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Biggest Financial Scam in the World: Madoff investment scandal

Bernie Madoff, the Wall Street financier who was sentenced to 150 years after being convicted for what came to be known as the largest and most devastating Ponzi scheme in financial history. Madoff was not the only one to face legal action. In 2014, five of his employees were found guilty of their part in the Ponzi scheme. In 2009, Madoff's accountant and lawyer David G. Friehling faced a maximum sentence of 114 years in prison but was later fined and sentenced to one year of house arrest and an additional year of supervised release instead.

Only a few of his victims have regained all of their losses. As of 2020, the US Department of Justice had returned about $3.2 billion to individuals that had been conned by Madoff.

The estimated $65 billion (45000 cr rupees) scam had victims from every stratum of society, from the poorest to the high. As a well-respected financier, Madoff convinced thousands of investors to hand over their savings, falsely promising consistent profits in return. He was caught in December 2008 and charged with 11 counts of fraud, money laundering, perjury, and theft.

D      A Ponzi scheme is a form of fraud that lures investors and pays profits to earlier investors with funds from more recent investors. A Ponzi scheme can maintain the illusion of a sustainable business as long as new investors contribute new funds, and as long as most of the investors do not demand full repayment and still believe in the non-existent assets they are purported to own.

The Madoff investment scandal was a major case of stock and securities fraud discovered in late 2008. In December of that year, Bernie Madoff, the former NASDAQ chairman and founder of the Wall Street firm Bernard L. Madoff Investment Securities LLC, admitted that the wealth management arm of his business was an elaborate multi-billion-dollar Ponzi scheme.

The reason Madoff managed to fly under the radar for so long (despite multiple reports to the SEC about suspicions of a Ponzi scheme) is because:

o  He was a well-versed and active member of the financial industry. He started his own market-maker firm in 1960 and helped launch the Nasdaq stock market.

o  He sat on the board of the National Association of Securities Dealers and advised the Securities and Exchange Commission on trading securities.

Madoff’s business, which was then legitimate, prospered. Working with his brother and two sons, his firm went on to become one of Wall Street’s largest market makers, matching buyers and sellers of stocks, and was among the pioneers of computerized trading.

Recommended Movie to watch- The Wizard of Lies (2017) 

Content source- Google (I consolidated all the information available on the internet)

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