I think the returns were fake, and thus, the money never existed. The values that were portrayed on statements and accounts were artificial. While he was marketing positive returns, he was actually losing money.

How Bernie (Made-Off) with 50 Large
All $ in Billions
Start in 1995 getting $1.0 from the rubes and increase that by 18%/year. Accrue negative gains of -5% and report positive gains of 15%. Allow rube withdrawals of 20%/year of average balance. Bernie gets an 8% commission on each incoming dollar and spends it. In fall 2008 have emergency withdrawals of $7.0.

Bernie has his properties if they are not mortgaged and $.05 in chump change.

What’s left for the crows: $1.9

Dear Mr. Bing,

The scheme unraveled because he ran out of money and it’s no great leap of logic to understand why.

While the Madoff scandal is a $50 billion Ponzi scheme, we’ll discover investors put in about 1/10th of that amount. Through the magic of compound interest, your $1M initial investment becomes $9.4M after twenty years of 12.5% annualized returns.
Each year, most investors let their gains roll-over while some took money out. When the money was withdrawn, your initial investment was used to pay someone else even if that was just a portion of their yearly capital gains. Since his returns were so high, small withdrawals would have huge impacts on the available cash. Furthermore, to avoid suspicion, when Madoff either kicked someone out or they decided to leave, the investor left with their full account and that’s where the cash went. As funds of funds needed to cash to meet their Q4 2008 redemptions, Maddoff’s cash hoard of maybe 5% of the actual amount soon unraveled. That’s why there’s nothing left. Barring the bear market, he’d still be a genius. We’ll learn later this almost happened during previous market corrections.

I’m sure he spent a lot, but the guy’s a psychopath who fed on the reinforcement and social proof of his success. Once he got started it was probably impossible to stop; it wasn’t the money. The whole situation is a Greek tragedy. His gains helped finance enormous acts of charity while he destroyed the lives of his friends.

Good question, but then again, how the money for the bailout is being used? why did not congress demanded full disclosure to each one of the recipients of the bailout on usage and results? how come our “best and brightest” in congress missed that one? did the Dynamic Duo (Paulson and Barnacles) duped them? Questions everywhere, big smoke curtain maybe???

Yes I know where the money is. Most of the money was paid back to the investors in the form of interst, they now have no principal.
The rest of the money was paid out to support the staff and insiders and Madoff himself, what a wonderful lifestyle he/they had.

This whole thing could have rolled on forever except the sheep quit investing,,,, a good scam gone bad…Geee Whiz ….wonder how many other suckers are spending their principals thinking it is earned interest????

Naw,,couldn’t happen to me…my guy looks real honest in his pin striped suit and besides he got initials behind his name from the fancy school he graduated from…

Money behaves much like a substance; for instance, soil.

When erosion takes place at one point, accretion takes place at another point.

The money game is like playing house. House sets the rules.

When eroded pockets leave the casino, Brink’s Armoured Vehicles carry the accretion to be deposited at another point.

Our jobs and expertise erosion has accreted to other continents.

Central banks of the World are controlled by the governments in which they reside with somewhat different customs.

We simply must look to where the funds accrete and to whom or where title is assigned.

We think ‘MONEY LAUNDERING” is limited to low end drug money; but, have we explored high-end “PONZI MONEY”?

The banks are money heaven; they create it and they devour it–I THINK??

These are my two-cents, for what they’re worth: rejoice, rejoice???

Oh come on, you know better than that, Bing-a-ding.

It’s called Return-Of-Principle.

Since the people who put money in got some of their money out, they won’t have to pay taxes on the so-called interest or dividends.

But the charities never paid taxes on their “income” so they take a bigger hit.

When the Weasels of Wall Street say “diversify” they just mean you should spread your investments among as many Madoff-like schemes as possible as it is unlikely they will all fail at the same time.

I believe that he paid everyone 10 percent, and just kept paying the return with new money he received, until the latest crisis, where everybody asked for their money back. The original money got paid out to people that asked for it first.

Bing, from a small cog in a big machine…I have always sensed when the man starts talking about multi-billions, the money starts to become make-beleive…dependant on the Global economics at the moment…but what do I know?

Merry Xmas, and thx everybody for just being who you are…gotta love it!

From what I’ve read, Bernie Madoff was a low-key guy compared to other Masters of the Universe. His Palm Beach House, NYC penthouse, yacht and other trappings add up to at most $250M. (Definitely not more than $1B) Where’s the $49B?

I don’t think there is any money left though. I think he lost them all when the market took a nose dive near end of 2008. Consider that if his performance is only market level since dot com crash but was instead reporting 10% profits, he probably had really about 20% of assets he claimed by early 2008. Then of course there market crash near end of 2008 and who knows had he had really invested in. All asset classes are down 35%-75% unless he had been invested in Treasuries, which I doubt. So by end of 2008, he has really only about 5% of funds needed if all his investors were to withdraw all their money.

I believe that the whole scheme unraveled not because his conscience caught up with him but because he didn’t have enough money to meet redemption requests. Wall Street Journal reported that he remarked to his sons that he needed to raise ‘$7B’ to meet redemption requests.

Therefore, if had only about 5% of funds ($2.5B) and there was deluge of investors asking for redemptions (probably to offset losses in other areas), and he was paying them out, he probably only admitted to his sons when didn’t have a cent left to pay out anymore.

But I am curious about my own theory. Did he really admit only after he had $0 left? I think there has to be about $100,000 left right..? Where is that money?

This whole Madoff thing has been described as a Ponzi scheme, and my understanding of how a Ponzi scheme works is that money coming in from new suckers is used to keep the old suckers hooked by providing a return on their “investment”. However, even given that this particular scheme has gone on for a very long time, it’s hard to imagine that everything that was paid in has also been paid out.

In any event, confiscation of ALL of Madoff’s assets for purposes of providing at least partial restitution seems appropriate; but don’t hold your breath waiting for that to happen, because the wheels of justice have a reputation for moving slowly.

