The cover for Madoff’s Ponzi scheme was that he was running a hedge fund – and, by all appearances, an extraordinarily successful one, which returned between around 10% and 12% every year, regardless of market conditions. (Madoff’s main business – see below – was a successful, and legitimate, share brokerage.) In a world of bubbles, where what-started-as- a-joke Dogecoin is now up nearly 17,000% this year so far, that might not sound like much. But low volatility – that is, minimal swings in performance – and very respectable long-term double-digit returns are the purple unicorn dancing on a rainbow of the asset- management world... It’s an impossible fantasy beyond achievement. “One of the biggest red flags was the consistent performance,” Erin told me. “It was totally unaffected by market conditions.” Madoff’s fund posted down months – which, of course, weren’t down months at all, since there was no actual trading going on – only an absurdly tiny 4% of the time. WHOWAS RIPPED OFF? The otherworldly performance of Madoff’s fund was like crack cocaine to the marketing and distribution agents, private bankers, and brokers who were unwitting partners to Madoff’s scheme. His investors spanned the grandest names in old-money Europe... from supposedly savvy bankers at UBS and Merrill Lynch to charities and pension funds... They all fed the Madoff Ponzi maw. His most important partner was the Fairfield Greenwich Group, a
tony marketing agent whose principals took home hundreds of millions of dollars from funneling money to Madoff. Madoff spared no one, as Erin wrote... For decades, Madoff looked his investors in the eye with a smile, shook their hands, and never showed any indication – let alone remorse – that he was robbing them blind. He fooled his closest friends and family, as well as hundreds of university endowments, charities, and pension funds; he stole people’s hard-earned savings, their futures, and their dreams... His investors spanned the grandest names in old-money Europe... from supposedly savvy bankers at UBS and Merrill Lynch to charities and pension funds... They all fed the Madoff Ponzi maw. Steven Spielberg, Zsa Zsa Gabor, John Malkovich, and Larry King were among the higher-profile victims of Madoff’s scam. The owner of the New York Mets lost hundreds of millions of dollars, and two years later announced plans to sell a stake in the team. Jim Simons of Renaissance Technologies, one of the world’s most successful (real) hedge funds, recommended Madoff to a university endowment. Most of Madoff’s victims, though, were people who were well-off but by no means rich... and who suffered life-altering wealth destruction when Madoff’s scheme collapsed.
American Consequences
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