The payout to Bernie Madoff’s victims began on February 6, and is expected to top $7.2 billion. Trustee Irving Picard, who is liquidating Madoff’s assets, confirmed more than half of the 2,216 claimants are now paid. Picard said the individual payouts ranged between $431 and $57.1 million.
Former NASDAQ Stock Market Chairman Bernie Madoff is accused of running the largest known ponzi scheme in U.S. history. It is estimated that Madoff bilked investors out of more than $65 billion.
Over a period of several decades, Bernie Madoff convinced more than 2,000 individuals and businesses to invest in his fraudulent operation.
Although ponzi schemes are initially successful, they are heavily dependent on two factors. The operator needs a steady flow of new investors and must discourage existing investors from reclaiming their “profits.”
As the funds were deposited into an account, and were never invested, there were no actual returns. Therefore, existing investors were paid using funds provided by new investors.
Business Insider reports that Madoff’s reputation and standing allowed him “to fly under the radar” for an extended period of time. In addition to chairing the NASDAQ Stock Market, Madoff was heavily involved in the National Association of Securities Dealers and the Securities and Exchange Commission on trading securities. He also owned his own financial investment firm.
21 days before his arrest: Bernie Madoff On Why Its Hard To Hide Fraud. http://t.co/uQpGpzHhP1
— Scott Bell (@iheartWallSt) January 19, 2015
Bernie Madoff’s ponzi scheme worked in his favor for several decades. However, everything crumbled in 2008.
As reported by Business Insider, investors requested a total of $7 million in returns. Unfortunately, Madoff had less than $300 million left in the account. As a result, the former NASDAQ chairman was arrested and charged with numerous federal felonies, including securities fraud.
In March 2009, Bernie Madoff pleaded guilty to 11 counts, including false statements, mail fraud, money laundering, and perjury. He was sentenced to 150 years in prison and ordered to forfeit more than $17 billion.
As reported by ABC News, the payout to Bernie Madoff’s victims is less than 60 percent of what they lost. However, Picard considers the payout a “significant step forward for the victims of Madoff’s ponzi scheme.” The trustee underlined the fact that the recovery “exceeded efforts made on behalf of victims in prior Ponzi schemes.”
Although the Madoff payout will help victims recoup a portion of their investments, it is unlikely that they will recover all of their funds. As the scheme lasted for decades, and involved thousands of investors, it would be impossible to identify or compensate everyone who experienced a loss.
[Image via Daily News]