Mr Madoff claims to have acted alone. When clients wished to redeem their investments, Madoff funded the payouts with new capital, which he attracted through a reputation for unbelievable returns and grooming his victims by earning their trust. That's why we were all so stunned.
See pictures of the demise of Bernard Madoff. Madoff's firm can execute trades so quickly and cheaply that it actually pays other brokerage firms a penny a share to execute their customers' orders, profiting from the spread between bid and asked prices that most stocks trade for.
He allegedly has now confessed that this was achieved by creating a pyramid scheme in which existing clients' returns were topped up, as needed, with money from new investors. My motivation was to try to make things better as much as I can, and that sort of meant putting myself out there.
Why did you decide to focus on that?
Some investors are understandably irate that their funds—including one run by the chairman of GMAC, a troubled car-loan firm—charged above-average fees, only to plonk the bulk of their cash in Mr Madoff's lap.
A year earlier, Rampart had learned that Access International Advisorsone of its trading partners, had significant investments with Madoff. Key Takeaways Bernie Madoff's Ponzi scheme, which likely ran for decades, defrauded thousands of investors out of tens of billions of dollars.
Madoff's plausibility to investors was based on several factors: His principal, public portfolio appeared to stick to safe investments in blue-chip stocks.