Wall Street Powerbroker Arrested For Fraud

Feds Say Ex-Nasdaq Chairman Bernard Madoff Swindled Investors Out Of $50B

(CBS/ AP)  A Wall Street powerbroker for nearly 50 years who built an influential firm has confessed to a massive fraud scheme that will cost investors at least $50 billion, federal authorities say.

Bernard L. Madoff, 70, facing a single count of securities fraud, declined to speak with reporters after a federal magistrate judge in U.S. District Court in Manhattan ordered him released Thursday night on $10 million bail.

Andrew M. Calamari, associate director of enforcement in the Securities and Exchange Commission's New York office, said the SEC had filed a civil securities fraud charge as well and was alleging "a stunning fraud that appears to be of epic proportions."

The SEC said it was seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for the firm. A hearing was scheduled for Friday.

If the allegations contained in a criminal complaint are true, it may be the largest fraud ever blamed on a single individual. Nearly all of the allegations stem from an FBI agent's recounting of what Madoff told two FBI agents and three senior employees of his firm, Bernard L. Madoff Investment Securities LLC.

Senior employees, believed to include Madoff's own sons, turned him in to authorities, reports CBS News chief investigative correspondent Armen Keteyian.

From exclusive Palm Beach country clubs to the tony Upper East Side of Manhattan, victims of the fraud -- many who had invested millions - are reeling, Keteyian reports.

"These are people who are wealthy individuals who are now looking at utter devastation," said Brad Friedman, attorney for the fraud victims.

It would be a steep fall for Madoff, a former Nasdaq stock market chairman who founded his business in 1960 with $5,000 he earned in part working as a lifeguard on Long Island beaches.

His firm was a market maker, handling trades in some of the largest securities on various stock exchanges, matching buyers and sellers. Investigators say Madoff's crime originated in a separate and secretive investment-advising business that served between 11 and 25 clients and had a total of about $17.1 billion in assets under management.

Stephen A. Weiss, a lawyer for several dozen investors, said there are many more investors. He said he "personally spoke with over 30 investors" who are believed to have invested more than $1 billion with Madoff.

The criminal complaint signed by FBI Agent Theodore Cacioppi said Madoff told at least three senior employees at his Manhattan apartment Wednesday that the investment adviser business was a fraud and had been insolvent for years, losing at least $50 billion.

Madoff told the employees he was "finished," that he had "absolutely nothing," that "it's all just one big lie" and it was "basically, a giant Ponzi scheme," according to the complaint filed in court.

The employees understood Madoff's admission to mean that "he had for years been paying returns to certain investors out of the principal received from other, different, investors," said the complaint, which did not identify the investors impacted by the scheme.

Cacioppi said one of the employees told him that Madoff was "cryptic" about the firm's investment advisory business and kept its financial statements locked up. The FBI agent said another employee told him that Madoff last week said clients had asked for about $7 billion in redemptions and he was struggling to meet those obligations but thought he could do so.

Cacioppi said two senior Madoff employees told him that Madoff said during the Wednesday meeting that he planned to surrender to authorities in a week but first wanted to distribute $200 million to $300 million he had left to certain selected employees, family and friends.

Cacioppi said he and another FBI agent arrived Thursday at Madoff's apartment, where Madoff invited them in and acknowledged knowing why they were there.

"Madoff stated, in substance, that he had personally traded and lost money for institutional clients, and that it was all his fault," Cacioppi said.

The agent wrote that Madoff said he had "paid investors with money that wasn't there" and that he was broke and insolvent and had decided that "it could not go on" and that he expected to go to jail.

Defense lawyer Dan Horwitz called Madoff "a person of integrity" and said he intends to fight the charge.

If convicted, Madoff could face up to 20 years in prison and a maximum fine of $5 million.

Bernard L. Madoff Investment Securities LLC ranks among the top 1 percent of U.S. securities firms, according to the company's Web site.

In 2001, Barron's reported that Madoff's firm was one of the three top market makers in Nasdaq stocks and the third-largest firm matching buyers and sellers of securities on the New York Stock Exchange.

