The Man Who Stole $65 Billion – Largest Ponzi Scheme In History

This video was made possible by WIX. If you are ready to create a website, head
over to to try out one of their premium plans right now. Sometimes when a lot of money gets stolen,
we can’t help but root for those who took it. We might look at a recent heist that must
be the closest thing to a real-life Ocean’s Eleven, when a bunch of old men (the Old blaggers)
stole millions of dollars’ worth of precious stones from a vault in London in 2015. It’s thought most of the men were arrested,
but much of the bounty remains at large. This is regarded as one of the biggest heists
in history. We might smile when we hear about these aged
robbers, but there’s one kind of theft that people almost always take a dim view of, and
that is the financial scam. Today we are going to look at the biggest
financial scam in history, in this episode of the Infographics Show, The Man Who Stole
$65 Billion. Before we talk about how this $65 billion
was stolen, let’s learn something about the man who took it. His name is Bernie Madoff. Unfortunately for him, he is still alive,
at the ripe old age of 80. He was born on April 29, 1938, in Queens,
New York. Madoff’s roots are European, with his parents
having Polish, Austrian, and Romanian heritage. His parents, Ralph and Sylvia, didn’t have
an easy time of it in New York, especially as they had to live through what is now known
as The Great Depression. Ralph was a plumber and Sylvia was a housewife,
which didn’t exactly afford them luxuries in life. They got involved with finance in the 60s,
but just as the son would later enter the world of dodgy dealings, his parents were
at one point shut down by the U.S. Securities and Exchange Commission because Sylvia, whose
name was on the company, had “failed to file reports of their financial condition.” The company was closed, but they didn’t
have to pay anything in fines or payments to customers. This was 1964, when young Bernie was just
26. It’s also said that Ralph owed a lot of
money in federal taxes, and perhaps that’s why the company was put in Sylvia’s name. They both gave up the ghost in the 70s anyway,
but there can be no doubt that these two sketchy parents set their son off on a mission to
cause financial mayhem. According to reports, it took Madoff some
time to get into finance, and like any young buck, he was more interested in girls and
sports, mainly swimming. In 1959, he married a girl he had met in high
school, and in 1960, he graduated from Hofstra University in Long Island. He started law school, then dropped out of
law school, and with $5,000 he had earned as a lifeguard and part-time work installing
sprinkler systems, Madoff took his first step into his parents’ financial footsteps. On top of the 5,000, he borrowed a further
$50,000, and started an investment firm called Bernard L. Madoff Investment Securities, LLC.
– perhaps now the most infamous investment firm ever created. The firm looked good from the outside. It was known as a solid “market maker.” This is described as being a person or a brokerage
house that “is always prepared to buy and sell securities in order to provide liquidity
to the markets,” according to the website, investing-answers. In simple terms, they buy when people sell,
and sell when people buy, to keep the cogs turning. They don’t buy because a stock goes up,
they buy when people sell. This involvement of market traders, according
to Investopedia, means traders and investors will make more transactions, and that’s
good for the market in general. But how do they make cash taking such risks? Well, they charge a little extra when they
sell the stock they bought. This is known as a Bid-Ask Spread. That’s a basic explanation, bc we can’t
spend too much time on how the stock exchange works. What we do need to get into is how Mr. Madoff
made his billions. As we said, he was very well known for his
good returns to his clients whose assets he managed. Apparently, that client list included such
names as Steven Spielberg and Kevin Bacon. You see, Madoff was seen as a stand-up guy
in the financial world. He even helped form the National Association
of Securities Dealers Automated Quotations (aka NASDAQ) and was chairman of that organization
for three terms. He made donations to humanitarian causes,
he gave money to politicians, and his brother, Peter, served two terms on the board of directors
of the Securities Industry and Financial Markets Association. So, you might be thinking now, how on Earth
could this guy also be involved in a massive scam? Madoff was first investigated in 1992, but
it wasn’t until the 2000s that subsequent investigations by private firms found what
they called “inconsistencies” that looked like fraud. Investigators for years had been saying that
the gains Madoff claimed to be making just didn’t look possible. In fact, for years, financial analyst Harry
Markopolos had been telling people something just didn’t add up, and embarrassingly for
