Ponzi Scheme Mastermind Bernie Madoff Dies at Age 82

The mastermind of one of America’s biggest frauds, Bernie Madoff has died at age 82.

Before his death, Madoff was a one-time chairman of the Nasdaq Stock Market and a fixture on Wall Street for more than 20 years. He became popular, negatively, after masterminding a fraud that milked $65 billion from thousands of investors. Some of the victims include big names like Steven Spielberg, L’Oreal heiress Liliane Bettencourt, New York Mets owners Fred Wilpon and Saul Katz, and actors Kevin Bacon and Kyra Sedgwick, among others.

Some of Madoff’s victims went as far as investing their life savings and pensions. The experience was very devastating to many of the victims, according to former assistant U.S. attorney for the Southern District of New York, Matthew L. Schwartz, who led the investigation of Bernard L. Madoff Investment Securities.

“There were so many people who effectively treated him like a bank and kept their entire life savings with him, so when it was all revealed to be a sham, people were not able to live their lives anymore,” Schwartz said. “They couldn’t pay tuition. They couldn’t pay their mortgages.”

In 2008, the Wall Street investor shocked the public when he confessed to a partnership in a multi-million dollar Ponzi scheme. In 2009, he pleaded guilty with the longest sentence allowed. The court-appointed trustee has since returned more than $12 billion to Madoff’s former clients.

The Bureau of Prisons said in a statement on Wednesday that Madoff died at the Federal Medical Center in Butner, N.C., although didn’t state the cause of death. His death came barely a year later after his attorney asked a federal court to release him from prison.

Madoff, who had served the first decade of his 150-year sentence had a chronic kidney failure and 18 months to live, the attorney wrote at the time.

Some three decades ago, Madoff had a reputation for championing computer trading and financial wizardry. If he had died at the time, he would have left a good legacy behind. Now the world remembers him as a disgraced fraudster who swindled thousands of innocent Americans of their hard-earned money, leaving them hopeless and homeless.

“There were so many heartbreaking stories of people who thought they had material savings, who had thought they put everything into their nest egg and that they would be able to retire and instead they ended up effectively homeless,” Schwartz added.

Like all other Ponzi schemes, Madoff took money from new investors to pay older investors, while keeping a portion to fund his lavish lifestyle. The scheme was supposed to last for as long as possible as long as new investors kept pouring their money into the system. Many of the victims were carried away by Madoff’s company reputation and never suspected foul play.

Author of “Wizard of Lies”, Diana B. Henriques wrote in her book that “people are trained to think of Ponzi schemes promising 50 percent returns a month”, but not Madoff. He had a different approach towards hooking his victims by paying returns that almost beat the S&P 500.

Madoff’s cover was blown when the 2008 financial crisis hit. Clients requested up to $7 billion in returns, but Madoff had only a fraction of the amount. His son, who he had told about the scheme, reported him to the federal authorities. On December 11, 2008, Madoff was arrested and charged with fraud. At the time of his arrest, the firm’s financial statements showed $65 billion but were only a shadow of the stated amount in reality.