Madoff: A Wall Street baron revealed as fraudster



NEW YORK, Sebastian Smith- In a city famous for money and theatre, Wall Steet brahmin Bernard Madoff was a master of both, using his charm to attract deep-pocketed clients who were unsuspecting of his alleged schemes.



   Madoff: A Wall Street baron revealed as fraudster
With little more than his wit and the implicit trust of his elite community, the silver-haired money manager is said to have pulled off a fraud of gargantuan proportions, conning thousands of savvy investors.
On Thursday, the 70-year-old's luck finally ran out as he admitted 11 charges of fraud and theft, apologizing before a courtroom and some of his victims.
Speaking publicly for the first time since his shocking arrest on December 11, Madoff recounted how he lured clients into giving him their money and confessed he was "deeply sorry and ashamed."
"I believed it would end quickly and I would extricate myself and my clients," he said. "This proved difficult and, in the end, impossible."
He was led away in handcuffs, an ignominious downfall for the man who once seemed to bathe in success as he climbed from lowly beginnings to the top of the Wall Street tree.
The man friends once knew as Bernie started as a Long Island lifeguard before entering the stock market, eventually becoming chairman of the Nasdaq stock exchange.
There, he was credited with helping revolutionize the shift in trading from face-to-face deals, from telephones to computers, with trades made in seconds not minutes, and ushering in an era of ever greater stakes and profits.
But it was as a private money manager that he won a reputation as a financial guru.
Returns of around 10 percent, with occasional surges a great deal higher, came in so regularly that rich individuals, endowments, and supposedly expert banks lined up to give him money.
When a handful of alarmed journalists and investigators raised concerns, they were ignored.
Madoff himself had several luxury homes, a motor yacht and private airplane, but this was to be expected for a big beast on Wall Street -- anything less might have been suspicious.
And the list of investors was Madoff's best advertisement: if so many VIPs were on there, what could there be to fear?
Behind this shiny surface, prosecutors say there was little more than a shell game, a Ponzi scheme where new clients' capital was stolen to pay off existing clients and create the illusion of returns.
"Madoff created and caused to be created a broad infrastructure at (his company) BLMIS to generate the impression and support the appearance that BLMIS was operating a legitimate investment advisory business," prosecutors said.
Just two weeks before Madoff's arrest, his company claimed to be managing 64.8 billion dollars, when in reality, the prosecution said, there was only "a small fraction of that."
Underlining what prosecutors see as Madoff's ruthlessness, he chose his chief victims from fellow members of the tight-knit Jewish community.
A columnist for The Wall Street Journal says Madoff lured his victims with a "mysterious allure and sense of exclusivity."
Initially Madoff would rely on a "macher," the Yiddish term for a big shot, who would go to the country club and "brag, 'I've got my money invested with Madoff and he's doing really well,'" the Journal wrote.
"When his listener expressed interest, the macher would reply, "You can't get in unless you're invited ... but I can probably get you in."

Thursday, March 12th 2009
Sebastian Smith
           


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