27 ms·

Bernie Madoff has died

241 points by cwwc 6y ago

Loughla 6y ago
Interesting. I thought he was already dead, or in house arrest. He just sort of went away after that whole debacle. Bernie Madoff was actually what put me back on my heels when it comes to investing and capitalism in general. I know it's a hot take on reddit, but genuinely - it appears that the only way to get punished is to scam people with loads of money.
- guiriduro 6y ago
  Yup, scamming per se is rife and as with most borderline 'white' white collar crime, largely consequence-free - in sell-side analysis for example. But step on the wrong toes...
  - anovikov 6y ago
    As a person with 21 year of experience in custom software development, i struggle to define what "scam" is, at all...
  - shadowgovt 6y ago
    The law around scams looks a lot like the design of unit tests. On the one hand, you have the full suite of hypothetical unethical mechanisms (realized and unrealized) human beings could scheme up to unfairly cheat each other out of hard-earned resources. Analogous to the full suite of behaviors a complex program could exhibit given arbitrary inputs over infinite time. And on the other hand, you have a subset of those behaviors carved out and codified as illegal, where a violator will go to jail. Analogous to the behaviors a unit test suite can rule out. But unit tests, as we know, are not mathematical proofs of soundness.
TwoNineA 6y ago
Oh no! Anyways ...
s_dev 6y ago
Hopefully he serves as an example to other Ponzi schemers in Wall Street. It's rare in the US white collar guys like this die in prison.
- minikites 6y ago
  Putting one of them in prison isn't threatening when we let hundreds of others walk around free.
- vsareto 6y ago
  "Look what happens when we choose to catch you"
- mumblemumble 6y ago
  Hopefully, but to be blunt, if that model of punition actually worked, then the homicide rate would have been lower back when gibbeting was still a thing.
  - smt88 6y ago
    Financial criminals and murderers are not comparable. Prison is like a death sentence to a rich person.
    - mumblemumble 6y ago
      True, they aren't, but we're not talking about the class of crime. We're talking about a particular kind of incentive model.
      - smt88 6y ago
        The "incentive" for murder is usually that someone is angry and not thinking about consequences at all. Financial crimes are usually slow-burning and almost never crimes of passion. Prison doesn't stop murderers, but that has no bearing on whether it stops Madoffs.
Arubis 6y ago
I hope this provides at least a little comfort for all those whose old age and retirement were ruined for his profit.
dep_b 6y ago
The scapegoat. The only one who ripped off the rich instead of the poor. I would like to see people like Paul Singer die in prison, who made the lives of millions of people miserable, but I guess it's all legal what he did...
- phpsuks 6y ago
  Scamming rich people is not exclusive of scamming poor people unfortunately. Poor always, always pay the bill.
  - data_acquired 6y ago
    To quote another Bernie, there's a fair bit of socialism for the rich in the US through bailouts when big corporations lose too much money/are too big to fail.
    - colineartheta 6y ago
      I'm not sure why you're being downvoted, as that's as true of a statement as almost anything. This weird, hypermasculine obsession with capitalism amongst this forum (and tech community at large) just perpetuates injustices.
      - mhh__ 6y ago
        Well I don't know about you, but I am merely a temporarily embarrassed founder
      - data_acquired 6y ago
        Haha :) I've been on HN for 12+ years, and yes, statements on capitalism don't always go over very well (unsurprising given links to YCombinator). Although I will say that HN has a wider diversity of opinion on quite a range of topics than other tech forums.
- bidirectional 6y ago
  Madoff had no problem defrauding charities and pension funds. Hardly Robin Hood.
breck 6y ago
> clients entrusted him with more than $19 billion in principal > Irving Picard, the trustee appointed to unwind the accounts, had recovered more than $14.3 billion Wait WHAT?? That's only a 25% loss. Not the 100% loss I assumed. Does anyone know more?
- zatertip 6y ago
  principal -- they probably thought their accounts were worth considerably more due to accumulated returns.
  - mumblemumble 6y ago
    Matt Levine recently observed, when talking about another Ponzi scheme, that it would be nice if newspapers would quote the net and not just the gross. Though that wouldn't tell the whole story, either. You would have the earnings of people who managed to get out of the scheme before it collapsed offsetting the losses of those who didn't. You're also not taking into account the opportunity cost of having that money in the Ponzi scheme instead of, say, VTSMX.
- gruez 6y ago
  That's not too surprising. Matt Levine wrote about the recent 1inMM ponzi scheme recently[1] and the scammer's "take" was only 10%. It makes sense if you think about it. For a ponzi scheme to work you need to constantly circulate cash (from new investors to old investors), so it's hard for you to take a lot without collapsing the whole scheme. [1] https://www.bloomberg.com/opinion/articles/2021-04-08/archegos-got-too-big-for-its-banks https://www.bloomberg.com/opinion/articles/2021-04-08/archeg...
- Gustomaximus 6y ago
  does this account for time? They might get their $10m back but if they invested it anywhere else it would be $30m now and inflation has eaten a chunk. I do know some people that pulled their fund before the collapse had their gains taken back to the principal amount.
- darig 6y ago
deleted 6y ago
[deleted]
scrubs 6y ago
BM is a special kind of stuck on stupid. In addition, his sons Mark and Andrew: * Mark killed himself in December 2010 on the second anniversary of his father’s arrest. * Andrew died in 2014 from cancer.
