Bernard Madoff was an American banker born in New York in 1938. His notoriety is due to the fact that he managed to put into practice the greatest financial fraud of all time; he caused a loss to its customers of approximately 65 billion euros. But how did he manage to do that?
In 1960 he founded the Bernard L. Madoff Investment Securities LLC, a brokerage company which provided money to those who wanted to buy securities and bonds on the NYSE (New York Stock Exchange).
Meanwhile to the brokerage activity Madoff opened within the society a section of consultancy and management of savings. In this division could work only members of his family and other trustworthy people.
In this section he used and marketed the "Ponzi scheme"; it is an economic model of fraudulent sale devised by Charles Ponzi, which promises strong gains to the first investors, at the expenses of new "investors", in turn victims.
However, the money was not really invested, but deposited in a current account from which Madoff himself withdrawing them when customers demanded the return of the investment or dividends, that is interest yielded.
The fraud consisted in the fact that Madoff paid the amount of interest by paying with the capital of new customers, without creating a real form of gain and thus guaranteeing only losses to the newcomers.
The "Ponzi scheme" is destined to run out when the interest to be paid to customers exceed the investments collected: for Madoff this happened in December 2008, when he was discovered, arrested and sentenced to 150 years in prison of fraud of about 37 thousand of people.
Madoff died on April 14, 2021 at the age of 82 in the FMC Butner prison of Bahama, while he was serving his sentence.
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