Friday, December 12, 2008

FORMER CHAIR OF NASDAQ ARRESTED IN ALLEGED SCAM

BBC - The former chairman of the NASDAQ stock market has been arrested and charged with securities fraud, in what may be one of the biggest fraud cases yet.

Bernard Madoff ran a hedge fund which ran up $50bn of fraudulent losses and which he called "one big lie," prosecutors allege.

Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.

His lawyer said he would fight to get through these "unfortunate events".

The 70-year-old has been released on $10m bail.

According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn of money under management - was a fraud and had been insolvent for years, losing at least $50bn.

He said he was "finished", that he had "absolutely nothing" and that "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.

He told them that he planned to surrender to the authorities but not before he used his last $200m-$300m to pay "selected employees, family and friends".

Under a Ponzi scheme, also known as a pyramid scheme, investors are promised very high returns on their investment, while in reality early investors are paid with money collected from later investors.

On Thursday, two agents from the FBI went to his apartment.

He told them he "paid investors with money that wasn't there", that he was "broke" and "insolvent", that it "could not go on" and he expected to go to jail.

1 Comments:

At December 12, 2008 12:40 PM, Anonymous Anonymous said...

Note that in cases involving less influential persons the feds generally seize the defendant's assets, alleging assets were criminally obtained, making hiring adequate legal representation impossible.

 

Post a Comment

<< Home