CNBC on the “Scam of the Century”

CNBC delves into the Bernie Madoff story tonight at 9 p.m. E.S.T. For those intrigued by white-collar crime, this should be quite an interesting show.

I’m still struggling to understand how a fund that claims to have $17 billion in assets can have defrauded investors for $50 billion.

Had he also borrowed $33 billion that he will never repay, so that $17 billion plus $33 billion adds up to $50 billion?

(Hat tip: Gary Zeune)


Steve

The people who benefited from the fraud are on the hook to pay back their gains. Easily another $33 billion.

miko

My understanding is that he took say 5 billion, pretended to generate steady returns on that for 10 years while actually losing almost all of it. All the while attracting more investors and more fresh capital.
So the clients were told they had N billion when they actually lost their original 100 million investment (they did have to pay income taxes on these fake profits so that really sucks).

Recession leads to one or two investors asking for redemption. And thats all he could afford to redeem....

So investors lost their original investment and whatever taxes they paid on fake gains. The fake gains + original investments tallies up to 50billion

Knoxville.TV

Troy Camplin wrote
"I guess that would make the Social Security program the biggest scam of the 20th century, as it is essentially the same kind of Ponzi scheme, ... Another example of something our government does that is illegal for private individuals to do."

Troy, why stop at Social Security? I mean why do we all never ask what exactly backs up all those federal reserve notes or more suscinctly what exactly IS a dollar? A dollar used to have a legal definition, a "standard". Now there is none. So the entire monetary system has been transformed into a Ponzi of a sort

Randy

Unrestricted Greed or American Greed or foolish investing its the reason so many already financially secure people would throw it all away.

Hey-- we are cashing in everything including our 401K's to keep our home and pay off the bank credit cards, so it is as difficult for me as it is for them to have a lot of sympathy for people who surely know the meaning of the word diversification.

Kevin

Troy, the social security system is not a Ponzi scheme. It was never described nor intended as a "savings account" or a retirement fund. Current workers always paid (and pay) for retired workers. It was never described otherwise by the government.