the them, the Securities and Exchange Commission ignored him, even when he went back numerous
times with more evidence of what looked like a scam. He wasn’t the only person that didn’t
trust the numbers, however, and many people refused to do business with Madoff. But how did Madoff get hold of people’s
money? What he had is called a Ponzi Scheme, which
simply put, is a scheme that offers huge returns on investments. It was named after Charles Ponzi, who said
that if you gave him some money, he’d give you back 50 percent more in just 90 days. Sounds great, but what happens is that you
pay off these first few people, and word gets around that indeed there is a huge return,
and soon many people want to get in on the act. You keep taking new money, and pay off older
investors with that cash while expanding. The problem is, you aren’t actually making
any money. Obviously, if all the big investors demand
their cash, you’d be in trouble, but what you do is convince them to keep their money
invested as the return will later be even bigger. It’s said that Madoff, with his closest
staff, manipulated trade reports with a computer program, while they also created bogus stocks
that seemed to give high returns. On paper, to the undiscerning eye, it looked
like he was making money. The poop hit the fan for Bernie when his clients
wanted back, in total, $7 billion, and he said all he had of their money was between
$200 and $300 million. This market maker with a good reputation who
had sat on the board of NASDAQ had all this time just been enticing people into a scam. It’s thought he had thousands of investors,
and in total they lost about $65 billion. It’s also said Madoff himself made around
$20 billion, or thereabouts. Apparently when he was confronted by his sons,
Andrew and Mark, he admitted to them that he had been running a Ponzi Scheme. He said that everything was “just one big
lie”. The sons knew nothing about the scam, although
Madoff’s brother Peter was involved. This wasn’t easy for the sons, and they
both died soon after, with Mark taking his own life and Andrew dying of lymphoma. What’s amazing is how candid and cold Madoff
was after he got caught, once stating, “I certainly wouldn’t invest in the stock market. I never believed in it.” He also once admitted that he was surprised
that he had gotten away with it for so long. Madoff called the investigators useless, saying,
“I was astonished. They never even looked at my stock records.” Many of those who lost money won’t get much,
or anything, back, but in 2017 the U.S. government promised 24,000 victims that a total of $772.5
million was to be shared among them. Madoff was arrested and charged with securities
fraud on December 11, 2008. His bail was set at $10 million, and he had
enough cash to pay for that. He was kept under house arrest for a few months
until a judge revoked the bail, stating that Madoff was a flight risk. He was sentenced to 150 years in jail in 2009
at the age of 71. If he behaves well, he’ll get out on November
14, 2139, at the age of 201. That’s not going to happen of course, and
it seems the trickster may have got his comeuppance. He was sick on many occasions in jail due
to stress, and was also attacked by inmates. Others say that the attack was for some reason
made up, and it is far from the truth. This might just be the case, seeing that in
a letter to his daughter-in-law, Madoff said, “They call me either Uncle Bernie or Mr.
Madoff. I can’t walk anywhere without someone shouting
their greetings and encouragement, to keep my spirit up. It’s really quite sweet, how concerned everyone
is about my well-being, including the staff.” What’s quite amusing are reports by reputable
media that while in prison Madoff had used his talents to exploit certain markets. “At one point, he cornered the hot chocolate
market,” said one man who’d been writing an audio series about Madoff. He added, “He bought up every package of
Swiss Miss from the commissary, and sold it for a profit in the prison yard. He made it so that, if you wanted any, you
had to go through Bernie.” So, there it is, the abridged story of one
of the world’s biggest con artists, the dark prince of Ponzi, the real wolf of Wall
Street, and it seems now a shrewd prison peddler of Swiss Miss, in his retirement. And while we can all agree that what he did
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The Infographics Show at the same time, by going to or clicking
the link in the description. What are your thoughts about the Madoff Heist? Is he any more unethical than an ordinary
house burglar, a bunch of old British men who committed a jewel heist, a common street
thief that runs off with your iPhone? Let us know your thoughts in the comments! Also, be sure to check out our other video
called What Happened to Malaysia Airlines flight 370?! Thanks for watching, and, as always, don’t
forget to like, share, and subscribe. See you next time!

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