pays " lives on. His was a cold and calculated crime and he should be made an example of to deter others !!