- jacquesm 6y ago
  This is in - very - poor taste.
beej71 6y ago
That's too bad. I wanted him to live out his term. Given the amount of damage he caused, he has hardly paid his debt to society.
- Tomte 6y ago
  You want a 71 year old man to live out his 150 year prison sentence?
  - anoonmoose 6y ago
    Sure, why else give him a 150 year prison sentence? I am only 49% joking.
- mchusma 6y ago
  Doesn't that just cost society more? In actual dollars a 150 year sentence would cost taxpayers something like $10M (apparently prison costs like $81k/year in the US)
  - anoonmoose 6y ago
    If his example deterred one person from committing the same crime, taxpayers may come out ahead anyways.
ollie87 6y ago
Guess that Awkwafina song now needs a partial re-write. Isn't Bernie Madoff dead? He's dead, right? Nah, that motherfucker not dead, he in jail getting booty-rammed by the feds, getting tossed by a dude named Big Ed, in a hotbed, eating ramen noodles and crying
cletus 6y ago
Here's the one lesson I really want us to all learn from this: the only thing the rich fear is prison because prison robs them of time. Fines are just the cost of doing business. There are many other scandals: the whole subprime disaster, pollution from plants and the like where no one went to prison and people really should've.
- finikytou 6y ago
  that is not the number one learning and I think you are wrong. The real powerful and rich do not fear jail. They fear people like madoff that targets them. That is why Madoff ended his life in jail while banks/funds CEO in the 2008 are now richer than ever stealing money from the poors and taking 0 accountability for the subprime crisis that destroyed a whole decade. In my book he was better than any of those bankers. He shown to the world that some people are smarter than the banks and that they will be severely punished if they do not abide by the laws that helps those banks to win.
  - obmelvin 6y ago
    Oh, please. Madoff ruined plenty of "normal" people's life savings. Say what you will about other bankers, but please don't try to elevate someone who destroyed the life savings of others. EDIT: Yes, non-profits and pension funds as well. That's not taking from the rich. Madoff was not Robin Hood.
    - mathattack 6y ago
      Many non-profits who invested their endowments with him got hurt too.
    - finikytou 6y ago
      no he did not. 75% of what he robbed was recovered also. Wouldnt call it ruining life... if he did steal to "normal people" that is to a much smaller percentage than he robbed the rich ones. thousands of people that are still in wall street today robbed poor people and are still trading/working in the industry today. While I am not elevating him I am elevating the fact that he rot in jail for robbing the rich. Just look at the papers from 2008 if you don't believe it.
geocrasher 6y ago
The debt that all men pay.
soneca 6y ago
Madoff made his ponzi scheme last 17 years with a limited network. Imagine how long a ponzi scheme accessible by the whole world could last. Possibly forever (or at least longer than my lifetime). I am thinking about Bitcoin here.
- xutopia 6y ago
  Why is Bitcoin different than gold though? Is gold also a Ponzi scheme?
  - assface 6y ago
    Gold has material use. You can make things with it.
    - Icathian 6y ago
      Okay, but the value of gold has basically zero relationship to it's industrial or commercial uses, so that isn't really relevant here.
      - lotsofpulp 6y ago
        There could be some value attributed to being able to use gold as a store of value and currency in the event of a dissolution of modern society such that the internet or widespread electricity is no longer around.
        danielbarla 6y ago
        Sure, but this is based on the idea that the innate uses and value of gold would be similar (or "relatively high") after such a transformation of the world. This is not clear to me at all, compared to say, a similar wealth invested into a large cache of firearms and ammo. Or whatever will happen to be useful, depending on the scenario. It reminds me of an anecdote from my grandfather from the end of WW2, people were giving away gold rings for loaves of bread. (Clearly, only when in desperate need, but it did happen.)
devops000 6y ago
The same day of Coinbase IPO.
krupan 6y ago
I was wondering how he got into this, did he set out to run a ponzi scheme from the get go? Interesting to see that it was not like that. He was running an honest fund that ran into some trouble during a down turn. He convinced himself that he could just fudge things a little, just until the downturn passed and then he'd go straight again. Of course he never went straight again. Life lessons for everyone there.
- robotcookies 6y ago
  Madeoff's claim has always been that it was meant to be a temporary, short term thing and he believed he could get himself out of it before anyone else realized his fraud.
  - JKCalhoun 6y ago
    Yeah, that's a weak defense. I mean, "meant to be a temporary" means he knew it was wrong/illegal. He gets no pass for that.
EMM_386 6y ago
Always worth reading: The World's Largest Hedge Fund is a Fraud [PDF] Nov 7, 2005 Submission to the SEC - Harry Markopolos https://www.math.nyu.edu/faculty/avellane/madoffmarkopoulos.pdf https://www.math.nyu.edu/faculty/avellane/madoffmarkopoulos....
- rozim 6y ago
  It is really called out: "Scenario #2 (Highly Likely) Madoff Securities is the world's largest Ponzi scheme"
- aero-glide2 6y ago
  What happened to his General Electric fraud allegations?
  - sn41 6y ago
    The accusation sounded credible - his main idea seemed to be that GE oversold insurance schemes that were detrimental to GE if the average lifespan increased. Which it has. On the other hand, there were some conflict of interest issues - I am not sure what the exact issue was. But on the whole, the issue seems to have disappeared with the great Covid bust-boom of the stock market.
