Madoff admits to $50 Billion fraud

Please tell me the taxpayers won’t have to bail out the victims of this con man!

Well, I don’t think anyone else is going to, so either they all get wiped out with no recompense, or the taxpayer picks up the tab. Companies/institutions/charieties may have to just suck it up and deal, but it wouldn’t surprise me if the individuals who have seen their retirement funds obliterated get some sort of help.

Maybe there’s some sort of industry-funded insurance/compensation scheme, but all that means is that other savers get soaked at the end of the day. This is why we all love criminals so much - they throw shit all over the place, and then we have to clean up after them.:mad:

At least four large European banks (Banco Santander, HSBC, BNP Paribas and Bank of Scotland) had invested in this scam, and it looks as though their combined losses will be about $5bn. In addition, a least two UK local authorities had invested substantial amounts in Madoff’s schemes.

Man, this guy was quite a salesman-either that, or banks employ some pretty stupid people!
I honestly can’t believe this stuff happens…when I risk MY money, i do a lot of research and check everything out (I even read annual reports). Can you impagine it?S just says to his staff-there’s this guy in Manhattan…he doesn’t supply any numbers, but he pays 20% per year!
And the banks executives? “yes…let’s invest $5 billion”!:eek:

Maybe I’m missing something. Madoff ran a Ponzi scheme in which people lost billions of dollars. But he didn’t just take this money, pile it up, and burn it. The 50 billion has simply been redistributed. For every dollar someone lost, someone else has gained a dollar. I feel sorry for the people who were cheated, but why is the economy as a whole any the worse for the swindle?

I just heard on the radio that a federal judge has in fact just ruled that this should be the avenue of restitution open to those who lost money!


Dont we know who the folks were in the early part of the scheme that got paid out?

Shouldn’t they be the first ones to poney up money for the victims?

I spoke this afternoon with a guy I know who used to work in the investment department of a sizeable Boston bank. He said they looked at investing with Madoff some time ago, but their research couldn’t produce any sound explanation for the results he was getting - especially the amazingly consistent returns, with scarcely (never?) a bad month. So they decided it sounded a bit dodgy.

Bet they’re glad now that they gave it a pass. (Or possibly not, if they’d have been making great returns and then been able to turn around and ask for a federal bailout for capital losses.)

Is Bernard Madoff out on bail, locked up or what?

Can you provide a link to an article about this ruling? The only thing I found was an article about the tax implications that said, “Tax rules allow investors who fall prey to criminal theft perpetrated by their investment advisers or brokers to claim a tax deduction stemming from their losses.”

He’s out on $10 million bail, co-signed by some of his relatives. He also apparently has to put his ginormous Manhattan apartment up for hock.

I really hope a huge number of recently deployed golden parachutes were invested in this scam.

He is currently out of jail, but needs to raise 10 million for a bond to stay out of jail.

Many of these people just got a statement saying how much they had and how much they made. One woman on TV said she gave him a million 30 years ago. Then later gave him more. She pointed out she has been paying taxes on profits she has not actually been making for decades. They will attempt to get a refund from the IRS.

Because until now, on paper, the 50 billions existed both in the pockets of people who had actually received returns and in the pockets of current investors. Now it is discovered that actually the latter don’t exist. Until last week, a given bank that had invested in this scheme had, say, 1.2 billions (1 billion it had invested plus 200 millions) and could loan money accordingly.Now, it has only 200 millions, and can loan only on this basis. And is $ 1 billion closer to bankruptcy.

True. But I think R. C. Semone’s point is that those who had money with Madoff long term received payment well in excess of what should have been distributed. So they have gained financially, to much the same extent that the current investors have (as you note) lost.

Indeed, if you are receiving an annual 10% return on your investment when the actual amount it has earned through investment is 5% [arbitrary figures], there comes a time when the value of what you have received is sufficient to offset even the loss of the principal.

Sure, but , until last week, it was assumed that the former had gained, say 50 billions, and that the latter had lost nothing, and still had 50 billions too. So, on paper, banks and other investors had a total of 100 billions. The amounts of loans, investments, etc…were based on the assumption that 100 billions existed. Now they will have to be based on the fact that there’s only 50 billions out there.

The net result is the same as in the case of a collapsing bubble, really. Banks or investors were supposed to have significant assets, the bubble collapse, the supposed assets evaporate overnight. Banks are now broke, and tank or at least don’t loan anything to anyone anymore. Same thing here.

The poster I was responding to was asking why it would affect the economy. That’s why.

I am curious about the role that the (sophisticated) investment gurus have in this disaster. You are a big pension fund manager-and you invest money with this guy Madoff. Don’t you owe it to the people you work for, to investigate and prove what this guy claims to be doing? To my mind, you should be responsible for this.
I fear a lot of state and local pension funds were snookered by this guy-which means that we (the taxpayers) are going to be screwed again-WE will have to make up the losses caused by this crook.

I heard the report on the radio, so I can’t provide a cite to that. But today (12/17) has a report on it. Believe it or not, its entire report is “On Monday, a federal judge issued an order that may help investors swindled by the scheme recover some of their money.” That has to be the most useless news story I have ever read.

Band Name!

Here’s an interesting short article from a guy who lost a bundle with Madoff. I find this fascinating: