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Thread: Poof There Goes another $50B

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    Olympic Champ RYou's Avatar
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    Default Poof There Goes another $50B

    Former Nasdaq chairman arrested for fraud
    Madoff reportedly told employees Ponzi scheme lost billions for customers

    NEW YORK - A Wall Street powerbroker for nearly 50 years who built an influential firm has confessed to a massive fraud scheme that will cost investors at least $50 billion, federal authorities say.

    Bernard L. Madoff, 70, facing a single count of securities fraud, declined to speak with reporters after a federal magistrate judge in U.S. District Court in Manhattan ordered him released Thursday night on $10 million bail.

    Madoff told the employees he was "finished," that he had "absolutely nothing," that "it's all just one big lie" and it was "basically, a giant Ponzi scheme," according to the complaint filed in court.

    The employees understood Madoff's admission to mean that "he had for years been paying returns to certain investors out of the principal received from other, different, investors," said the complaint, which did not identify the investors impacted by the scheme.
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    Ancient Arachnid Spider's Avatar
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    Default Re: Poof There Goes another $50B

    His attorney said that it was an "unfortunate situation." There was nothing unfortunate about it. It was a deliberate, premeditated act of fraud. I can't believe how these guys who are prominent politicians, successful professional athletes and wealthy CEO's aren't satisfied with their good fortune and position, and blow it all with their greed and stupidity. Maybe Big had it right after all .
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    Default Re: Poof There Goes another $50B

    Sad sad it is if u ask me

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    Olympic Champ r.payton@att.net's Avatar
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    Default Re: Poof There Goes another $50B

    He is now at home wearing an Ankle bracelet -house arrest for scamming 50 billion dollars -I know he is still waiting his trial but it'll be a few years and i'm betting he gets 2 years at a country club .

    Once again, as in the Ivan Botsky case -how many people lost everything they had and if one commited suicide he should be charged with manslaughter .

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    World Champ ODH's Avatar
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    Default Re: Poof There Goes another $50B

    How does the money go "Poof"?
    In a Ponzi scheme don't some of the early investors make out at the expense of the ones who come later to the game.
    Wealth is neither created or lost in these scenarios, just transferred.

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    Olympic Champ r.payton@att.net's Avatar
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    Default Re: Poof There Goes another $50B

    It begins :
    -Villihuchet-sp- a french investor who lost over 1.4 bilion dollars in this PONZI scheme slit his wrists in his office rather than face the people who had entrusted their liives savings with him .Whether out of honor or the fact he was staring at numerous lawsuits doesn't really matter -the CAUSE of his death was the actions of another man -Manslaughter .

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    Olympic Champ RYou's Avatar
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    Default Re: Poof There Goes another $50B

    I've read there was about 300-400 million left. This one has been going on for a long long time, some speculate over 30 years.

    What cash there was remaining, was gobbled up with the market downturn in the fall leaving a fraction of the total investment. He had invested in hedge funds which buys investments on margin. Once it starts losing money you need to cover your loss in cash. There was no new cash. As the market fell more cash calls were made and the investments were sold off at severe losses to cover the cash calls.

    Bears Stearns was hedged 30:1, investments to cash. 1:1 is considered highly leveraged. I wouldn't be surprised to hear he was leveraged 3-4-5:1 or more trying to boost profits to cover his thefts.

    If you are leveraged 10:1, a 10% drop in stock value wipes out your cash position.
    Last edited by RYou; 12-23-2008 at 06:11 PM.
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    Olympic Champ r.payton@att.net's Avatar
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    Default Re: Poof There Goes another $50B

    Quote Originally Posted by RYou View Post
    I've read there was about 300-400 million left. This one has been going on for a long long time, some speculate over 30 years.

    What cash there was remaining, was gobbled up with the market downturn in the fall leaving a fraction of the total investment. He had invested in hedge funds which buys investments on margin. Once it starts losing money you need to cover your loss in cash. There was no new cash. As the market fell more cash calls were made and the investments were sold off at severe losses to cover the cash calls.

    Bears Stearns was hedged 30:1, investments to cash. 1:1 is considered highly leveraged. I wouldn't be surprised to hear he was leveraged 3-4-5:1 or more trying to boost profits to cover his thefts.

    If you are leveraged 10:1, a 10% drop in stock value wipes out your cash position.
    The story said he was heavily invested -now are all his investors left out in the cold also ?

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    World Champ ODH's Avatar
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    Default Re: Poof There Goes another $50B

    Quote Originally Posted by RYou View Post
    I've read there was about 300-400 million left. This one has been going on for a long long time, some speculate over 30 years.

    What cash there was remaining, was gobbled up with the market downturn in the fall leaving a fraction of the total investment. He had invested in hedge funds which buys investments on margin. Once it starts losing money you need to cover your loss in cash. There was no new cash. As the market fell more cash calls were made and the investments were sold off at severe losses to cover the cash calls.

    Bears Stearns was hedged 30:1, investments to cash. 1:1 is considered highly leveraged. I wouldn't be surprised to hear he was leveraged 3-4-5:1 or more trying to boost profits to cover his thefts.

    If you are leveraged 10:1, a 10% drop in stock value wipes out your cash position.
    So is this a Ponzi scheme, outright theft, or just bad investing and false reporting?

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