macjohnmcc 6y ago
I learned a few years ago that I actually worked closely with one of the two programmers who worked with Madoff and was part of the "Madoff Five" the year before he started with Madoff. I feel the judge went too easy on the programmers involved as there is no way they did not understand what they were helping to orchestrate. I also worked closely with another programmer a couple of years later who wound up being a drug kingpin. I hope that it ended with those two!
- lordnacho 6y ago
  What were they coding? Sounded to me like nothing at all was going on inside.
  - askesisdev 6y ago
    They built software to create a fake history of the trading and also imitated certain software from other companies and regulators so the customer could check the trades were real. There is a decent book on Madoff called 'Wizard of Lies'
    - macjohnmcc 6y ago
      Yeah and knowing the programmer personally at the time I have no reason to believe he would not have known what he was helping to facilitate. Eventually the two programmers asked for their pay to be in diamonds like they were working for a James Bond villain and that is not how you do if you are ignorant of what they were doing.
lordnacho 6y ago
I remember when this happened, I was running a hedge fund. Supposedly he was doing collars (split-strike conversions) to make this money, but it just seemed implausible to me at the time, since I traded options. I figured he just punted futures, nice and easy way to sorta hug the index (I hadn't seen his "returns"), maybe Martingale it and get lucky until you're not so lucky. But then it turned out he wasn't doing anything at all. This was a bit of an insight for me, because I'd been through investor meetings, and they ask a lot of things. Mostly the wrong things, but they do ask things that you need to actually have had a fund to answer, like "who does your audits". So I was pretty amazed when it turned out he got away with some DIY audit (through a friend?) or something like that. One thing that did seem to happen immediately was that investors seemed to play it safe. Not great for little funds. I think a lot of them were spooked by some quite big names getting scammed.
- ajcp 6y ago
  > Supposedly he was doing collars (split-strike conversions) to make this money, but it just seemed implausible to me at the time, since I traded options. I figured he just punted futures, nice and easy way to sorta hug the index (I hadn't seen his "returns"), maybe Martingale it and get lucky until you're not so lucky. For all I know you might as well be talking about a Rockwell Retro Encabulator[1] 1. https://youtu.be/RXJKdh1KZ0w?t=50 https://youtu.be/RXJKdh1KZ0w?t=50
  - lordnacho 6y ago
    That is a brilliant video, perfectly cromulent.
- cm2187 6y ago
  He also went for unsophisticated (though sometimes with large tickets) investors.
- spaceflunky 6y ago
  Can you please explain what it means to "do a collars" and "punt futures to hug the index"? I'm partly interested and partly think you're making these words up :)
dboreham 6y ago
He couldn't have done it without the software developers who wrote clever code to generate fake but plausible trades.
drawkbox 6y ago
Still blown away that he was basically just putting the funds in a Chase bank account and not even investing it. > In a 2013 email to CNBC from prison, Madoff claimed the break in the market that started the Great Recession led to his scam. > “I thought this would be only a short-term trade which could be made up once the market became receptive,” he wrote. “The rest is my tragic history of never being able to recover.” > In fact, investigators said, Madoff did not execute a single trade for his advisory clients for years. Rather than employing a so-called split-strike conversion strategy as he claimed, he simply deposited investors’ funds in a Chase bank account, paying off new customers with funds from earlier customers — a classic pyramid scheme — and providing his clients with falsified account statement. The investment “returns” shown on those statements — some $50 billion in all — were pure fiction. > The scandal at Bernard L. Madoff Investment Securities shattered investor confidence, which was already damaged by the financial crisis. And it led to sweeping changes at the Securities and Exchange Commission, which missed the fraud for years despite repeated warnings, including from independent investigator Harry Markopolos, who set out to analyze Madoff’s improbable returns and pronounced them fraudulent as early as 2000. It was also a failure of regulators, the whole thing could have been avoided with some basic checks. > A subsequent investigation by the agency’s inspector general, H. David Kotz, found that rather than following up on clear evidence of fraud, SEC enforcement staffers decided to take Madoff’s word that his operation was legitimate. > “When Madoff provided evasive or contradictory answers to important questions in testimony, they simply accepted as plausible his explanations,” Kotz wrote. Chase eventually ended up having to pay some fines and changed reporting, but ultimately it is amazing he pulled it off with just money in an account. Banks will do pretty much anything it seems as long as you are capitalizing them as FinCEN reports show. >In the end, in addition to Madoff, more than a dozen individuals, including Peter Madoff, were convicted of federal crimes, but none of the others was accused of knowing about the fraud. JPMorgan Chase, Madoff’s primary bank, paid $2.6 billion to the U.S. government and Madoff victims in 2014 to settle allegations that it did not maintain adequate controls. After Chase instituted some unspecified reforms, prosecutors dropped charges against the bank. [1] https://www.cnbc.com/2021/04/14/bernie-madoff-dies-mastermind-of-the-nations-biggest-investment-fraud-was-82.html https://www.cnbc.com/2021/04/14/bernie-madoff-dies-mastermin...
- smcl 6y ago
