Let’s face it: the odds that one man was able to perpetrate a $50 billion scam all by himself is about as likely as a 10-year-old NFL quarterback.
Harry Markopolos, who years ago worked for a rival firm, researched Mr Madoff's stock-options strategy and was convinced the results likely weren't real.
“Madoff Securities is the world's largest Ponzi Scheme,” Mr Markopolos, wrote in a letter to the US Securities and Exchange Commission in 1999.
Mr Markopolos pursued his accusations over the past nine years, dealing with both the New York and Boston bureaus of the SEC, according to documents he sent to the SEC reviewed by The Wall Street Journal.
Also striking some as odd: Mr Madoff operated as a broker dealer with an asset management division. Why not simply act as a hedge fund and pocket big gains, rather than profit from trading commissions as the firm seemed to be doing, they asked.
In other words, if Bernard Madoff was a true investing genius, why did he (supposedly) earn his money from fees — chump change, if he was generating a consistent 10-11% return?
It’s far more likely that Madoff was allowed to continue because he was spreading the wealth around to buddies on Wall Street. Now that the bubble has burst, a legion of Captain Renaults have suddenly appeared to conduct oversight.
Rick: How can you close me up? On what grounds?
Captain Renault: I’m shocked, shocked to find that gambling is going on in here!
[a croupier hands Renault a pile of money]
Croupier: Your winnings, sir.
Captain Renault: [sotto voce] Oh, thank you very much.
Captain Renault: Everybody out at once!
Bernard Madoff may be able to name names, which would explain his relatively cushy bail arrangement. House arrest in a $7 million condo? Rough.
Here’s a thought: as is the case when wise guys turn state’s evidence, house arrest may not be the safest arrangement for Bernard Madoff.
But with President-elect Obama comes change, right? Sure. Besides serving as a commissioner under three previous administrations, Obama’s nominee to head up the Securities and Exchange Commission, Mary Schapiro, previously appointed one of Norman Madoff’s sons to a regulatory body that oversees securities firms.
Now, there’s no evidence to suggest that Mark Madoff was complicit in this father’s actions. At the very least, however, it demonstrates the incestuous nature of Wall Street and the government agencies that are supposed to regulate it. Foxes guarding the henhouse, apparently.