This is the same question the people around the world have been asking. Also what happened to all the money at Wall Street when the market capitalisation was at record high, who pocketed the money and disappeared? It just doen’t add up!

Two words:
ATM fees.

–www.sawyerspeaks.wordpress.com

Obviously, the ‘money’ has been distributed on the following basis:

Sum Total Invested in Scumbag Madoff Ponzi Scheme = (Moneys expended by Scumbag Madoff, relatives, and lackeys, purchasing prostitutes, blow, real estate, yachts, trust, and philanthropic community standing so as to lure additional investors)+(Moneys invested by rich country-club scumbags who couldn’t resist the lure of getting something for nothing by investing in the chimera of a high return/no risk orgasmic fantasy)+(Moneys invested by naive, decent and trusting folk trying to improve the human situation)+ (various governmental expenses, i.e.; income/estate taxes, probate, attorney fees, political contributions, marketing related folderal, and graft).

Some of the money is still ‘out there’ and smart attorneys will be going after the most recent recipients of Madoff investor payouts. Thieving off the next lower pyramid layer is no better behavior than displayed by the initiating douchebag. Repeat until carcass is stripped clean and thoroughly sun-bleached.

Don’t worry, a fresh contingent of financial stooges will arrive, like clockwork, with every new generation.

Merry Christmas, Bing!

There is no money….anywhere. We are back to trading conch shells. Fortunately, I have a small collection of shells that I accumulated over 25 years of scuba diving.

Thank you for your Blog. Keep ‘em coming…

Happy Holidays to all of you great bloggers and Stanley for the venue!

Looking forward to a 2009 where:

SEC Implements a mega giga database based on good business model (more than a powerpoint) with regular independent audits so we will all know where the money goes next time

The GAO follows up to see that a system is in place (1 or several GAO audit recommendations)to track the bail out funds(see PB Jim Lehrer new hour interview from 12/22 with acting GAO Head and reporter who interview bail out recipients)

The purported culprit of the Fry’s fraud shares his spreadsheet template to track kickbacks(seems like he had a handle on it)

Hoping for a year of change where integrity and doing the right thing makes a profitable comeback!

Thanks, TJ. Back atcha.

I don’t buy that the money was disbursed over a period of time to people who pulled out of the fund or funds operated by the crooks, weasels and stooges. The principle of the Ponzi scheme is that the operators keep the majority and the “investors” get the dust kitties and random bits that are left on the kitchen floor after the sausage is made. This means that yeah, Madoff probably gave back some of the stuff when he had to, but the “interest” that he returned was miniscule in comparison to the size of the big walnut that was accumulated. I still think there are dozens of billions tucked away someplace. I want some.

Bing, remember that the ‘operators’ of a Ponzi or pyramid scheme include the levels down from the tip of the pyramid (whose financial success was critical in attracting a steady stream of lower pyramid level investors). The money is largely back in the portfolios of individuals that maintained wide diversification, and they’re wisely laying low right now.

Would anyone like to invest in some international postal reply cupons?
Happy holidays to all.

Merry Christmas All and a Happy (& Safe) New Year…

I’m hoping he spent it all on hookers and blow. Atleast that is what I would do. They need to fast-track this guys trial and get him the hell out of his penthouse. Haven’t they frozen all his assets? The idea of this guy enjoying the holidays makes me sick…

i have no particular financial concnerns. i want some too.

My guess is that it’s in a bank account in the Caymen Islands…

I think everything was “Monopoly(R)” money, account statements probably fake, who knows.

Merry Christmas Bing, Happy Holidays, thanks for your blog and for letting us, the readers, post what we think,,,,and for being patient with some of us who sometimes post stupid comments or ideas!!!!! MERRY XMAS!!!!!

Bing like most honest men, you obviously have no idea how the mechanics of a Ponzi scheme really operates.
Remember he was paying 10% interest or better.
In 8 years the principal is gone and everyone who hangs in there becomes a financial drag on the rest of the suckers.
This Ponzi scheme ran TOO LONG, without building up it’s base in proportion to it’s expenditures.
There was a time when Bernie could have ripped off a lot of money, but the dummy hung in there until his ill gotten gains were reduced to the point he could not go on with out a huge influx of new suckers.

Bottom line: Bernie like Bush had no EXIT strategy…..

Even crooks need good sound advice.

I thought he promised a solid FIVE percent…

Bing, just this morning I was reading your page in the Fortune Special Issue where you feature the ancient and wealthy Solomon. I think he’s the fellow with the simplest answer to your question, “So… where’s the money?”

His answer (I looked it up): ” … for riches certainly make themselves wings; they fly away as an eagle toward heaven.”

Maybe if you look in relatively high and inaccessible places …

I agree with many of you that the interest never really existed; creating a false sense of how much he really ripped people off. I predict it will take at least 1-3 years to investigate and convict.

As usual, I kind of agree with Jack Hammond, one of the fellow Canadians here. I also agree with Jessica in St. Paul.

Merry Christmas everyone! This is definately an awesome group to be part of. Thanks to Bing!!!

Hey Bing, what Apple products did you ask Santa for this year???? New Nano perhaps??

Is this column a joke? The missing principal has all gone to interest or “returns” to early investors. They’ve been collecting interest or dividends all along but they will have no principal left either.

Madoff shorted puts at a level of 6:1 leverage vs. Capital , and lost the money

simple

Thanks Bing for raising a question that had puzzled most of lay-folks like me.

The readers comments are informative.

Merry X’mas !

I’m saving up for a new Mac Air. But frankly, I’m not sure I’m going to indulge myself for a while. Having a little cash in the bank sounds kinda good right now.

Not only where is the money, Where where the regulators ??? It is hard for me to believe this can happen.

bernie madoff and his scheme, sounds to me like other Bernie, 40 years ago , Bernie Cornfield, IOS, Investors Oversea Services 1 billion dollars scheme, now it is the same,the bigger number is the result of the inflation.Nobobody learned the lesson.Easy money easy go

Bing, I hope your Christmas was merry and bright! Thanks for providing this venue; we all look forward to every new column.

That is a one billion dollar question, I am too sure he did not act alone. I believe is either the investigator having step on fact that is too hot to reveal or they have traded their barge for justices. I agree with you the money is very much still there, in trust or fake alias that can be his families or children. Try Africa or Dubai, only the greedy can cover this loaded greed.

WERE IS THE MONEY ? BING THAT IS EASY ITS LOST JUST LIKE THE REST OF THE STOCK MARKET WERE DID MY 100K GO IN MY 401K

ITS LOST WERE DID THE TRILLIONS IN STOCK MARKET LOSSES GO .

IDK WERE IT GOES I CAN TELL U IT DOES NOT SEEM LIKE MADOOF WAS 100% SCAM HE HAS BEEN DOING THIS SINCE THE 70s

HE PROBABLY GOT HIT HARD IN 07 AND 08 AND LOST JUST LIKE EVERYONE ELSE ONLY DIFFERENCE WAS HE PRETEND TO BE MAKING MONEY SO DO THE MATH BING

07 AVG FUND LOST 10%
08 AVG FUND LOST 40% AND MORE FOR INTL FUNDS

NOW MADDOFF
07 12% GAIN
08 12% GAIN TILL DECEMEBER THATS ENTIRE YEAR

SO NOW YOU HAVE HIM SENDING OUT CHECKS FOR A TOTAL OF 24% IN THE YEARS THAT HE PROBABLY LOST 10% IN 07 AND 40% IN 08 , THAT IS A TOTAL OF 74% LOSS , THEN ADD TO THAT REDEMPTIONS PEOPLE RUNNING SCARED AND WALA YOU HAVE 100% LOSS

DOES THAT NOT ADD UP ?

YES FUZZY MATH

BTU NOT A FUZZY ANSWER

Like Eddie Murphy’s Film Trading places. Don’t jail the guy, let him trade places with those he has conned by justice putting him out his $5million house and let him ride a bus for a week. A thief is a thief. Treat him like one.

If we don’t know where $700 BN of taxpayer Wall Street bailout money went, I guess it’ll be a while before we know where Madoff’s booty went! It’s a good question though and maybe it will even be answered some day. I would guess that through the years, lots of the OPM Madoff found in his hot and slimy hands went to carrying charges for his (and others) lifestyles, not just things he bought, like hgouse and yachts. There might be billions of dollars that went for overly generous salaries and extraordinary NYC office rents and much more related to keeping Madoff’s “ship of fools” afloat. The carrying charges, not the purchases, for such a lifestyle have to be HUGE. Now if we could just get both Paulson and Madoff to tell us where $750BN went it just might make our day. Might it not?

30 to 50 billion has been paid to investors to keep the scam going. Media love to put the camera on some $ loser who had not withdrawn funds yet. I am ready for the story on some lucky bastard who invested 5 million, withdrew 10 million and lived well for 10 years. There is “the Money.”

It is hard to believe that Madoff could steal so much without accomplices. I would bet that many offshore accounts are the final resting place for alot of the money.

Those frequent skiing vacations to Switzerland that Bernie took. Did anyone check to see if there was cash in the suitcases?

Most of the money was lost obviously but his money. homes and his familes homes and investments should immediately be taken since it is all stolen money. He should be in jail right now…he has no assets so he cannot put money up for bail..obviously another corruption in the US only available for the RICH… 20 years is nowhere near enough…They have to raise the sentence to the death penalty to stop this since this is just the tip of it. You will see a lot more of it showing up as investors start asking for their money from other investment firms. In this case I suspect the whole family was involved. It is impossible for a firm that large to not know there was a scam going on unless the others sat at home and never opened any mail or talked on the phone (which would make them all guilty too). Think about it. What did they all do every day for 10 years? I suspect he will meet his maker via the hands of one of his investors..just punishment…And the SEC—they might as well be disbanded..it is obvious they are being paid off with bribes.

Well, while it is a good question, one question I know the answer to is “where is Madoff”?. While the wake of his destruction continues to gather steam….he is in his comfortable apartment. He should NOT be there. He belongs in jail…..which is a miniscule punishment for the havoc he has wreaked. He should NOT be out on bail..he should be in jail!!!!

I just heard this holiday week that Bernie and his wife had their pilot and flight attendant (who work on their private 50% share of their Long Island jet)fly to Palm Beach to “CLEAN OUT” the Palm Beach house of ALL valuables – there goes the art and artifacts…this was related to me by the best friend of the flight crew.

As Dylan once said: “To live outside the law, you must be honest”.

Nathaniel of Shawnee, the story of somebody who successfully ‘got in, and got out’ of the Madoff scheme probably won’t be told by the recipient. Much like a purchase of stolen goods, whatever remnant riches that could be convincingly linked to a Madoff investment will be the target of every investor and fund that has the money to pursue recovery. Buy something that falls off the back of a truck, and the rightful owner gets it back ….and you’re out the dough. But of course, the new owner seldom brings the windfall purchase to the attention of the authorities…….that’s the job duty of jealous ‘friends’ and ex-wives.

So far, about the only thing I’ve heard comparable is the story of one investor whose would-be investment was turned away by Madoff because he couldn’t (to his considerable disappointment, since he’d been listening to his richer friends gloat for years about the returns they’d been getting from Madoff) meet the minimum $20 million entry requirement.

Crafty attorneys will be seeking out the success stories, and it will take years of litigation to sort it out, by which time the attorneys will have extracted whatever sweet morsels remain. It is the way of the financial jungle and noble hyenas that maintain the flow of nutrients, keeping the whole ecosystem operating efficiently.

Just look at it as another way of redistributing wealth, much of which was ill-gotten anyway.

You All Got Only Half of the Story !
A Well known fact, not published so far, is that Madoff ALSO paid out 2-6 % ANNUALLY IN RETROCESSIONS TO MONEY RAISERS !

Now just assume you would have given US$ 1 million to him ten years ago :

1) he charged 2/20 fees that siphoned the capital, since he did not made the profits
2) he paid out 2-6 % annually to money raisers
3) 1 & 2 grew in amount…since
there was “apparent annual profit” over the years
4) clients also made some withdrawals over the yearsm believing there still was some “capital” as per the statements.

Conclusion : you dont even need to lose money to have siphoned totally the accounts over only 5 years or so !

Or said otherwise :
put 1 million in T-bills at let say 4 % average over the years.
The 2/20 fees on apparent gross performances or so would siphon around 5 % annually or 1 % more than the T-bills.
Then you pay the money raiser let say 4 % annually and growing in size due to the apparent 10 % performance. (getting 4 % growing at 10 % – smiles)
Then you may as well assume that many clients/charities withdrew part or all the yearly ” apparent 10 % profits or so” for their own well being and personal use or distributed to the good causes.
And your account will be at zero in far less than 10 years !!!!

I repeat…even before eventually
HIDING the trading losses !!!

Therefore as to the question “where is the money ?”
1) part to Madoff fees
2) part to Money Raisers
3) part to Money Redeemed
and
4) maybe only, part to….hidden losses !

There are more layers of hidden dirts that should come up the surface. But will they ? Many “respectable” names who introduced their own friends as a friendship favor…should not sleep well.

N.B. these money raisers ANNUAL RETROCESSIONS were of course neither DISCLOSED…..NOR TAXED…BECAUSE PAID TO OFFSHORE ENTITIES BELONGING TO…..MONEY RAISERS !

Hey Hey ! Many will have to raise their hands, admit or acknowledge that YESS they got UNDISCLOSED RETROCESSIONS !

Happy New Year…to all of those !

Why is that people when they become wealthy give their money to someone else only showing them just a piece of paper every month. You have to be stupid to do that.And after fear has settle then they don’t even ask questions.Be on the look out for all this so call portafolio managers as they are in decline, they come out the closet and no been able to provide what is on paper. We develop shopping centers and we encorage our investors to come and look at our projects and actually become familiar with their investment, returns and more importaly they can feel,see and smell the concrete.
It is a tradegy what people do to make an easy dollar.

I TOO WOULD LIKE TO KNOW WHERE THE MONEY IS – SINCE MY HUSBAND AND I LOST APPROX. $1 MILLION WITH THIS PSYCHOPATH!

THIS MONEY WAS OUR “LIFE’S CUSHION” LEFT TO ME BY MY PARENTS, WHO STARTED INVESTING WITH MADOFF ABOUT 20 YRS. AGO.

WE ARE NOW LEFT WITH VERY LITTLE AND HOPE THAT WE CAN RECOUP SOME OF OUR LOSSES. I GUESS WE’LL HAVE TO PRAY ALOT AND KEEP OUR FINGERS CROSSED!

Most Americans can’t relate to the lamenting cries of those who lost their $million + portfolios…terrible fall I must admit, but welcome to the world of the average American! Also, these millionaires made the common retail investor mistake of putting all of one’s eggs in one basket.

Regarding the original topic of where the money went, I would like to know what his actual losses were. They had to be around 50% for 4 years straight to reach his estimated remaining portfolio value of $300M:

50% of $5B = 2.5B
50% of $2.5B = 1.25B
50% of $1.25B = 625M
50% of 625M = $312.5M

Jorge, the reason people believed a ‘piece of paper’, is human trust, which will be in mighty short supply with the abuses that sustained deregulation has set loose. That will be the more costly legacy of the bank failures and Madoff scandal. Capital won’t flow to even reputable uses, such as building your shopping centers.

Where do you keep all your money, titles to properties owned, and records of debts owed you…..in your mattress? It’s difficult for your investors to spend a piece of that chunk of concrete you pursued them to invest in (especially if it becomes a part of some decaying suburban mall).

Since all that stuff is pretty difficult (and can hardly hope to keep pace with inflation)to cram into one’s bedding, we created financial regulatory oversight systems to off-set natural human greed. Of course, we convinced ourselves that regulation was inhibiting even headier possibilities of growth….so we scrapped most of it. At least a decade of economic misery is ahead of us, which will leave an indelible and well-earned distrust in the markets (and their paper-thin representations of wealth).

Don’t worry, there are new generations on the way, who one day will laugh at our lingering preoccupation with our generation’s ‘great depression’ much as my parents smiled about my grandparents’ aluminum foil saving antics.

SORRY THIS COULD NOT HAVE BEEN A 40YR SCAM , HE HAD TO HIT JUST RECENTLY , HE PROBABLY THOUGHT HE CAN FENAGLE THE BAGEL TILL THINGS TURNED AROUND HE PROBABABLY DID IT IN THE PAST , BUT THIS CRISIS IS JUST THE WORST THING TO HIT OUR COUNTRY SINCE PEARL HARBOR

THIS MONEY WAS OUR “LIFE’S CUSHION” LEFT TO ME BY MY PARENTS, WHO STARTED INVESTING WITH MADOFF ABOUT 20 YRS. AGO.

WE ARE NOW LEFT WITH VERY LITTLE AND HOPE THAT WE CAN RECOUP SOME OF OUR LOSSES. I GUESS WE’LL HAVE TO PRAY ALOT AND KEEP OUR FINGERS CROSSED!

Posted By DEBORAH ASHENFARB, CORAL SPRINGS, FL

If your parents started with Madoff 20 years ago and rolled over their investment with him to aquire the million, then you never actually lost a million, cause it only existed on paper.
If you actually had the million in your hands and in cash and walked in and ivested with Madoff then you lost a million.

You cannot claim losses on “ill gotten gains”,,,,that’s the law.

Madoff has been running this scheme since 1970 and that would make your parents gains,,,ill gotten.

The best you can claim is that “in theory you lost a million”.