anoonmoose 6y ago
From Wikipedia: "On June 22, 2009, Sorkin hand-delivered a customary pre-sentencing letter to the judge requesting a sentence of 12 years, because of tables from the Social Security Administration that his life span was predicted to be 13 years." Letter was submitted 11.81 years ago.
- willis936 6y ago
  Now that's an actuary.
MengerSponge 6y ago
Sounds like I'm gonna have a beer and rewatch "The Other Guys" tonight
- Cd00d 6y ago
  I don't see the connection. A cursory search of that movie's wikipedia page doesn't return anything for 'mado'... Why?
  - MengerSponge 6y ago
    It's funny. You should watch it too. It isn't a documentary, but it's about a forensic accountant who is chasing down a crooked billionaire, while colleagues who focus on flashy street-level enforcement get all the accolades.
rainyMammoth 6y ago
After watching the movie "The Wizard of Lies", i changed my mind if Madoff. He was a prisoner of his own vice and it consumed him and killed his whole family
- paulpauper 6y ago
  even his son who died of cancer?
- parenthesis 6y ago
  He brings to my mind the man who loses his job, but, too ashamed to tell his wife, continues to leave the house in his suit every morning, his wife not discovering the true situation until the house is foreclosed, at which point it is too late. A tragic figure, who unfortunately brings down others with him.
  - rainyMammoth 6y ago
    Exactly. He was not brave enough to stop by himself and made everything worse as a result. Sometimes everyone is a victim.
slibhb 6y ago
I was always fascinated by how violently people felt toward Madoff. Madoff reminds me of a character in a Woody Allen movie. Martin Landau in Crimes and Misdemeanors. In Dosteovsky, the perpetrator feels real guilt, confesses, and finds salvation in God. In Woody Allen, the perpetrator gets over his guilt and lives happily ever after, avoiding punishment. In Madoff's case, the perpetrator dies in prison and his family is destroyed. Of the three, Madoff killed no one. In some sense I think he was a scapegoat for the 2008 financial crisis. That's not to say that he was innocent or that his crimes were insignificant. Only that, due to the timing, he became a convenient target for the public's understandable outrage over the financial crisis.
- bsanr2 6y ago
  I think the general understanding is that the visceral animosity has to do with the nature of the betrayal. His fund was shopped around largely to other wealthy people in his community; they thought they were making money hand-over-fist (particularly for all of the charities and whatnot they could have just been funding directly), with an "in" that people outside couldn't access. Finding out that Madoff had actually lost all of their money wasn't just a hit to their pocketbooks: it struck at the solidarity of their community, at their sense of self and goodness, at their egos. In short, it stripped them of everything that being part of the fund was supposed to magnify. It's not just embarrassing, it's devastating; all of your psychic and material fallbacks have been wiped in one fell swoop. When something like that happens, you don't want to admit that you were taken for a fool; you need a scapegoat, and you need him to be a demon.
- jasonwatkinspdx 6y ago
  I think a lot of it is simply there's a lot of frustration that crimes like this go on every day. Many people see the top levels of finance as all being tainted by fraud, stealing from ordinary workers, and this acts as confirmation for that. Bernie's fraud imploding did motivate several suicides. Not exactly killing by his own hand, but he does bear some responsibility. We also shouldn't ignore he cravenly focused on charities as their legal requirements would give his ponzi scheme the longest runway. He also leveraged his reputation in the ultra wealthy NE Jewish community to find victims. So independent of the common outrage, I can see how a lot of people would see this as a particularly ugly betrayal.
spamizbad 6y ago
Madoff was arguably a victim of cancel culture before we had coined the term. Punished by woke capital for his whimsical approach to finance and investing. A titan cut down by his lessers.
dukeofdoom 6y ago
Were the cameras off, like in Epstein's jail strangulation?
- deleted 6y ago
  [deleted]
paulpauper 6y ago
Even 1st degree murderers, serial rapists, and producers of kid porn get smaller sentences . I think only serial killers get a worse sentence. It goes to show how when it comes to money, prosecutors , judges, and juries do not mess around . Lost money ruins and harms lives as badly as actual violence. Some of the longest sentences are handed out to people who do non violent crimes of a financial nature, often because of how the charges are stacked (wire fraud, laundering, mail fraud, etc.) and then there are multiple counts. SO it is easy to get a very long sentence.
m3kw9 6y ago
If he wasn’t, he was dead man walking
skeeter2020 6y ago
>> "Bernie was by no means perfect. But no man is." Compared to Madoff most of us ARE perfect. I have no doubt he felt sorry for his actions once caught and punished, ut this is not the same thing as regretting them enough to voluntarily work at change your ways. Good riddance.
nathanvanfleet 6y ago
> He was soft spoken and an intellectual. Bernie was by no means perfect. But no man is. Actually in comparison to Madoff and as someone who hasn't stolen $19 billion dollars I feel relatively perfect. It's funny how someone who might steal something worth a few hundred dollars in an instant are somehow not given the second chances of people like Madoff who was operating a much larger criminal scheme over 15 years.
gvv 6y ago
too little too late.
mensetmanusman 6y ago
The most interesting thing to me was that he was punished more than some murderers...
watersb 6y ago
> Madoff’s big-name investors included ... Kevin Bacon ... Of course. Ponzi scheme. Wow.
deleted 6y ago
[deleted]

