How Bernie Madoff Fooled the World
The deceased financier’s name has become shorthand for a certain kind of investment fraud. Here’s how he got away with what he did for so long.
How did Bernie Madoff do it? He had a plan and he stuck to it.
Photographer: Timothy A. Clary/AFP via Getty Images
Bernard Madoff has gone to meet his maker, but we have not heard the last of him. Like Charles Ponzi before him, his name has already become part of the financial lexicon, shorthand for how financiers can exploit human nature for profit.
Ponzi, with a plan involving airmail stamps, gave his name to investment plans that pay old investors with money they take in from new investors, and do not make the underlying investments that they claim. Sadly, there have been plenty more such schemes since Ponzi died in 1949, many of which came to light like Madoff’s in the wake of the financial crisis of 2008. But Madoff took the Ponzi concept to extremes nobody had previously thought possible. The news that he had been arrested and charged with running a Ponzi scheme then estimated to be worth $65 billion was one of the greatest of all the shocks of 2008. Across the world of finance the reaction was the same when the news hit screens: “How is this even possible?”