The down side is you make have to repay all of that theoretical money back…..that’s scarey…

As most seem to realize by now, the vast majority of the money didn’t go ’south’, but ’sideways’–investments in went out the door to earlier investors. Interesting that a Saudi group put in $400mil last year, only to have taken it out in less than 12 months. But apparently “Bernie” is trying to scoop everyone…he’s actually blogging about this at http://www.bernard-madoff-scam.blogspot.com

I once bought into a mutual fund through a man who was using an outside broker. I did not receive one piece of paper other than a receipt for four months after handing this idiot Ten (10) grand. I finally found the name of the broker and called him for the money. My stock certificates were on his desk and had earned three didivdend checks. I honestly think this man was going to steal my money. After a few harsh words I received all of my certificates and dividends through an Investment Bank. It pays to do your homework. The man that originally sold me this investment did not understand my fear at all. I never invested with him again because he was an idiot.

Where did the money go? Who knows but this much is clear: the earliest “investors” had plenty of time to multiply their money many times due to the high returns. Over these years, they probably have withdrawn enough to exceed the normal return of other legitimate investment vehicles. If you consider that most people lost big chunks of their money this year, I’d suggest that these earliest investors made out like a bandit. The earliest investors are his closet friends and relatives who actually benefited, not hurt like people were saying. The real suckers are the latecomer to the party who did not have time to realize any gain and a chance to withdraw some of their money. This is why people may be asked to return all or some of the funds that were withdrawn in the past 6 years. To be fair, all the funds that were ever withdrawn during this Ponzi scheme should be returned and divided between all victims. Money that were paid to feeder funds and the likes should also be returned and redistributed to all victims to recoupe some of their loses. In the end, this is simply a transfer of wealth from a large number of unsuspected people to a lucky few who are closest to Madoff, including Madoff himself. As to why he did it, ask yourself why other masters of the universe on Wallstreet did the same thing to the financial system that eventually brought down the entire world. Here is an example: the housing bubble colapse. Does it not look like a giant Ponzi scheme to you? When will we ever learn to avoid these schemes? NEVER! Long live greed and the masters of the universe.

Where’s the money? Simple, almost all of it, except what Madoff may have skimmed off the top, is in the checking accounts of his clients – especially those clients who have been with him for more than 10 years. How so? the fat “returns” they received were actually return of principal and not return on principal. So they haven’t really lost anything; they just haven’t made anything either. Its a different matter for the latecomers; they have truly been had – big time.

Madoff will spend the rest of his life in jail. What about investment bankers (like Santander) that “invested” clients money with Madoff for years and years? what will be their punishment?

the money has been chanelled to secret banbk accounts over seas.
financial fraud is comon on wall st.the corruption and the incompetence of the people that suppose to protect us is of such magnitude that these criminals will steal this great country out of existance.the first step has already happen,the crash of the market,the stealing of the american industry and technology that took over 200 years to build.
we don’t have a goverment that represents us,we lost our goverment,the criminals are in control of everything

Stan, just one more thought. As complicated as our water system is the water company knows where each glass full of water is assigned and bills the customer accordingly.

Likewise, our vast electrical system knows where each watt is delivered and billed accordingly.

The national highway system, as complex as it is, is named from the turnpike, interestate system, street, and alley for one to find his way to a randon destination.

How can the Central Banking System not know where funds come from and to whom or where they are assigned?

Hello! The World population is the most educated its ever been since formal education began!

To all the Neros’ out there, don’t make your selves out to be like kindergarten children.

Rome is burning. Today, we have smoke alarms!

A gross simplification that disregards any market returns (positive or negative) or changes in fund size on the portfolio managed by Madoff and simply looks at payout and turnover can show how quickly $50 B could disappear. Assume his claimed $14 B under management earning 12% a year, which he paid out (which induced investors to keep their money in and not make principal withdrawals), using new funds which were raised. That is $1.68 B per year paid out. Then consider an average fund high-end fund holding period of 8 years, meaning that in 8 years the entire investor base turned over (also not true, but bear with me). That’s an average $1.75 B per year in “principal” paid out of new investors’ funds. Total then he would be paying out $3.43 B per year of new money to satisfy existing claims on the fund. Do that for 15 years and you’ve lost $51.45 B of new investors’ money. I understand that this is a gross simplification but it points to how likely it is that there is not some giant “stash of cash” waiting somewhere in a “vault”. If a true Ponzi scheme, then Madoff probably made hundreds of millions and truly lost many tens of billions.

Lost money with Madoff? Good! Welcome to real life with the rest of us you spoiled whining has-beens!! Now some of you might actually have to get a real job instead of exploiting the rest of us.

Clearly, in this pyramid scheme, a large amount of money has been taken by co-conspirators (those bringing in the “investors” and their money who knew of the scheme – “don’t ask how money is made don’t tell how money is made policy” does not apply to professional money managers that invest billions of dollars and don’t try to verify the returns”). Also, a large chunk of pyramid scheme money has been paid out over time to various John Doe and Jane Doe Investors and Charity Investors and Fund Investors who have received back principal and great returns or portions thereof – this is the nature of a pyramid scheme – some win, some break even and some lose. Now those who received any money/fees from scheme (for last six years) will have to pay it back into the pot so all investors/money managers can share and share alike.

Compare Kingate Global Fund (Madoff fund) with S&P500. It looks that money is lost to market.

Another good question is how much money is lost in e.g. Fidelity Funds. This amount of money maybe somewhat higher than 50 billions.

Where is the RICO law application. This has conspiracy written all over it. The Feds or State should now own that Manhattan penthouse and other assets. What, the Penthouse is now a cell of the State Pen?

Here’s a Toast to Due Diligence!

New Investment Commandment: Know thy Custodian, Clearinghouse and Auditor.

My #1 Rule: Diversify, Diversify, Diversify.

I wonder if while he was lying about the trades that were being made, maybe he was busy too- moving money to offshore accounts for his sons… With all the lies that were stated about his imaginary trades, there is obviously alot that he is trying to hide.

Every dime and every piece of property this skunk owns should be immediately frozen by the govt. until a total accounting of his assets is completed.
He should spend the rest of his sorry life in an 8X10 cell as the “guest” of the government.
Even that is small recompense for the havoc he’s raised.

