Bernie Madoff

From Grokipedia

Bernard Lawrence Madoff was an American financier who founded Bernard L. Madoff Investment Securities LLC in 1960 and operated the largest Ponzi scheme in history, defrauding investors of up to $65 billion in fictitious profits and principal losses. As a prominent market maker and serving as chairman of the NASDAQ stock market board from 1990 to 1993, Madoff built a reputation for consistent returns through his purported split-strike conversion strategy, which attracted high-net-worth individuals, charities, and feeder funds. The scheme unraveled in December 2008 when Madoff confessed to his sons that it was "one big lie," leading to his arrest by federal authorities amid the financial crisis, as he could no longer meet redemption requests with incoming funds to pay purported returns to earlier investors. In March 2009, he pleaded guilty to 11 federal felonies including securities fraud, money laundering, and perjury, resulting in a sentence of 150 years imprisonment on June 29, 2009; Madoff died in federal prison on April 14, 2021, while serving that term. The scandal exposed regulatory failures by the SEC, which had received whistleblower tips but dismissed them, and led to ongoing victim compensation exceeding $4 billion recovered through asset forfeitures and distributions by the Department of Justice.

In brief

Bernard Madoff built a respected market-making firm and a secret asset-management business that was not investing so much as recycling. For years the returns looked calm; they were invented.

The 2008 collapse exposed the fraud and wrecked families, charities, and his own house. The lesson is bitter and useful: reputation is not an audit.