Bernard Madoff, architect of the biggest investment fraud in U.S. history, ripping off tens of thousands of clients of as much as $65 billion, has died, The Associated Press reported Wednesday. He was 82. For access to live and exclusive video from CNBC subscribe to CNBC PRO: https://cnb.cx/2NGeIvi
Bernard Madoff, mastermind of the biggest investment fraud in U.S. history, ripping off tens of thousands of clients of as much as $65 billion, died Wednesday. He was 82.
His death at the Federal Medical Center in Butner, North Carolina, was confirmed by the federal Bureau of Prisons.
Madoff died apparently from natural causes, the AP reported earlier, citing an unidentified person familiar with the matter. He would have turned 83 on April 29.
Madoff was serving a 150-year sentence at the prison, where he had been treated for what his attorney called terminal kidney disease. His request for compassionate release from prison was denied in June.
He pleaded guilty in 2009 to a scheme that investigators said started in the early 1970s and defrauded as many as 37,000 people in 136 countries over four decades by the time Madoff was busted on Dec. 11, 2008 — after his two sons turned him in. Victims included the famous — director Steven Spielberg, actor Kevin Bacon, former New York Mets owner Fred Wilpon, Hall of Fame pitcher Sandy Koufax and Nobel Peace Prize winner Elie Weisel — and ordinary investors, like Burt Ross, who lost $5 million in the scheme.
Madoff insisted the fraud did not begin until the early 1990s, when, he said, “the market stalled due to the onset of the recession and the Gulf War.”
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.
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.
In early 2020, Madoff asked a judge to release him from prison, saying he was in the end stages of kidney disease and was too old for a transplant.
“You know there hasn’t been a day in prison that I haven’t felt the guilt for the pain I caused on the victims and for my family,” he told The Washington Post at the time. He said his goal was to explain his actions to his grandchildren.
“You know I lost both my sons, and my wife is not really well. So it’s horrible,” he told the Post. “I was very close with my family. I made a terrible mistake. And you know I suffer with it. I’ll suffer with it when I get out.”
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