Bernard “Bernie” Madoff was a well-respected hedge fund manager, founder of a successful investment company named Bernard L. Madoff Investment Securities, LLC and, for a period of time, Chairman of the NASDAQ.
In 2008, at the peak of the Great Recession, Madoff admitted to his sons who worked with him at his firm that the company was a big fraud, nothing more than the greatest Ponzi Scheme of all times.
The fraud was estimated to be around $64 billion and Madoff was found guilty of eleven federal crimes, being finally sentenced to 150 years in prison and to give back $170 billion to his defrauded former clients.
In short, Bernie Madoff operated his fund by promising extremely high returns he was not actually able to achieve; instead, as in a classical Ponzi Scheme, he used the money from new investors to pay off the promised returns to the previous one.
After having defrauded his investor for decades, in 2008 Madoff found himself unable to find new clients because of the financial crisis; his previous investors requested a total of $7 billion back in cash, but the financier had only about $200 million left to give them at the time.
Another reason why Bernie Madoff managed to operate his Ponzi Scheme for so long (despite multiple reports to the SEC about his constant too high returns) is because he was a very well-respected, well-known and active member of the financial community, having started his own fund back in 1960 and personally helped launch the NASDAQ stock market in 1971; he was also an advisor to the Security and Exchange Commission and was considered a Wall Street veteran who knew exactly what he was doing.
Thousands of investors have been defrauded by Madoff and only some of them have been able to recover a portion of their assets lost in the fraud.
Today the Madoff Investment Scandal in considered to be the largest and worst financial fraud in the history of Capitalism.