Former Nasdaq chairman arrested for fraud

Madoff reportedly told employees Ponzi scheme lost billions for customers

Reuters
updated 7:38 p.m. CT, Thurs., Dec. 11, 2008

NEW YORK - Bernard Madoff, a longtime fixture on Wall Street, was arrested and charged on Thursday with allegedly running a $50 billion Ponzi scheme, U.S. authorities said.

The former chairman of the Nasdaq Stock Market who remains a member of Nasdaq OMX Group Inc's nominating committee, is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he founded in 1960.

But the alleged fraud involved a hedge fund he ran from a separate floor of the building where his brokerage is based.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to a criminal complaint against him.

A Ponzi scheme is a pyramid-type swindle in which very high returns are promised to early investors, who are paid off with money put up by later investors.

Prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 5 years in prison and a fine of up to $5 million.

"Madoff stated that the business was insolvent, and that it had been for years," Lev Dassin, acting United States Attorney for the Southern District of New York, said in a statement.

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Is there any part of the US financial system that isn't rotten to the core?

Yet Congress seems willing to bail them out - no questions asked - but demands that the VICTIMS who placed reasonable reliance on the availability of credit that no longer exists due to the CRIMINAL CONDUCT of those in the financial markets must destroy their businesses if they want help.

John