Financial Fiasco
by Claudine ZapDec 15, 2008
When you've lost your life savings in a multi-billion-dollar Ponzi scheme, does it provide some modicum of comfort knowing that the likes of Steven Spielberg, New York Mets owner Fred Wilpon and the town of Fairfield, Connecticut are sharing in your misery?
That is the question many investors are facing as more details surface on what is perhaps the biggest financial rip-off in Wall Street history. As the story of the fund manager and scam artist Bernard Madoff unfolded this weekend, armchair investors turned to the Internet to find out more about the scandal that was rocking Wall Street to the tune of $50 billion in losses.
Who is Bernard Madoff?
It's almost inconceivable that one man could have held the trust, and funds, of so many, and accounted for the billions in losses, much of which has gone to "money heaven," as hedge fund manager Douglas Kass put it. The former lifeguard and Nasdaq chair arrested for fraud, ran his investment business, which he founded in 1960, with several family members, including his two sons, who reportedly turned him in after learning of their father's fraud last week.
The supposed Hedge fund that held cachet if you could get into it, churned out reliable returns every year for captains of industry and average investors alike. In fact, the downfall is what did him in, as investors facing losses in other parts of the market started asking for their money back, money Madoff didn't have, causing the pyramid scheme to finally collapse.
Ponzi scheme definition
Named for Charles Ponzi, the original American swindler, a Ponzi scheme is a sham business that pays out its newest clients with the money from the old ones, which is what Madoff confessed he had done. Maybe it's time to rename it a Madoff scheme.
List of Madoff clients
Along with endowments such as Yeshiva University, charities and hundreds of investors, the list included a real who's who of the business, entertainment, and government: Steven Spielberg's charity, the Wunderkinder Foundation, invested nearly 70 percent of its money with Madoff. Others duped include: Real estate magnate Mort Zuckerman, Nobel Laureate Elie Wiesel, and Senator Frank Lautenberg.
Although we imagine he's now persona non grata, Madoff made much of his membership to the Palm Beach Country Club, where many members entrusted their life savings to him. Said one who lost everything: "I just can't deal with it. I'm cooked." For a more complete list of investors, go here.