Shortly after leaving law school, Madoff founded his firm in 1960. It was one of five broker-dealers most closely involved in developing the Nasdaq Stock Market, where he served as a member of the board of governors in the 1980s and as chairman of the board of directors.

In the 1990s, Madoff was viewed as a maverick. He angered leaders of the New York and American stock exchanges by taking away some of their business by paying brokerage firms a penny a share to route orders through his system.

[mrmeatspin]

the New World Order is here..

[generey]

Ohhhhhhhhhh......This is the kind of s h i t that needs to be dealt with on the streets...street justice, especially in today''s times.

[generey]

And what of that woman baker? The tart on tv, what''''s her name that went to prison for lying about stocks?


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Posted by HETUP at 04:32 PM : Dec 12, 2008

Martha Stewart. STILL filthy rich & STILL on tv. What a country!

[babooph]

Those massive funds that the two Bush campaigns had -CEO support from 2/3 or more-wonder where all that $ came from -bet the propaganda system is told to bury that !

[generey]

Defense lawyer Dan Horwitz called Madoff "a person of integrity" and said he intends to fight the charge.

If convicted, Madoff could face up to 20 years in prison and a maximum fine of $5 million.

Integrity...LMAO! Get him a job in congress!!!!!!!! And where does all the money "collected" in the form of fines go?????

[slim1h2o]

Wall Street Powerbroker Arrested For Fraud
Feds Say Ex-Nasdaq Chairman Bernard Madoff Confessed To $50 Billion Scheme In NYC

Ha!!!!

Your bailout at work folks!!

This is just the tip of the icebreg folks!!

[slim1h2o]

And what of that woman baker? The tart on tv, what''''s her name that went to prison for lying about stocks?

Posted by HETUP at 04:32 PM : Dec 12, 2008

That was chicken feed you moron, but they did roast her though, didn''t they?

Of course she did deserve what she got.

[blog_fever]

Ha!!!!

Your bailout at work folks!!

This is just the tip of the icebreg folks!!

Posted by slim1h2o at 05:00 PM : Dec 12, 2008
---------------------------------------------------

You mean "China''s tip of the iceberg." We are trillions of dollars in debt. Just wait... "The United States of America - Made in China."

[swingset4u]

Once a crook always a crook! It will never end because Republicans are only looking out for their investments and not investing in Americans!

[slim1h2o]

The United States of America - Made in China."

Posted by blog_fever at 05:39 PM : Dec 12, 2008

If Mao was still alive, I bet he''d be here already looking for the keys to the Whitehouse...

[blog_fever]

If Mao was still alive, I bet he''''d be here already looking for the keys to the Whitehouse...

Posted by slim1h2o at 05:44 PM : Dec 12, 2008
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Ancient Chinese Secret! lol

[mrmeatspin]

Posted by blog_fever at 06:11 PM : Dec 12, 2008
+ report abuse
Posted by blog_fever at 05:39 PM : Dec 12, 2008


******************

The New World Order will soon forclose on this country..



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Posted by slim1h2o at 05:44 PM : Dec 12, 2008
report abuse

[lmartink]

Great! Another Wall STreet idiot.

Rather than a bailout, maybe we should have just gone into Wall Street with the Marines -- to kick arse, and take names.

[slim1h2o]

Posted by MrMeatSpin at 06:17 PM : Dec 12, 2008

If you are going to try to put words into my mouth, you should do it right.

Or try harder....

[ziggy1965]

all his equity should be seized where''s his 10 million
in bail come from now

[slim1h2o]

How to deal with Wall Streeters? Get a rope.

Posted by jbrown88881 at 07:31 PM : Dec 12, 2008

I agree!!

[formrusmcsgt]

As Henley wrote "A man with a briefcase can steal more money than any man with a gun"....

[jydavis1]

I''m sure he can find a job with Obama''s financial team - not one of them are very genteel

[ofbyfor3]

String him up!

What is wrong with people like this? He had ''more money than God'' and STILL it''s not enough! People like this should ALL end up in the soup line.

Better yet, let''s bring back the old practice of putting people in the stocks so they can be publicly humiliated. Whole different definition of ''stock'' than the one they''re used to.

[truthislife1]

Oops!

[truthislife1]

Or is it whoops! I''m confused.

