Madoff Investment Securities LLC in 1960, and was its chairman until his arrest. Alerted by his sons, federal authorities arrested Madoff on December 11, 2008. On March 12, 2009, Madoff pleaded guilty to 11 federal crimes and admitted to operating the largest private Ponzi scheme in history. Investigators have determined others were involved in the scheme. Questions about his firm had been raised as early as 1999. Madoff’s personal and business asset freeze created a chain reaction throughout the world’s business and philanthropic community, forcing many organizations to at least temporarily close, including the Robert I. 5,000, earned from working as a lifeguard and sprinkler installer.
His fledgling business began to grow with the assistance of his father-in-law, accountant Saul Alpern, who referred a circle of friends and their families. He has built a highly profitable securities firm, Bernard L. Madoff Investment Securities, which siphons a huge volume of stock trades away from the Big Board. Several family members worked for him.
His younger brother, Peter, was senior managing director and chief compliance officer, and Peter’s daughter, Shana Madoff, was the compliance attorney. Federal investigators believe the fraud in the investment management division and advisory division may have begun in the 1970s. However, Madoff himself stated his fraudulent activities began in the 1990s. In 1992, Bernard Madoff explained his purported strategy to The Wall Street Journal.
Poors 500-stock index generated an average annual return of 16. P over 10 years was anything outstanding. Madoff’s sales pitch was an investment strategy consisting of purchasing blue-chip stocks and taking options contracts on them, sometimes called a split-strike conversion or a collar. In his guilty plea, Madoff admitted that he hadn’t actually traded since the early 1990s, and all of his returns since then had been fabricated. However, David Sheehan, principal investigator for Picard, believes the wealth management arm of Madoff’s business had been a fraud from the start. Madoff’s operation differed from a typical Ponzi scheme. While most Ponzis are based on nonexistent businesses, Madoff’s brokerage operation was very real.
Rather than offer high returns to all comers, Madoff offered modest but steady returns to an exclusive clientele. The investment method was marketed as “too complicated for outsiders to understand”. He was secretive about the firm’s business, and kept his financial statements closely guarded. Madoff was a “master marketer”, and his fund was considered exclusive, giving the appearance of a “velvet rope”.
The Swiss bank Union Bancaire Privée explained that because of Madoff’s huge volume as a broker-dealer, the bank believed he had a perceived edge on the market because his trades were timed well, suggesting they believed he was front running. The Madoff family gained unusual access to Washington’s lawmakers and regulators through the industry’s top trade group. Bernard Madoff sat on the board of directors of the Securities Industry Association, which merged with the Bond Market Association in 2006 to form SIFMA. Madoff’s brother Peter then served two terms as a member of SIFMA’s board of directors.
Legal Division, but resigned her SIFMA position shortly after her uncle’s arrest. Madoff Securities LLC was investigated at least eight times over a 16-year period by the U. Bienes, the principals being Frank Avellino, Michael Bienes and his wife Dianne Bienes. Bienes began his career working as an accountant for Madoff’s father-in-law, Saul Alpern.
Then, he became a partner in the accounting firm Alpern, Avellino and Bienes. Bienes, represented by Ira Sorkin, Madoff’s former attorney, were accused of selling unregistered securities. In a report to the SEC they mentioned the fund’s “curiously steady” yearly returns to investors of 13. However, the SEC did not look any more deeply into the matter, and never publicly referred to Madoff. The size of the pools mushroomed by word-of-mouth, and investors grew to 3,200 in nine accounts with Madoff. Regulators feared it all might be just a huge scam.