The Madoff Case and Ponzi Schemes
Alleged Fraud is Enormous
The fraudulent investment scheme allegedly orchestrated by Bernard L. Madoff, described by the Securities Exchange Commission (SEC) as “vast” and designed to “deceive investors, the public and regulators,” may have lost tens of billions of dollars and could prove to be one of the largest frauds in U.S. history. Documented allegations of fraud against Madoff Investment Securities, LLC were presented to the SEC as early as 1999 by Harry Markopolos, a Certified Fraud Examiner, according to the Wall Street Journal.
In one of his written communications to the SEC, dated Nov. 7, 2005, Markopolos detailed 29 red flags challenging the legitimacy and legality of Madoff Securities’ investment scheme. Markopolos also concluded that it was “highly likely” that “Madoff Securities is the world’s largest Ponzi scheme.” A Ponzi scheme is an illegal business practice in which new investors’ money is used to make payments to earlier investors.
"Chasing Madoff"
An interview with Madoff whistleblower Harry Markopolos was the cover feature of the May/June 2009 issue of Fraud Magazine. The article details Markopolos's journey, challenges and frustrations in trying to expose the multi-billion dollar Ponzi scheme. Read the article in PDF format.
OIG Releases SEC Madoff Fraud Report
The Office of the Inspector General released the results of its investigation into the failure of the SEC to uncover Bernard Madoff's ponzi scheme. Read a Bloomberg article about the report, or view the PDF of the actual report as posted on the SEC's website.
Testimony Before Congress
UPDATE: Madoff whistleblower Harry Markopolos testifies before the U.S. Senate Committee on Banking, Housing & Urban Affairs on Sept. 10, 2009. His prepared testimony is available in PDF format.
On Feb. 4, 2009, Markopolos gave detailed testimony before the House Financial Services Subcommittee. The Wall Street Journal posted a PDF of his prepared testimony online here.
Markopolos referred to the ACFE's 2008 Report to the Nation on Occupational Fraud and Abuse during his testimony. The ACFE Report is available in PDF format here.
Markopolos has been interviewed by 60 Minutes, the Wall Street Journal and numerous other news sources, and was named CFE of the Year and gave a keynote address before more than 2,000 anti-fraud professionals at the 20th Annual ACFE Fraud Conference & Exhibition, July 14, 2009 at Bellagio in Las Vegas.
More Ponzi Schemes Exposed
As predicted by anti-fraud experts, more fraud cases have emerged in the wake of the Madoff scandal. In an article in the January edition of the ACFE's The Fraud Examiner e-newsletter, ACFE President James D. Ratley, CFE stated that “The longer the economy stays in a recession, the more Ponzi schemes you’ll see begin to surface because of the diminished cash flow.” Mr. Ratley has been interviewed by the Fox News Channel, Reuters and other media sources since the Madoff fraud first made headlines in December of 2008.
Madoff and Ponzi Scheme News
Read recent news articles about Bernard Madoff's alleged fraud.
Ponzi Schemes and the History of Charles Ponzi
Learn about Ponzi schemes, how Ponzi schemes differ from pyramid schemes, and about Charles Ponzi here.