[mcv57]

SEC Chairman is hiding in Dicky Cheney''s under-shorts. Come on corrupt justice department, with recent scandels on wall-street, you have to arrest this SEC chief for negligence and mentally disabled; if not on corruption charges.

[mcv57]

.... and you rich boys thought you were all on the same side of the fence (corruption). The rich stealing from the rich .... that''s a new fable for the history books.

[flsunjnky]

And Bush wanted to put Social Security there? How many Wall Street nightmares does it take for the people to wake up and smell the coffee?

[nothappyatall]

planned to surrender to authorities in a week but first wanted to distribute $200 million to $300 million he had left to certain selected employees, family and friends. ''

Oh of COURSE, and now that h e is out on $10 million BAIL- all of it no doubt stolen, he can do that and skip off, nice going!

[flsunjnky]

No, the reaction needs to be that we should be careful about who we choose to follow, and who we choose to lead.

[ronmh7]

Who can tell me the names of his children and grandchildren?
He is a horrible piece of s&hit and his family should know about it. His family should have to have all financial resourses yanked from them, but give them a subway pass to visit this old *** in prison. He can explain it to them

[gce65]

He''s really just *** rich hedge fund investors and not mom & pop investors. You''d never hear a word about any of this if he was making them money, as he probably has for years.

It''s only now, when he sticks it to them with his Ponzi scheme that they''re all in an uproar.

Still, I''d like to see an enormous dollar bill plaque erected outside the New York Stock Exchange and have financial criminals nailed to it and left to bleed in public for all to see.

[gce65]

He''s really just s-c-r-e-w-i-n-g...

[jerr11]

"Defense lawyer Dan Horwitz called Madoff "a person of integrity" and said he intends to fight the charge. "



There''s another person of integrity too, who swindled the country of trillions for his buddies and his family and killed over 4200 Americans in the process.

Mission Accomplished!

Heckuva job!

[rob416]

This guy should definetly be put in prison. It is a little difficult for me to believe that the millionare/billionaire clients he had didn''t check into the business dealings of the Firm. You would think they would have been smart enough to know if it sounds, acts or looks to good it probably is not.

[ofbyfor3]

ronmh7 at 09:52 PM : Dec 12, 2008

Did you miss your KKK meeting tonight? Whether or not he''s Jewish is meaningless. Lumping all people of an ethnic group together is pathetic and childish. And before you bother to ask, no, I''m not Jewish.

[raskal_2]

so that is where the money went, it never was there. Wait till the bets from the derivatives are called in.(think 57t dollars)

[lee2261]

Never trusted other people with my money,I buy land.
But this time I will make an exception, I am buying GM stock, we should all buy it. ..and hold for few years.

[whitemale08]

A good example of GIANT PONZI SCHEME THAT IS THE WHOLE QUADRILLION IN THE DERIVATIVES MARKET!!!

THE WHOLE DERIVATIVES MARKET IS A PONZI SCHEME!!!!

SHUT-DOWN THE DERIVATIVES MARKET NOW!!!!

[grandesign]

"If convicted, Madoff could face up to 20 years in prison and a maximum fine of $5 million."

Now there''s justice. $50 Billion for $5 Million in fines. The American Way.

Derivatives are a bane on our capitalistic markets. DERIVATIVES CREATE SOCIALISM. We are all going to find this out the hard way--market collapse.

[grandesign]

I am buying GM stock, we should all buy it. ..and hold for few years.
Posted by lee2261 at 10:19 PM : Dec 12, 2008

Sure, you can hold it forever. Maybe paper your walls with it, since after bankruptcy the equities are the first to become valueless.

[homespunlady]

Well folks, there goes those "institutional" pension funds further down the drain. One man''s "wealthy" is another man''s "fund manager".

They''re RIOTING all over Europe over far less than the level of corruption here. Greece had a 15 year old killed triggering riots and the reason given? - Their "wealth gap"! France, Germany and others are seeing uprisings and the best "protests so far in the States is a few thousand outside the Fed buildings. Although I worry about that bomb incident at some small bank branch out West...not too bright taking it out on a few bank tellers rather than demanding a massive crackdown on those "behind the curtain" of the REAL massive economic FRAUD.
Yes, this guy was FINALLY accused but what of the MONEY? Did it go to consolidating wealth and power elsewhere - like Europe??
This is stinking SO bad that it''s affecting the entire WORLD - not the just the US corner of it.

