Madoff Victims: A Long List Of Investors

Bernie Madoff's Ponzi scheme defrauded tens of thousands of investors out of an estimated $65 billion. The exact number of victims is unclear, with estimates ranging from 37,000 to 40,000 people. The scandal shattered investor confidence and led to sweeping changes at the Securities and Exchange Commission (SEC), which had failed to detect the fraud despite repeated warnings.

Celebrities who lost money

Bernie Madoff's Ponzi scheme, considered the largest in history, defrauded 37,000 victims in 136 countries of billions of dollars. While the scandal affected thousands of ordinary people who lost their life savings, Madoff's celebrity clients also made headlines. Here are some of the famous names scammed by Madoff:

Kevin Bacon and Kyra Sedgwick

The Hollywood couple lost tens of millions of dollars in the Bernie Madoff scandal. Bacon, known for his roles in "Footloose" and "Mystic River", and Sedgwick, best known for her role in "The Closer", spoke philosophically about the loss, pointing out that others had lost everything.

Elie Wiesel

A Holocaust survivor and Nobel Peace Prize winner, Wiesel and his wife lost their entire life savings of $12 million to Madoff. Additionally, his nonprofit, the Elie Wiesel Foundation for Humanity, lost $15.2 million.

Steven Spielberg

The Academy Award-winning director and his charity, the Wunderkinder Foundation, lost an undisclosed amount to Madoff. The foundation's assets were reportedly worth $12.6 million in 2006, with over half of its income from interest and dividends coming from Madoff investments.

John Malkovich

The actor, known for his roles in "Being John Malkovich" and "Dangerous Liaisons", lost $2 million in the Madoff scandal. Like his fellow actors, he took the loss in stride, considering it a valuable life lesson.

Zsa Zsa Gabor

The Hungarian-born actress and socialite, along with her husband, Frederic Prinz von Anhalt, lost between $7 to $10 million in the Madoff Ponzi scheme.

Jeffrey Katzenberg

The producer of Disney hits like "The Little Mermaid" and "Aladdin", as well as Dreamworks Studios successes like "Shrek" and "Kung Fu Panda", lost at least $20 million in the scandal. The loss affected both his personal finances and his charity, the Marilyn & Jeffrey Katzenberg Foundation.

Larry King

The Emmy-winning broadcaster lost $700,000 when the Madoff scandal broke. Fortunately, he was able to recover his losses within a few years.

Charities that lost money

Bernard Lawrence "Bernie" Madoff was an American financier who executed the largest Ponzi scheme in history, defrauding thousands of investors out of an estimated $65 billion over the course of at least 17 years. About 10% of the money he swindled came from nonprofit organizations, according to the New York State Attorney General's Office. Here is a list of some of the charities that lost money:

• The Elie Wiesel Foundation for Humanity lost $15.2 million.
• Hadassah lost $90 million.
• The International Olympic Committee lost $4.8 million.
• The Jewish Community Foundation of Los Angeles lost $18 million.
• New York University lost $24 million.
• Yeshiva University lost $14.5 million.
• The Picower Foundation lost $1 billion.
• The Betty and Norman F. Levy Foundation lost $240 million.
• The Chais Family Foundation lost $198 million.

How the scheme was uncovered

The scheme orchestrated by Bernie Madoff, which defrauded tens of thousands of people of as much as up to $65 billion, was uncovered through a combination of factors, including the efforts of whistleblowers, investigative journalism, and the eventual collapse of the Ponzi scheme. Here is a detailed account of how the scheme was brought to light:

• Initial Suspicions and Whistleblowing : Concerns about Madoff's operations were raised as early as 1999 by Harry Markopolos, a quantitative financial analyst. Markopolos, who worked for Rampart Investment Management, was tasked with replicating Madoff's impressive and consistent investment returns. Upon analysing Madoff's revenue stream, Markopolos identified red flags, including the unusually steady rise in returns with minimal downturns, which was atypical of the volatile market. Markopolos suspected a Ponzi scheme or insider trading and shared his findings with the Securities and Exchange Commission (SEC) in 2000, but his warnings went unheeded. Markopolos persisted, filing more detailed complaints in 2001 and 2005, and even speaking to journalists, but to no avail.
• Journalistic Investigations : While Markopolos' efforts did not immediately prompt official action, they did spark interest from some journalists. In May 2001, the first articles questioning Madoff's methods were published, indicating that there was a growing scepticism within the financial press.
• Collapse of the Scheme : As time went on, Madoff's Ponzi scheme began to unravel due to a lack of cash. Flooded with redemption requests from clients during the financial crisis of 2008, Madoff could no longer sustain the scam. On December 10, 2008, he confessed to his sons, Mark and Andrew, that his investment advisory business was a lie.
• Turned In by His Sons : Mark and Andrew Madoff, who were not complicit in the fraud, immediately alerted the authorities. On December 11, 2008, the FBI raided Madoff's offices in Midtown Manhattan, marking the end of his decades-long deception.
• Subsequent Investigations : Following Madoff's arrest, various investigations were conducted, leading to the discovery of the full extent of the fraud. These investigations revealed that Madoff had not executed a single trade for his advisory clients for years and had simply deposited their funds into a bank account, using new investors' money to pay earlier customers. The "investment returns" he reported were entirely fictitious.
• Impact on Feeder Funds : The collapse of Madoff's scheme also brought scrutiny to the network of feeder funds that had funnelled clients' money to him. These funds, which collected significant fees, were implicated for ignoring signs of Madoff's deception and displaying self-interested indifference to the source of his investment returns.
• Recovery and Compensation Efforts : The court-appointed trustee, Irving Picard, played a crucial role in recovering assets and compensating victims. As of 2022, the Madoff Victim Fund has distributed over $4 billion to more than 40,000 victims worldwide, enabling most of them to recover 80% of their losses.

How much money was returned to victims

Bernard Madoff, the mastermind behind the biggest investment fraud in US history, orchestrated a Ponzi scheme that defrauded tens of thousands of people of as much as $65 billion. The court-appointed trustee, Irving Picard, estimated the actual losses to investors at $18 billion, and significant efforts have been made to return this money to the victims.

The US Department of Justice established the Madoff Victim Fund (MVF) to compensate those affected by the fraud scheme. The fund is overseen by former US Securities and Exchange Commission Chairman Richard Breeden, who acts as a Special Master to assist with the victim remission proceedings. As of September 2022, the MVF has distributed over $4 billion to more than 40,000 victims worldwide, with most recovering 88.35% of their losses. This figure is remarkable for a Ponzi scheme, and the efforts to return money to victims are ongoing.

The majority of the government fund, approximately $2.2 billion, came from a civil forfeiture recovery from the estate of deceased Madoff investor Jeffry Picower. An additional $1.7 billion was collected through a deferred prosecution agreement with JPMorgan Chase Bank, which was Madoff's primary bank. Further funds were collected through civil and criminal forfeiture actions against Madoff, his co-conspirators, and certain investors.

The MVF's payouts are intended to compensate victims who lost money directly with Madoff and third parties who lost money indirectly, such as by investing in "feeder funds." The fund has made a significant impact in providing relief to those affected by Madoff's fraudulent scheme, with the ultimate goal of returning as much of the stolen money as possible.

In addition to the MVF, another $5 billion in assets recovered by the US Attorney's Office is being paid separately to Madoff victims through the BLMIS Customer Fund, administered by the Securities Investor Protection Act Trustee. This brings the total amount returned to victims to over $9 billion, providing some measure of justice and relief to those impacted by this devastating fraud.

How much money was lost

Bernie Madoff's Ponzi scheme defrauded investors of an estimated $65 billion over the course of at least 17 years. The court-appointed trustee, Irving Picard, estimated the actual losses to investors at $18 billion. However, it is difficult to determine the exact amount lost, as the scheme involved fabricated gains, and some investors profited.

Madoff's scheme was the largest Ponzi scheme in history, and it affected tens of thousands of people in 136 countries. While some of the victims were famous individuals like Steven Spielberg and Kevin Bacon, ordinary investors also lost substantial amounts of money. Burt Ross, for example, lost $5 million in the scheme.

As of late September 2022, about $4 billion had been returned to approximately 40,000 of Madoff's victims through the U.S. Department of Justice's Madoff Victim Fund. The fund's payouts were made possible by the recovery of assets from Madoff, his co-conspirators, and investors who profited from the scheme.

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