Most of the money went to his investors as cash returns, that’s why they stayed happy. Lets say you deposited $1 million with Madoff ten years ago. He could afford to pay you 10% interest every year, and you could withdraw that interest, for ten years. After that, all the money is gone and he needs to find someone else’s money to keep paying you. I’m not surprised that there were times he didn’t want to take on more investors. What that meant, as he knew, was that he would have to find even more investors down the track. So he kept the incoming funds to a level which satisfied his payment obligations and nothing more – the trouble was that even this limited intake had to increase exponentially over the years.

I agree with Lukasiak and Michelob — the “lost” money either never existed or was paid out to other people. Here’s what I mean by never existed — suppose you invested 1 million dollars 15 years ago, and it earned 15% per year, every year, and you never withdrew any. On paper your balance would be about 7 million. But suppose the money was never invested and was just used to pay others. Did you lose 1 million or 7 million? The 6 million never went anywhere because it never existed in the first place other than on paper.

Madoff understands risk vs. reward very clearly. He’s smart enough to not take a huge risk like that of committing criminal acts unless there was going to be a huge reward for himself. Believe me, he has lots of money stowed away in offshore accounts.

How come my bank never makes a mistake with my withdrawls or deposits, but the SEC cant figure out a 50B Ponzi scheme. If the economy did not go south, Madoff would still be going strong. He could not handle so many people withdrawing money. Check out http://www.bernard-madoff-scam.blogspot.com/

Are you sure your bank never makes a mistake with your withdrawals or deposits?

Ah, one small observation. Where’d the $50 billion number come from? Bernie? May not be a real number. Remember, he’s an egoist and a liar; $50 billion makes him sound like a REAL man. The real number may be lower, a lot lower. A second observation: I’m amazed at the number of people writing about INCREASING the regulatory function. Why, just a few short months/years ago, most folks were saying REDUCE regulation because its a drag on the economy, leads to socialism, etc etc etc. Why don’t I hear that now?

Cheers! ~Rick in Atlanta

Greedy Bastards Unite – The early “investors” got your money – go sue them. Madoff knew what he was dealing with – “better than thou” rich folks that were looking to beat the system. My daddy once told me – “If it sounds too good to be true; it’s probably illegal, immoral or both”. One more old saying – “If it swims like a fish, looks like a fish and when it dies, it smells like a fish; it just might be a fish (or in this case a gefilte fish). When you try to beat the system and lose, TOO DAMN BAD!

The SEC did not see it as a Ponzi scheme because it did not recieve that specific label until Madoff said that’s what it was. There is no telling what kind of scheme it actually is because he lied about all the trades (investments). I believe he simply took what money was there, moved it to his own personal accounts, and then he threw his hands up in the air yelling Oh no, I ran out of money!

Today’s received wisdom is tomorrow’s screwup-in-hindsight.

He paid old clients with the money from new clients. It is the same Ponzi work that Social Security does. Where is the money? – this question about SS is more important.

Gamblers can get rid of any amount of money.

Still doesn’t make sense. Why bother with all the collections to cover earlier collections and phony statements if you already had millions and controlled milions

The money obviously went predominantly to pay investors’ returns and support redemptions.

HEDGE FUNDS

The money was laundered through IDB bank whit the help of Sy Syms of which he was partner with at the Yeshiva. IDB (Israel Discount Bank) was fined by NYS authorities for money laundering and failure to implement mechanisms to prevent money laundering. Needless to say, that is the black hole were all this money ended up.

The money was taken out of the country and the long time friends and investors with Madoff are aware of its whereabouts.

What this scheme entails was the transferring of all those huge fortunes out of the US pending a monetary collapse. Madoff was hired as the fall guy so that would explain the lenient treatment and “House Arrest.”

Madoff will probably not spend significant time in prison as he probably has already cut a deal with Prosecutors. Additionally, the SEC is conducting a cover-up to help Madoff beat this wrap.

But as Bernie put it so well, “It’s all one BIG lie.”

as madoff was legally set up, adn advisor entity, a broker dealer,and some typr of fund ,,,his entities by law needed to have “bank accounts”. these bank accounts could have been in various names but any first year auditor could have compared the balance in client accounts (in totals) with the balances in the varous bank accounts. I have audited broker dealers and adisors and i can tell you that take an auditor 2-3 days to have caught this fraud.
THe SEC and chairman Cox are responsible for criminal negligence in not cathing this fraud. The level of negligence rises to the level of GROSS,CRIMINAL NEGLIGENCE, and the agency and it’s director should be held liable for the losses , the suicides, and the despair of old people who have lost their life savings and do not have time to make it back.

In reference to your Response,”Mike, Spokane, WA : December 26, 2008 2:57 pm” You fall into my my criteria of a portfolio manager… If it smells like a duck, walks like duck and it looks like a duck it must be a portfolio manager. It seems that my comments hurt you and certainly they have to. Think about the people that got hurt. It is the legal profession and avenue to scam others of their wealth that they have earned in a conventional way of doing business. The recent events will change the way people will look at a portfolio manager and time will tell. Perfect examples are Bear Stearns and Lehman and MADOFF. Some are legal and some might have cross the line but it still all the same game getting others people money and show profits on paper. Lets take a look at the ones that where legal. Sure they where reputable companies in peoples minds but what is the difference when a reputable company uses this incoming revenue to support the whole company lifestyle(So Called Overhead) (Offices, salaries, bonuses, planes, Mega Yachts, Etc..) and not backing their own portfolio??? Companies are able no having to back their investments with their own moneys. The portfolio manager profession should also risk company dollars as a safer method for the investor. There should be regulation that the portfolio manager has to guarantee the investment dollar for dollar and show such liquidity at any time including but not limited what the definition of liquidity should be( Cash Only)

The money went to early investors. He wasn’t really making 12 percent a year for them. Let’s say he was making 5 percent some years, 10 percent in great years, losing in other years. But every year he paid investors 12 percent. If you lose 5 to 10 percent every year, you’ll quickly lose a lot of money.

