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I'm stunned that there has been no mention of this so far at DP. Are we that weary of bad news coming from Wall Street, or is the story not as sexy as a shoe tossing?
Bernie Madoff has committed the largest fraud ever recorded. The loss is estimated to be between $17 to $50-billion (yes, with a "b"). So far, the victims have been friends, banks, business and charities, and of course, millions of people who invested in these "hedge funds."
From what I understand, he used a simple pyramid scheme. Got people to invest with a guaranteed return, so in order to pay the return, he recruited more to invest. And so on. It was that simple, and yet few caught on. Someone did report him years back, but it fell on deaf ears.
reportonbusiness.com: Madoff debacle reveals stunning failure of due diligence
Bernie Madoff has committed the largest fraud ever recorded. The loss is estimated to be between $17 to $50-billion (yes, with a "b"). So far, the victims have been friends, banks, business and charities, and of course, millions of people who invested in these "hedge funds."
From what I understand, he used a simple pyramid scheme. Got people to invest with a guaranteed return, so in order to pay the return, he recruited more to invest. And so on. It was that simple, and yet few caught on. Someone did report him years back, but it fell on deaf ears.
These investments start with a meeting between the sharp-eyed, skeptical advisers and executives from a money manager such as Madoff Investment. The advisers should ask how the money is managed.
You're not pressing Colonel Sanders for the secret blend of 11 herbs and spices on his fried chicken. You're simply asking hedge fund managers to explain just how they generated the returns they claim. Money managers are expected to offer up detailed, audited results. They may even be politely asked to produce their auditors.
Bernie Madoff never, ever explained just how he was making money. There was vague talk of owning blue-chip stocks and writing covered calls. But most of this business was done on a trust-me basis, by a trader with five decades of experience, credentials such as a stint as Nasdaq's chairman, and a great story of getting started in markets with $4,000 earned as a lifeguard.
reportonbusiness.com: Madoff debacle reveals stunning failure of due diligence