Bernard Madoff founded Bernard L. Madoff Investment Securities LLC in 1960. It became a prestigious firm on Wall Street, acting both as a market-maker (a middleman between buyers and sellers of shares) and as an investment fund that managed money for high-net-worth individuals and institutions. Year after year Madoff delivered reliable annual returns of around 10% for his investors. He managed to do this even in down markets when everyone else was losing money. These returns inevitably created suspicions, but billions of dollars continued to be entrusted to him, principally because he always paid out if anyone requested their money.
Madoff was arrested by the FBI in December 2008 and charged with securities fraud. It now appears that his firm was actually operating one of the largest Ponzi schemes
in history. He had been paying some investors (those who requested their money) with money from other investors. The scheme went belly-up when clients wanted to withdraw over $7 billion from the firm due to the ongoing economic crisis. Madoff simply didn't have this money. Losses are estimated to be as high as $50 billion.
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