$50b? Pshaw! That would barely cover the cost of the shoes in Imelda’s closet.

GREED is the heart of Capitalism and Bernie Madoff is just another heart-beat . A blind man on a trotting horse knows that Madoff has already shared the money with his greedy family and friends . The U.S economy and americans in Iraq are dying , while Pres. George W. Bush plays his fiddle and duck from size 10 shoes .

Investment management is a career based on trust. The clients have to trust the manager, and they have to trust that the manager will give it back someday. I will be really disappointed if Madoff talks his way out of this one like it’s just the same thing as social security. Please don’t tell me he’s going to dupe every one again, or should I say “double-dupe”. He wants to victimize himself so that everyone will feel sorry for him and give him more money- DON’T FALL FOR IT!

Jorge, I wasn’t hurt by your comments, nor did I intend to insult you or your concern for people that were damaged by Madoff’s heinous behavior. I am not a portfolio manager, though I’ve served as a board director for a major pension fund. It is, however, quite conceivable that I walk and smell like a duck (really…what does a duck smell like, and is it indicative of a deep personal flaw?). Perhaps something is being lost in an ESL translation?

My comments were merely intended to describe the limitations associated with your rejection of all synthetic representations of wealth, and the necessity of trust-based financial instruments. In short, though I might find the real world nature of your shopping center construction mildly reassuring, I would certainly want to be able to link my partial ownership to rights on ROI, equity, and some sort of paper-based contractual agreement enforceable by a court of law, rather than on what you might think is fair.

Your proposals regarding increasing portfolio manager liability are laudable, but unworkable; they violate the fundamental basis of the risk/return relationship that governs legitimate investment activity. While funds invested in high risk financial instruments have every lawful right of expecting a high rate of return should such improbable ventures succeed, there can be no guarantee of safety, or even liquidity. You can’t have it both ways. In a rational world, low risk = low rate of return (unless you’re one of Madoff’s more recent investors…..and we can see how that’s turned out).

IN BERNIES DEFENCE…

If I was 70 year old Bernie…
I would tell the judge who ordered disclosure, the prosecutors, the investors to: “GO POUND SAND”.

At age 70, he has no reason to disclose, or testify unless it is to his advantage, and his testimony is up for bids to the highest bidder…

He can testify that those that invested knew of the scam or they were innocent…take your pick…he can also claim that there were brown envelopes filled with cash passed under the table to those that brought in the suckers….
Who are you gonna believe at trial a repentant sinner or some smuck falsely accused…who should have asked for a fee but didn’t..

The sums are large and the law suits will last for years…his testimony will make or break cases, and in that regard he is in the drivers seat and you can have him for a price.

He will name bankers, politicians and everyone he wants too and no one but Bernie will know if it is the truth or not…

Just the gathering of the testimony in deposition form will take years and years and of course he has a failing memory as old timers kicks in.

He will need to stay in nice hotels cause that stuffy jail affects his ability to recall events.

In the end it maybe in everyones interest to pay him to quietly leave…. heh heh heh

I know Carjackers who are gonna have a worse time in court than Bernie…

Mostly, the investors got the money.
Paying out 12% a year means returning 100% of the depositor’s money in 6.5 years. They “thought” they had principle left but in fact had it returned to them as “interest” or “earnings”.
The losers were those who were not in long enough to ‘earn’ their money back. The winners were the ones invested a very long time.

A good chunk of Madoff’s Money is in the Central Bank of a Country where FBI, IRS or CIA are prohibited to investigate.

Let’s see….Offshore is a pretty good guess. The Cayman Islands,Switzerland, and others have been a favorite for hiding money without question for years. Just try to get a peek there..NOT going to ever happen!

I find it very interesting that Mr. Madoff chose to defraud Jewish Charities, Jewish Universities and Schools, Wealthy Jewish Clients and Jewish Endowments. Being from Arizona and watching the Baptist Foundation rob retired Baptists of their life savings makes me wonder why anyone would pick a financial Advisor or Organization based on religious beliefs.

Much of that money never existed in the first place. It was ficitious compounded interest.

Let’s say I set up a similar scheme involving only me. I put $1mil in my scheme, and I award myself 12% interest. I take that $120k a year and spend it, never touching my principal.

Years later, the market tanks, and I try to take out that principal, only to find that it is not there because I’d been taking out $120k a year for years. I suddenly realize I’ve fooled me, and I’ve “lost” $1mil. Or spent it on scotch and hookers over the years, depending on how you see things.

That’s about how it all went down, less the commission checks for people who brought in more suckers, in Bernie’s case.

I understand it. I just think there’s a lot of money sitting around somewhere, hiding.

Bernie Madoff is a financial expert. Do you think he would let money that was supposed to be compounding just sit around, and then he just gradually gave it out to clients until there was nothing left? Anyone who knows anything about finance would not just let the money sit around, and at the same time give it out until there was nothing left. Only an idiot would do that. Bernie Madoff thought this out very meticulously. He did not just give it to clients as interest until there was nothing left. Being the financial expert that he is, it would not be an appropriate fit. If the shoe doesn’t fit, then ya can’t wear it, and that shoe just doesn’t fit him.

I strongly suspect that his investments just had been losing money for years and years. A million here and there, for 20 to 30 years, adds up.

It takes some real talent to lose money consistently in the market for a straight 20-30 years. Seriously, you have to be trying to lose money if that’s the case.

I invested with Bernie in the late 1980’s, but then (fortunately) withdrew my accumulated funds 3 years ago to complete a real estate purchase. If those weren’t my real returns, am I going to have to give some of that money back? Not an easy task, as its all in devalued real estate now………..

