Bernard Madoff

Bernard Lawrence Madoff (; April 29, 1938 – April 14, 2021) was a Jewish American financier, con artist, and stock broker who was the admitted mastermind of the largest-known Ponzi scheme in history, worth an estimated $65 billion. He was at one time chairman of the Nasdaq stock exchange. Madoff's firm had two basic units: a stock brokerage and an asset management business; the Ponzi scheme was centered in the asset management business.

Born in Brooklyn and raised in Laurelton, Madoff graduated from Hofstra University, and founded a penny stock brokerage in 1960, which eventually grew into Bernard L. Madoff Investment Securities. He was the company's chairman until his arrest on December 11, 2008. That year, the firm was the sixth-largest market maker in S&P 500 stocks. While the stock brokerage part of the business had a public profile, Madoff tried to keep his asset management business low profile and exclusive. At the firm, he employed his brother Peter as senior managing director and chief compliance officer, Peter's daughter Shana as the firm's rules and compliance officer and attorney, and his sons Mark and Andrew Madoff. Mark hanged himself in 2010, exactly two years after his father's arrest, Peter was sentenced to 10 years in prison in 2012, and Andrew died of lymphoma on September 3, 2014.

On December 10, 2008, Madoff's sons Mark and Andrew told authorities that their father had confessed to them that the asset management unit of his firm was a massive Ponzi scheme, and quoted him as saying that it was "one big lie". The following day, agents from the Federal Bureau of Investigation arrested Madoff and charged him with one count of securities fraud. The U.S. Securities and Exchange Commission (SEC) had previously conducted multiple investigations into his business practices but had not uncovered the massive fraud. On March 12, 2009, Madoff pleaded guilty to 11 federal felonies and admitted to turning his wealth management business into a massive Ponzi scheme.

The Madoff investment scandal defrauded thousands of investors of billions of dollars. Madoff said that he began the Ponzi scheme in the early 1990s, but an ex-trader admitted in court to faking records for Madoff since the early 1970s. Those charged with recovering the missing money believe that the investment operation may never have been legitimate. The amount missing from client accounts was almost $65 billion, including fabricated gains. The Securities Investor Protection Corporation (SIPC) trustee estimated actual direct losses to investors of $18 billion, of which $14.829 billion has been recovered and returned, while the search for additional funds continues. On June 29, 2009, Madoff was sentenced to 150 years in prison, the maximum sentence allowed. On April 14, 2021, he died at the Federal Medical Center, Butner, in North Carolina, from chronic kidney disease.

Madoff was born on April 29, 1938, in Brooklyn, New York City, to Ralph Madoff, a plumber and stockbroker, and wife, Sylvia Madoff (née Muntner). Madoff's grandparents were Jewish emigrants from Poland, Romania, and Austria. He was the second of three children; his siblings are Sondra Weiner and Peter Madoff. His family later moved to Queens, and Madoff graduated from Far Rockaway High School in 1956. Friends from his youth described him as a thin, outgoing boy who participated in community center activities and ate ice cream at the local five-and-ten.

Madoff attended the University of Alabama for one year, where he became a brother of the Tau chapter of the Sigma Alpha Mu fraternity, then transferred to and graduated from Hofstra University in 1960 with a Bachelor of Arts in political science. Madoff briefly attended Brooklyn Law School, but left after his first year, using money he had saved working as a lifeguard and running an irrigation sprinkler business to start Bernard L. Madoff Investment Securities LLC.

In 1960, Madoff founded Bernard L. Madoff Investment Securities LLC as a broker-dealer for penny stock with $5,000 (equivalent to $54,000 in 2025) that he earned from working as a lifeguard and irrigation sprinkler installer and a loan of $50,000 from his father-in-law, accountant Saul Alpern, who referred a circle of friends and their families; Carl J. Shapiro was one such early customer, investing $100,000.

Initially, the firm made markets (quoted bid and ask prices) via the National Quotation Bureau's Pink Sheets. In order to compete with firms that were members of the New York Stock Exchange trading on the stock exchange's floor, his firm began using innovative computer information technology to disseminate its quotes. After a trial run, the technology that the firm helped to develop became the National Association of Securities Dealers Automated Quotations Stock Market (Nasdaq). After 41 years as a sole proprietorship, the Madoff firm incorporated in 2001 as a limited liability company with Madoff as the sole shareholder.

The firm functioned as a third market trading provider, bypassing exchange specialist firms by directly executing orders over the counter from retail brokers. At one point, Madoff Securities was the largest market maker at the Nasdaq, and, in 2008, was the sixth-largest market maker in S&P 500 stocks. The firm also had an investment management and advisory division, which it did not publicize, that was the focus of the fraud investigation.

Madoff was "the first prominent practitioner" of payment for order flow, in which a dealer pays a broker for the right to execute a customer's order. This has been called a "legal kickback". Some academics have questioned the ethics of these payments. Madoff argued that these payments did not alter the price that the customer received. He viewed the payments as a normal business practice:

If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow was an issue that attracted a lot of attention but was grossly overrated.

Madoff died of hypertension, atherosclerotic cardiovascular disease, and chronic kidney disease at the age of 82 in Federal Medical Center, Butner, a federal prison for inmates with special health needs near Butner, North Carolina, on April 14, 2021. He was cremated in Durham, North Carolina. His cremation was contrary to traditional Jewish custom and his ashes went unclaimed by his family; as of 2023 his cremains are still in a lawyer's office.

Madoff met Ruth Alpern while attending Far Rockaway High School and the two began dating. Ruth graduated from high school in 1958, and earned her bachelor's degree at Queens College. On November 28, 1959, Madoff married Alpern. She was employed at the stock market in Manhattan before working in Madoff's firm, and she founded the Madoff Charitable Foundation. Bernard and Ruth Madoff had two sons: Mark (1964–2010), a 1986 graduate of the University of Michigan, and Andrew (1966–2014), a 1988 graduate of University of Pennsylvania's Wharton Business School. Both sons later worked in the trading section alongside paternal cousin Charles Weiner.

Several other family members worked for Madoff. His younger brother, Peter, an attorney, was senior managing director and chief compliance officer, and Peter's daughter, Shana Madoff, also an attorney, was the firm's compliance attorney.

On May 12, 2009, PBS Frontline aired The Madoff Affair.

In season 7 of Curb Your Enthusiasm, aired in 2009, the character George Costanza (from Seinfeld) loses all of the money he made from an app called iToilet by investing with Madoff.

Imagining Madoff was a 2010 play by Deb Margolin that tells the story of an imagined encounter between Madoff and his victims. The play generated controversy when Elie Wiesel, originally portrayed as a character in the play, threatened legal action, forcing Margolin to substitute a fictional character, "Solomon Galkin". The play was nominated for a 2012 Helen Hayes Award.

A documentary, Chasing Madoff, describing Harry Markopolos' efforts to unmask the fraud, was released in August 2011.

Woody Allen's 2013 film Blue Jasmine portrays a fictional couple involved in a similar scandal. Allen said that the Madoff scandal was the inspiration for the film.