241 points by cwwc 6y ago

Interesting. I thought he was already dead, or in house arrest. He just sort of went away after that whole debacle. Bernie Madoff was actually what put me back on my heels when it comes to investing and capitalism in general. I know it's a hot take on reddit, but genuinely - it appears that the only way to get punished is to scam people with loads of money.

guiriduro 6y ago
Yup, scamming per se is rife and as with most borderline 'white' white collar crime, largely consequence-free - in sell-side analysis for example. But step on the wrong toes...
- anovikov 6y ago
  As a person with 21 year of experience in custom software development, i struggle to define what "scam" is, at all...
- shadowgovt 6y ago
  The law around scams looks a lot like the design of unit tests. On the one hand, you have the full suite of hypothetical unethical mechanisms (realized and unrealized) human beings could scheme up to unfairly cheat each other out of hard-earned resources. Analogous to the full suite of behaviors a complex program could exhibit given arbitrary inputs over infinite time. And on the other hand, you have a subset of those behaviors carved out and codified as illegal, where a violator will go to jail. Analogous to the behaviors a unit test suite can rule out. But unit tests, as we know, are not mathematical proofs of soundness.

TwoNineA 6y ago

Oh no! Anyways ...

s_dev 6y ago

Hopefully he serves as an example to other Ponzi schemers in Wall Street. It's rare in the US white collar guys like this die in prison.

minikites 6y ago
Putting one of them in prison isn't threatening when we let hundreds of others walk around free.
vsareto 6y ago
"Look what happens when we choose to catch you"
mumblemumble 6y ago
Hopefully, but to be blunt, if that model of punition actually worked, then the homicide rate would have been lower back when gibbeting was still a thing.
- smt88 6y ago
  Financial criminals and murderers are not comparable. Prison is like a death sentence to a rich person.
  - mumblemumble 6y ago
    True, they aren't, but we're not talking about the class of crime. We're talking about a particular kind of incentive model.
    - smt88 6y ago
      The "incentive" for murder is usually that someone is angry and not thinking about consequences at all. Financial crimes are usually slow-burning and almost never crimes of passion. Prison doesn't stop murderers, but that has no bearing on whether it stops Madoffs.

Arubis 6y ago

I hope this provides at least a little comfort for all those whose old age and retirement were ruined for his profit.

dep_b 6y ago

The scapegoat. The only one who ripped off the rich instead of the poor. I would like to see people like Paul Singer die in prison, who made the lives of millions of people miserable, but I guess it's all legal what he did...

phpsuks 6y ago
Scamming rich people is not exclusive of scamming poor people unfortunately. Poor always, always pay the bill.
- data_acquired 6y ago
  To quote another Bernie, there's a fair bit of socialism for the rich in the US through bailouts when big corporations lose too much money/are too big to fail.
  - colineartheta 6y ago
    I'm not sure why you're being downvoted, as that's as true of a statement as almost anything. This weird, hypermasculine obsession with capitalism amongst this forum (and tech community at large) just perpetuates injustices.
    - mhh__ 6y ago
      Well I don't know about you, but I am merely a temporarily embarrassed founder
    - data_acquired 6y ago
      Haha :) I've been on HN for 12+ years, and yes, statements on capitalism don't always go over very well (unsurprising given links to YCombinator). Although I will say that HN has a wider diversity of opinion on quite a range of topics than other tech forums.
bidirectional 6y ago
Madoff had no problem defrauding charities and pension funds. Hardly Robin Hood.

breck 6y ago

> clients entrusted him with more than $19 billion in principal > Irving Picard, the trustee appointed to unwind the accounts, had recovered more than $14.3 billion Wait WHAT?? That's only a 25% loss. Not the 100% loss I assumed. Does anyone know more?

zatertip 6y ago
principal -- they probably thought their accounts were worth considerably more due to accumulated returns.
- mumblemumble 6y ago
  Matt Levine recently observed, when talking about another Ponzi scheme, that it would be nice if newspapers would quote the net and not just the gross. Though that wouldn't tell the whole story, either. You would have the earnings of people who managed to get out of the scheme before it collapsed offsetting the losses of those who didn't. You're also not taking into account the opportunity cost of having that money in the Ponzi scheme instead of, say, VTSMX.
gruez 6y ago
That's not too surprising. Matt Levine wrote about the recent 1inMM ponzi scheme recently[1] and the scammer's "take" was only 10%. It makes sense if you think about it. For a ponzi scheme to work you need to constantly circulate cash (from new investors to old investors), so it's hard for you to take a lot without collapsing the whole scheme. [1] https://www.bloomberg.com/opinion/articles/2021-04-08/archegos-got-too-big-for-its-banks https://www.bloomberg.com/opinion/articles/2021-04-08/archeg...
Gustomaximus 6y ago
does this account for time? They might get their $10m back but if they invested it anywhere else it would be $30m now and inflation has eaten a chunk. I do know some people that pulled their fund before the collapse had their gains taken back to the principal amount.
darig 6y ago

deleted 6y ago

[deleted]

scrubs 6y ago

BM is a special kind of stuck on stupid. In addition, his sons Mark and Andrew: * Mark killed himself in December 2010 on the second anniversary of his father’s arrest. * Andrew died in 2014 from cancer.

jacquesm 6y ago
This is in - very - poor taste.

beej71 6y ago

That's too bad. I wanted him to live out his term. Given the amount of damage he caused, he has hardly paid his debt to society.