Madoff certainly would have invested the money he collected in some way in order to keep the fraud going as long as possible. The earliest investors were also encouraged to keep re-investing their returns in order to bring the “fund” to a critical point where it can begin to dole out real money. As long as the scheme can keep going, Madoff and the earliest investors can withdraw more money from it. Whatever investment he made with the money, it could not last forever due to the high returns that the fund had to pay out to long-time investors, outrageous fees to co-conspirators and Madoff himself, and possible loses here and there from his gambles with the stock market and the casinos. He’s certainly one of those masters of the universe whose oversized egos need to be fed constantly, “mine is bigger than yours” life-long obsession. This Ponzi scheme surely inflated his ego to several order of magnitude without much effort and at the same time afford him a lavish lifestyle of the rich and famous. If the other masters of the universe did not spoil the loot, all of them, Madoff included, would have kept on fleecing everyone else quite a bit longer until they went out from this world, having lived a very good life indeed.

Mark, my unqualified advice to you is to ‘run silent, run deep’. The worst thing you could do is ask the investors’ attorneys. I think you know what their answer will be. At a minimum you’ll spend a fortune in attorney fees successfully defending your gains if you bring it to their attention. Your attorney,, and theirs, will make out like champs.

He got paid to be the fall guy for even bigger crooks behind the scenes. He had his sons turn him in hoping to have them avoid the wrath that will soon be his. When all is said and done he will be remembered as a terrible investor, which ironically will bother him the most. If you don’t think he had help, then why is he not sitting in jail but rather a place I can only dream of visiting? What i’ve learned is that I can screw the rest of you as hard as I want and nothing bad will happen to me and my family. I’m going to start now, does anyone want 43% yearly returns? Send me your cash, I’ll send you statements of proof…. Serious investors only please

Just as someone who unknowingly bought stolen goods, by law he would have to return the goods to the rightful owners. Whether he can get his money back is an entirely different matter. We do not know yet how the fund will be recovered and distributed to its victims. With all the lawsuits from so many different victims, whatever little money that remains and can be recovered from long-time investors, most of that will go to attorney fees anyway. If Madoff did not maintain good recordkeeping which seems to be the case, there will be very little chance to recover much from the long-time investors. The real battle will not be between Madoff and his investors. Rather, it will be between the investors themselves! That will be the ultimate tragedy.

I feel a little bit of sympathy for Madoff because he reminds me of a ferret I used to have. She would always drag stuff under my bed and hide things there. He looks just like her in the face. The ferret didn’t mean any harm, that was just what she liked to do. Maybe the money is under Madoff’s bed.

swiss banks ??? by any means.

Madoff or (MAD OFF WITH THE MONEY ) Is modern day Hitler, what an attrocity he inflicted on vast amonunts of Jewish people, he should rot in hell. the federal government must step in who overseas the lack of diligent overseeing by the SEC and the negligence regarding the life savings of people and institutions throughout the U.S. Some of the readers might not have sympathy for the rich who lost to a sccam of unequalled pproportions ever in the U,S.however, the rich should seek out as the average lay person the most interest on their money. At this point all of us should go back to saving our money in our mattresses, or pillows because 2008 demonstrated how unsecure banks are and how vulnerable our life savings is to disappear before us. President Bush his cabinet and congress should go down in history as being the most ignorant elected officials in U.S history, the SEC should be held responsible for lack of scutiny when so much money is in the hands of a few, namely Madoff.

Where? Lemme give you some clues: Madoff’s just a front pawn.

OK, Anne Palmer, I simplified it a bit.

Bernie may have made about 8% a year or so. It’s an old Wall Street adage, “nobody beats the street”, and we must assume that Bernie wasn’t beating it either, or we wouldn’t be having this discussion.

So … Bernie credits his investors with 12% gains, makes, on average, 8% gains, and takes in a bunch of cash in fees off the top.

He goes on making 8% but losing 12%, and this works as long as he has more investors coming in … until the market tanks and too many investors want their principal back … at which point it becomes clear that the “gains” that were being paid out came from principal.

The point remains … much of this money consited of the fictitious gains being reported, so they were not really there to lose. I’m sure Bernie and his cohorts stashed some cash in offshore banks, but most of the “losses” were funny money that never existed in the first place.

I am a Cuban witch doctor (santero priest) I can help with this all, call me on my private line….nahh just send me your money! I´ll put a spell on Bernie!

In a Ponzi or Pyramid scheme, not all parties are victims in a financial way. The absolute victims are the greedy (100% re-invested) the richest (no need to withdraw) and the latecomers. I’ve suggested that some long-time investors might have made out like a bandit. They most certainly have withdrawn many times the money that they put in after so many years invested in the scheme. These are the long-time investors that Madoff approached initially. They are most certainly the closest sources of friendship and affection to Madoff that he knew would not be hurt by his scheme, at least from a financial basis.
Might it be possible that, in an absurd sense, Madoff had a certain motivation in this that is more than just for himelf? You know, the Robin Hood approach of taking away from the rich & undeserved and give it to the poor. It certainly would make him feel good, even proud of such deed. With a large ego and so much power, a distorted sense of purpose usually prevails. Hitler, Jim Jones and the recent masters of the universe are some excellent examples. Hopefully, Madoff will write a book about all of this to tell us of his motive(s) and make millions in the process. In the end, unwittingly or not, we are all conspirators and victims at the same time. History will repeat itself. That much is certain in the money world.

He never invested the money and if he did, it was probably in crap bonds. So the principal never appreciated and withdrawls made the principal amount drop further. Subtract out checks paid to family, co-workers, preferential charities, lavish living etc. and you still have some change left. The IRS will find it in a Swiss, but I’m betting its more likely in an undisclosed, Bahamian off-shore account. The key here is to watch the offspring of the cohorts and specifically Madoff’s family for the next 20 years. If there’s a statute of limitations, the prosecutors will lose, because Madoff took the shame and sacrifice to build a future empire as his family legacy. I have one question – how much money do you need to be happy? Freak…!

I still think there’s some money under his bed, maybe in a briefcase.

just follow his money and his families accounts and assets first. He shared with his children, grandchildren, etc. Any thing bought, given away to family members etc. should be given back. He should have to live in a regular apt. and his 8 million dollar house should be taken too.