Home > global economic crisis > Bernard Madoff Charged In $50 Billion Financial Ponzi Scheme

Bernard Madoff Charged In $50 Billion Financial Ponzi Scheme

December 16th, 2008
Bernard Madoff was once chairman of NASDAQ, and a scion of the American investment banker and money manager community. Now he is at the center of what may be the worst financial con game in history, shaking confidence at a time of global economic crisis.


On December 11, 2008 the FBI arrested Bernard Madoff. He was charged with securities fraud, this coming on the heels of an admission, supposedly to his sons, that Madoff’s business was “a giant Ponzi scheme.” This is connected with an asset management component of his firm.

Contained in the criminal complaint is the allegation that investors lost a staggering $50 billion from Madoff’s Ponzi scheme. After his arrest and booking, Madoff was released after posting $10 million in bail. If convicted, Madoff faces up to 20 years in prison and a fine of $5 million.

Amidst the raging global economic crisis, Madoff’s emergence reveals another dimension of danger to already shaken global financial markets. The current credit crunch is related to lack of trust and transparency, contributing to excess counter-party risk among banks and other financial institutions. The charges against Madoff, and the vast sums of vanished wealth that may be involved, will increase distrust regarding the already fragile hedge funds and their managers. It also raises the question: how many other schemes leading to vast degrees of wealth destruction are yet to be uncovered while the global economic crisis continues? Perhaps there are other Bernard Madoffs still to be uncovered, leading to further erosion of trust by investors big and small with the major financial institutions of the global economy.


Comments are closed.