Tomte 6y ago
You want a 71 year old man to live out his 150 year prison sentence?
- anoonmoose 6y ago
  Sure, why else give him a 150 year prison sentence? I am only 49% joking.
mchusma 6y ago
Doesn't that just cost society more? In actual dollars a 150 year sentence would cost taxpayers something like $10M (apparently prison costs like $81k/year in the US)
- anoonmoose 6y ago
  If his example deterred one person from committing the same crime, taxpayers may come out ahead anyways.

ollie87 6y ago

Guess that Awkwafina song now needs a partial re-write. Isn't Bernie Madoff dead? He's dead, right? Nah, that motherfucker not dead, he in jail getting booty-rammed by the feds, getting tossed by a dude named Big Ed, in a hotbed, eating ramen noodles and crying

cletus 6y ago

Here's the one lesson I really want us to all learn from this: the only thing the rich fear is prison because prison robs them of time. Fines are just the cost of doing business. There are many other scandals: the whole subprime disaster, pollution from plants and the like where no one went to prison and people really should've.

finikytou 6y ago
that is not the number one learning and I think you are wrong. The real powerful and rich do not fear jail. They fear people like madoff that targets them. That is why Madoff ended his life in jail while banks/funds CEO in the 2008 are now richer than ever stealing money from the poors and taking 0 accountability for the subprime crisis that destroyed a whole decade. In my book he was better than any of those bankers. He shown to the world that some people are smarter than the banks and that they will be severely punished if they do not abide by the laws that helps those banks to win.
- obmelvin 6y ago
  Oh, please. Madoff ruined plenty of "normal" people's life savings. Say what you will about other bankers, but please don't try to elevate someone who destroyed the life savings of others. EDIT: Yes, non-profits and pension funds as well. That's not taking from the rich. Madoff was not Robin Hood.
  - mathattack 6y ago
    Many non-profits who invested their endowments with him got hurt too.
  - finikytou 6y ago
    no he did not. 75% of what he robbed was recovered also. Wouldnt call it ruining life... if he did steal to "normal people" that is to a much smaller percentage than he robbed the rich ones. thousands of people that are still in wall street today robbed poor people and are still trading/working in the industry today. While I am not elevating him I am elevating the fact that he rot in jail for robbing the rich. Just look at the papers from 2008 if you don't believe it.

geocrasher 6y ago

The debt that all men pay.

soneca 6y ago

Madoff made his ponzi scheme last 17 years with a limited network. Imagine how long a ponzi scheme accessible by the whole world could last. Possibly forever (or at least longer than my lifetime). I am thinking about Bitcoin here.

xutopia 6y ago
Why is Bitcoin different than gold though? Is gold also a Ponzi scheme?
- assface 6y ago
  Gold has material use. You can make things with it.
  - Icathian 6y ago
    Okay, but the value of gold has basically zero relationship to it's industrial or commercial uses, so that isn't really relevant here.
    - lotsofpulp 6y ago
      There could be some value attributed to being able to use gold as a store of value and currency in the event of a dissolution of modern society such that the internet or widespread electricity is no longer around.
      - danielbarla 6y ago
        Sure, but this is based on the idea that the innate uses and value of gold would be similar (or "relatively high") after such a transformation of the world. This is not clear to me at all, compared to say, a similar wealth invested into a large cache of firearms and ammo. Or whatever will happen to be useful, depending on the scenario. It reminds me of an anecdote from my grandfather from the end of WW2, people were giving away gold rings for loaves of bread. (Clearly, only when in desperate need, but it did happen.)

devops000 6y ago

The same day of Coinbase IPO.

krupan 6y ago

I was wondering how he got into this, did he set out to run a ponzi scheme from the get go? Interesting to see that it was not like that. He was running an honest fund that ran into some trouble during a down turn. He convinced himself that he could just fudge things a little, just until the downturn passed and then he'd go straight again. Of course he never went straight again. Life lessons for everyone there.

robotcookies 6y ago
Madeoff's claim has always been that it was meant to be a temporary, short term thing and he believed he could get himself out of it before anyone else realized his fraud.
- JKCalhoun 6y ago
  Yeah, that's a weak defense. I mean, "meant to be a temporary" means he knew it was wrong/illegal. He gets no pass for that.