Welcome late to the ECONOMIC WORLD WAR people other nations have caught on years ago.

[scallywag8]

Well...Ebay sucks!!!

[oolongw]

These big shot have no shame at all.

[hunterdon6]

This is just a tip of an iceberg. These people should not be sent to jail, but to an enclosed room with all the people who lost their money. Justice would then be served. Most CEO''s of the big companies are just as guilty of these type of fraud. Send them all to jail!

[slim1h2o]

Welcome late to the ECONOMIC WORLD WAR people other nations have caught on years ago.

Posted by homespunlady at 01:57 AM : Dec 13, 2008

Only because they "felt" those effects yrs ago.
And so will we, it''s coming....

[seventim]

www.99numbers.com

[ofbyfor3]

String him up!

What is wrong with people like this? He had ''more money than God'' and STILL it''s not enough! People like this should ALL end up in the soup line.

Better yet, let''s bring back the old practice of putting people in the stocks so they can be publicly humiliated. Whole different definition of ''stock'' than the one they''''re used to.

[mrjustice1]

WE MUST PROSECUTE SUCH FRAUDULENT INVESTMENT BANKERS GLOBALLY.
HARSH NEW MEASURES, INCLUDING LENGHTY, HARD-LABOR PRISON TERMS, AND IN MANY, MANY CASES, EXECUTION FOR THE HUNDREDS OF MILLIONS OF LIVES TO WHOM THEY''VE BROUGHT FINACIAL RUIN, AND WHOSE FUTURES THEY''VE DESTROYED.

[tbird6740]

Can somebody tell me WHERE ALL THAT $$$ went? It''s gotta be SOMEWHERE! Considering that Madoff BAILED OUT OF JAIL on $10M bond, (that''s TEN MILLION, folks) he''s gotta have some $$$$ SOMEWHERE! And how in the world does he get pinned with a measley $5M FINE? When he lost 50 BILLION? The numbers ain''t adding up here, people!!!!!!!! I also can''t help but wonder how many POLITICIANS invested with his firm?

[debluezzman]

Kind of funny, he makes a 10m dollar bail, with whos''s money, everything this man had should have been, frozen, including his brain, people like this should be taken out to the street and shot, they breath good air hard working people could be breathing.

[mrjustice1]

REDISTRIBUTE THE STOLEN WEALTH AND MONIES TO THE RIGHTFUL VICTIMS

These ''investment banker'' parasites must be brought to account for their PREMEDITATED, AND WElL-CALCULATED schemes, scams, and other swindles, which they did not procure by accident!

Confiscation of these ''investment bankers'' and of those similarly-titled ''financiers'' assets, lavish homes, monies, and other, would be an appropriate form of justice.

Let''s not forget to press for opening up, confiscating, and prohibiting all their offshore and their secret bank accounts in Switzerland, Cayman Islands, etc, where they retain the[OUR] and their victims'' stolen monies!

[mrjustice1]

...IS IN THE AIR!
"LET THEM EAT CAKE!"

OUR LAWS MUST BE CHANGED AND DRASTICALLY

BUT, BUT, BUT...

So many of these parasitic ''investment bankers'' schemed, planned, and plotted, to take[as in licensed to steal] our hard-earned money, and make it disappear.

If our government, our politicians, lawyers, accountants, brokers and other ''financiers'' are ''in'' on all this, then it''s time to revolt.

[ofbyfor3]

Get a good man and set up an offshore account, it''''s legal and will allow you to eliminate taxes. You are right though, if you aren''''t diligently paying attention, you can get dinged for sales tax and the like, but get into farming to be able to stop paying sales tax, fuel taxes. In my yacht I burn diesel which I put through the farm. At the end of the year I get a rebate so my yacht goes anywhere free.

Posted by HETUP at 10:26 AM : Dec 13, 2008


You are SUCH an obvious LYING TROLL!!!!!