Ponzi scheme

A simple and effective way of defrauding a lot of people at once. Even though Ponzi schemes have been around for literally hundreds of years — the eponymous Charles Ponzi did his in the 1920s, but before that they were called “pyramid scheme”s, the meatware seems to be peculiarly, persistently susceptible to them; the SEC had to halt one as recently as July 2019. Well, at least it caught this one; it did rather less well with the scheme run for 15 years by a certain B. Madoff, despite the best efforts of whistleblower Harry Markopolos.

Here is Harry Markopolos’ 18 page submission about Madoff to the SEC from November 2005 — fully three years before the fraud emerged — that says, with the aid of twenty-nine red flags, “Madoff Securities is the world’s largest Ponzi scheme”.

See also

• Bernie Madoff
• Harry Markopolos’ excellent book about Bernie Madoff, No One Would Listen: A True Financial Thriller
• Risk taxonomy