MADOFF - HIS "MADE-OFF SCAM".

Bernard Madoff was a former chairman and director of the NASDAQ in 1990.Prior to that he started his own investment company Bernard L. Madoff Investment Securities LLC in 1960. Madoff was a person of Jewish origin.His Jewish origin had resulted in Jewish Community investing huge amounts in his firm.

Bernard Madoff "made-off" with a $50 Billion scam. The scam was claimed to have taken place due to the loss suffered by Madoff's hedging operations through Eurpoean counterparties.He claims to have suffered losses due to bad trade, But investors haven't found any records as such.In order to meet with the redemption demands of clientele , he started collecting money from the people promising to pay an attractive interest rate. The investors received an attractive rate of interest on their investments which led them to invest more money in his firm. The scam was that he collected money from one person to clear his debt and then borrowed money from the 2nd person to clear the debt of the 3rd person and so on.

Ex- XYZ Bank approached Mr. Madoff for redemption of the amount which the Bank lent to him, Madoff who din't have cash started collecting money from people. If Mr. A paid 100$ to Madoff, Madoff inturn paid 200$ to Mr.A after few days by collecting money from B, Similarly He paid B 400$ by borrowing money from C&D, in order to pay C&D he again borrowed from E&F. This transactions occurred regularly & finally he had to hang up his boots.

Madoff was arrested by federal authorities on Dec. 11 and charged with securities fraud for allegedly running a Ponzi scheme - paying one set of investors with money from another.In other words a "Ponzi" scheme is a scheme in which a person pays early investors with the money put in by later ones.

The scam was named Ponzi as an Italian by name Charles Ponzi was the first person who resorted to "Get Rich Quick" scam in 1920. From then onwards any similar kind of fraud was referred to as "Ponzi" Scam.

Reknown Director Steven Spielberg and DreamWorks Animation chief executive Jeffrey Katzenberg, South California's Jewish community lost to the extent of 600 $Million , Massachusetts Mutual Life Insurance lost to the extent of $3Million HSBC Bank, Royal Bank Of Scotland,United Kingdom firms have lost hundreds of millions of pounds, Major charity bodies too lost their funds.

Critics claim that the US SEC( Securities & Exchange Commission) failed to realise the threat which they could have avoided ten years ago. This scam which comes during a slump in the economy has further aggravated the financial scenario . The SEC is still investigating and estimating the extent of the actual loss suffered by the investors in this regard. Hope these kind of frauds are eliminated in order to safeguard the interests of the investors.