EMM_386 6y ago

Always worth reading: The World's Largest Hedge Fund is a Fraud [PDF] Nov 7, 2005 Submission to the SEC - Harry Markopolos https://www.math.nyu.edu/faculty/avellane/madoffmarkopoulos.pdf https://www.math.nyu.edu/faculty/avellane/madoffmarkopoulos....

rozim 6y ago
It is really called out: "Scenario #2 (Highly Likely) Madoff Securities is the world's largest Ponzi scheme"
aero-glide2 6y ago
What happened to his General Electric fraud allegations?
- sn41 6y ago
  The accusation sounded credible - his main idea seemed to be that GE oversold insurance schemes that were detrimental to GE if the average lifespan increased. Which it has. On the other hand, there were some conflict of interest issues - I am not sure what the exact issue was. But on the whole, the issue seems to have disappeared with the great Covid bust-boom of the stock market.

macjohnmcc 6y ago

I learned a few years ago that I actually worked closely with one of the two programmers who worked with Madoff and was part of the "Madoff Five" the year before he started with Madoff. I feel the judge went too easy on the programmers involved as there is no way they did not understand what they were helping to orchestrate. I also worked closely with another programmer a couple of years later who wound up being a drug kingpin. I hope that it ended with those two!

lordnacho 6y ago
What were they coding? Sounded to me like nothing at all was going on inside.
- askesisdev 6y ago
  They built software to create a fake history of the trading and also imitated certain software from other companies and regulators so the customer could check the trades were real. There is a decent book on Madoff called 'Wizard of Lies'
  - macjohnmcc 6y ago
    Yeah and knowing the programmer personally at the time I have no reason to believe he would not have known what he was helping to facilitate. Eventually the two programmers asked for their pay to be in diamonds like they were working for a James Bond villain and that is not how you do if you are ignorant of what they were doing.

lordnacho 6y ago

I remember when this happened, I was running a hedge fund. Supposedly he was doing collars (split-strike conversions) to make this money, but it just seemed implausible to me at the time, since I traded options. I figured he just punted futures, nice and easy way to sorta hug the index (I hadn't seen his "returns"), maybe Martingale it and get lucky until you're not so lucky. But then it turned out he wasn't doing anything at all. This was a bit of an insight for me, because I'd been through investor meetings, and they ask a lot of things. Mostly the wrong things, but they do ask things that you need to actually have had a fund to answer, like "who does your audits". So I was pretty amazed when it turned out he got away with some DIY audit (through a friend?) or something like that. One thing that did seem to happen immediately was that investors seemed to play it safe. Not great for little funds. I think a lot of them were spooked by some quite big names getting scammed.

ajcp 6y ago
> Supposedly he was doing collars (split-strike conversions) to make this money, but it just seemed implausible to me at the time, since I traded options. I figured he just punted futures, nice and easy way to sorta hug the index (I hadn't seen his "returns"), maybe Martingale it and get lucky until you're not so lucky. For all I know you might as well be talking about a Rockwell Retro Encabulator[1] 1. https://youtu.be/RXJKdh1KZ0w?t=50 https://youtu.be/RXJKdh1KZ0w?t=50
- lordnacho 6y ago
  That is a brilliant video, perfectly cromulent.
cm2187 6y ago
He also went for unsophisticated (though sometimes with large tickets) investors.
spaceflunky 6y ago
Can you please explain what it means to "do a collars" and "punt futures to hug the index"? I'm partly interested and partly think you're making these words up :)

dboreham 6y ago

He couldn't have done it without the software developers who wrote clever code to generate fake but plausible trades.

drawkbox 6y ago

Still blown away that he was basically just putting the funds in a Chase bank account and not even investing it. > In a 2013 email to CNBC from prison, Madoff claimed the break in the market that started the Great Recession led to his scam. > “I thought this would be only a short-term trade which could be made up once the market became receptive,” he wrote. “The rest is my tragic history of never being able to recover.” > In fact, investigators said, Madoff did not execute a single trade for his advisory clients for years. Rather than employing a so-called split-strike conversion strategy as he claimed, he simply deposited investors’ funds in a Chase bank account, paying off new customers with funds from earlier customers — a classic pyramid scheme — and providing his clients with falsified account statement. The investment “returns” shown on those statements — some $50 billion in all — were pure fiction. > The scandal at Bernard L. Madoff Investment Securities shattered investor confidence, which was already damaged by the financial crisis. And it led to sweeping changes at the Securities and Exchange Commission, which missed the fraud for years despite repeated warnings, including from independent investigator Harry Markopolos, who set out to analyze Madoff’s improbable returns and pronounced them fraudulent as early as 2000. It was also a failure of regulators, the whole thing could have been avoided with some basic checks. > A subsequent investigation by the agency’s inspector general, H. David Kotz, found that rather than following up on clear evidence of fraud, SEC enforcement staffers decided to take Madoff’s word that his operation was legitimate. > “When Madoff provided evasive or contradictory answers to important questions in testimony, they simply accepted as plausible his explanations,” Kotz wrote. Chase eventually ended up having to pay some fines and changed reporting, but ultimately it is amazing he pulled it off with just money in an account. Banks will do pretty much anything it seems as long as you are capitalizing them as FinCEN reports show. >In the end, in addition to Madoff, more than a dozen individuals, including Peter Madoff, were convicted of federal crimes, but none of the others was accused of knowing about the fraud. JPMorgan Chase, Madoff’s primary bank, paid $2.6 billion to the U.S. government and Madoff victims in 2014 to settle allegations that it did not maintain adequate controls. After Chase instituted some unspecified reforms, prosecutors dropped charges against the bank. [1] https://www.cnbc.com/2021/04/14/bernie-madoff-dies-mastermind-of-the-nations-biggest-investment-fraud-was-82.html https://www.cnbc.com/2021/04/14/bernie-madoff-dies-mastermin...

smcl 6y ago

anoonmoose 6y ago

From Wikipedia: "On June 22, 2009, Sorkin hand-delivered a customary pre-sentencing letter to the judge requesting a sentence of 12 years, because of tables from the Social Security Administration that his life span was predicted to be 13 years." Letter was submitted 11.81 years ago.

willis936 6y ago
Now that's an actuary.

