Bernard L. Madoff was born in Queens, New York in 1938. After receiving a Bachelor of Arts in political science at Hofstra University, he briefly attended law school before founding the firm Bernard L. Madoff Investment Securities in 1960. In the early 1970's, Madoff and his investment firm implemented the use of computer information technologies with the New York Stock Exchange. By 1971, this technology was incorporated into the NASDAQ. Madoff Securities would eventually gain rank consistently as one of the largest market makers for the NASDAQ with Madoff serving as its non-executive chairman until his arrest in 2008.
By the early 1990's, Madoff had entered into the government sector serving as a member on the Board of Directors for the Securities Industry Association, the precursor to the Securities Industry and Financial Markets Association (SIFMA). His brother, Peter, an eventual co-conspirator in Madoff's scheme, would serve two terms on SIFMA's Board of Directors. Bernie and his wife, Ruth, contributed $240,000 in federal candidacies and party politics donating $25,000 a year to the Democratic Senatorial Campaign Committee from 2005 to 2008.
In 1999, Harry Markopolos, a certified fraud analyst, informed the Securities Exchange Commission of possible illegal practices within Madoff's firm. Markopolos stated it was mathematically impossible for BLMIS to accrue to gains it had reportedly seen; a return stream rising steadily with only a few downticks, a tell-tale sign of a Ponzi scheme. While Markopolos' evidence was substantial, the SEC's failure to act would grant Madoff another nine years to continue his fraudulent practices, plenty of time to ward off accusations and lure in new investors to fuel his pathological firm.
Though Markopolos believed Madoff's operation was on the brink of failure as early as 2005, it is possible Madoff could have continued his Ponzi scheme into our present day were it not for the 2008 Financial Crisis. As investors across Wall Street panicked with the plummet of the housing market, Madoff's accounts were drained in his attempts to meet the redemptions of his withdrawing investors. In December of 2008, he supposedly admitted to his brother, wife, sons, and the overseer of his fraudulent transactions, Frank DiPascali, that he was finished. The entire operation was "just one big lie." His sons, Mark and Andrew, reportedly contacted their attorney shortly after who placed them in touch with federal authorities. It was later argued by Mark and Andrew's attorney that Madoff had intended to fully redeem his family members and close friends on their investments before ending his firm and allowing his sons to hand him over to federal custody. Following his confession, he stepped down as chairman of NASDAQ.
In March of 2009, Bernie Madoff pled guilty to 11 federal felonies. These included securities fraud, mail fraud, wire fraud, perjury, and money laundering all in conjunction with a criminal complaint stating Madoff had defrauded and basically stolen $65 billion from his clients, the largest Ponzi scheme to-date. Madoff would be sentenced in June of that year to 150 years in federal prison, he being 71 years old at the time of his sentencing. He is currently serving his sentence at the Federal Correctional Institution Butner Medium in Butner, North Carolina.
