‘ Middleman Who Convinced Investors. The investigation into the Bernard Madoff investment fraud is turning to “middlemen” who convinced investors to sink their money into Madoff’s alleged Ponzi scheme. According to The Wall Street Journal, many of those at the center of the Madoff probe claim to be victims themselves, but investigators want to know […]
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Middleman Who Convinced Investors. The investigation into the Bernard Madoff investment fraud is turning to “middlemen” who convinced investors to sink their money into Madoff’s alleged Ponzi scheme. According to The Wall Street Journal, many of those at the center of the Madoff probe claim to be victims themselves, but investigators want to know exactly what these recruiters told investors, and whether or not they even disclosed that Madoff would be the one managing investors’ money.
The 70-year-old Madoff was arrested on one count of securities fraud on December 11. Madoff – once a chairman of the Nasdaq stock exchange – is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.
According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.” Madoff reportedly told employees that his fraud could cost investors as much as $50 billion.
According to The Wall Street Journal, Madoff was able to keep his alleged Ponzi scheme going for decades due to his continuing ability to lure investors. His “middlemen” were key to this, the Journal said. These recruiters pitched the investing strategy and received fees from the Madoff in return. Many of them became wealthy in the process.
According to The Wall Street Journal, the following individuals are being investigated:
Right now, there are no allegations that any of these middlemen was aware of Madoff’s alleged fraud. However, some have been named in lawsuits by angry clients, who say that they failed to perform due diligence, and in some cases didn’t reveal they were actually invested Madoff.
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