MengerSponge 6y ago

Sounds like I'm gonna have a beer and rewatch "The Other Guys" tonight

Cd00d 6y ago
I don't see the connection. A cursory search of that movie's wikipedia page doesn't return anything for 'mado'... Why?
- MengerSponge 6y ago
  It's funny. You should watch it too. It isn't a documentary, but it's about a forensic accountant who is chasing down a crooked billionaire, while colleagues who focus on flashy street-level enforcement get all the accolades.

rainyMammoth 6y ago

After watching the movie "The Wizard of Lies", i changed my mind if Madoff. He was a prisoner of his own vice and it consumed him and killed his whole family

paulpauper 6y ago
even his son who died of cancer?
parenthesis 6y ago
He brings to my mind the man who loses his job, but, too ashamed to tell his wife, continues to leave the house in his suit every morning, his wife not discovering the true situation until the house is foreclosed, at which point it is too late. A tragic figure, who unfortunately brings down others with him.
- rainyMammoth 6y ago
  Exactly. He was not brave enough to stop by himself and made everything worse as a result. Sometimes everyone is a victim.

slibhb 6y ago

I was always fascinated by how violently people felt toward Madoff. Madoff reminds me of a character in a Woody Allen movie. Martin Landau in Crimes and Misdemeanors. In Dosteovsky, the perpetrator feels real guilt, confesses, and finds salvation in God. In Woody Allen, the perpetrator gets over his guilt and lives happily ever after, avoiding punishment. In Madoff's case, the perpetrator dies in prison and his family is destroyed. Of the three, Madoff killed no one. In some sense I think he was a scapegoat for the 2008 financial crisis. That's not to say that he was innocent or that his crimes were insignificant. Only that, due to the timing, he became a convenient target for the public's understandable outrage over the financial crisis.

bsanr2 6y ago
I think the general understanding is that the visceral animosity has to do with the nature of the betrayal. His fund was shopped around largely to other wealthy people in his community; they thought they were making money hand-over-fist (particularly for all of the charities and whatnot they could have just been funding directly), with an "in" that people outside couldn't access. Finding out that Madoff had actually lost all of their money wasn't just a hit to their pocketbooks: it struck at the solidarity of their community, at their sense of self and goodness, at their egos. In short, it stripped them of everything that being part of the fund was supposed to magnify. It's not just embarrassing, it's devastating; all of your psychic and material fallbacks have been wiped in one fell swoop. When something like that happens, you don't want to admit that you were taken for a fool; you need a scapegoat, and you need him to be a demon.
jasonwatkinspdx 6y ago
I think a lot of it is simply there's a lot of frustration that crimes like this go on every day. Many people see the top levels of finance as all being tainted by fraud, stealing from ordinary workers, and this acts as confirmation for that. Bernie's fraud imploding did motivate several suicides. Not exactly killing by his own hand, but he does bear some responsibility. We also shouldn't ignore he cravenly focused on charities as their legal requirements would give his ponzi scheme the longest runway. He also leveraged his reputation in the ultra wealthy NE Jewish community to find victims. So independent of the common outrage, I can see how a lot of people would see this as a particularly ugly betrayal.

spamizbad 6y ago

Madoff was arguably a victim of cancel culture before we had coined the term. Punished by woke capital for his whimsical approach to finance and investing. A titan cut down by his lessers.

dukeofdoom 6y ago

Were the cameras off, like in Epstein's jail strangulation?

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paulpauper 6y ago

Even 1st degree murderers, serial rapists, and producers of kid porn get smaller sentences . I think only serial killers get a worse sentence. It goes to show how when it comes to money, prosecutors , judges, and juries do not mess around . Lost money ruins and harms lives as badly as actual violence. Some of the longest sentences are handed out to people who do non violent crimes of a financial nature, often because of how the charges are stacked (wire fraud, laundering, mail fraud, etc.) and then there are multiple counts. SO it is easy to get a very long sentence.

m3kw9 6y ago

If he wasn’t, he was dead man walking

skeeter2020 6y ago

>> "Bernie was by no means perfect. But no man is." Compared to Madoff most of us ARE perfect. I have no doubt he felt sorry for his actions once caught and punished, ut this is not the same thing as regretting them enough to voluntarily work at change your ways. Good riddance.

nathanvanfleet 6y ago

> He was soft spoken and an intellectual. Bernie was by no means perfect. But no man is. Actually in comparison to Madoff and as someone who hasn't stolen $19 billion dollars I feel relatively perfect. It's funny how someone who might steal something worth a few hundred dollars in an instant are somehow not given the second chances of people like Madoff who was operating a much larger criminal scheme over 15 years.

gvv 6y ago

too little too late.

mensetmanusman 6y ago

The most interesting thing to me was that he was punished more than some murderers...

watersb 6y ago

> Madoff’s big-name investors included ... Kevin Bacon ... Of course. Ponzi scheme. Wow.

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