Mar
What exactly WAS the whole Bernie Madoff thing? Like what type of investing was it and what happened? In detail? I know nothing about it and want someone to help me know and understand who, why, what…
Answer:
To explain the Bernie Madoff Investment Swindle you would have to go far back to the beginning of this century when a man named Charles Ponzi started the most famous one.
He found out that when you purchased postal coupons in Italy and redeemed them in the United States that you got paid a lot more in Dollars than what you had to pay for them in Lira.
So his idea of “investment” was to buy large numbers of postal coupons in Europe then ship them overseas and redeem them at a post office in the Says. Which in the beginning actually worked.
As he drew more and more investors there was a point when it wasn't technically possible to purchase this many postal coupons in one country and get them redeemed in the U.S. so he decided to take money from new investors and use it to pay out the profits from older investors that were due for their divident payments.
A Ponzi Scheme always promises massive interest payments on your capital that the normal market can not sustain. Example you invest $100 and according to your contract you make an additional $10 each 2 months in interest… As you can see your money would grow pretty quick. The investors that first get into this are usually still lucky and get paid from the money that comes in from new investors. Unfortunately sooner or later there are too many “old” investors anticipating a pay out and not enough “new” investors coming into the game whose money is paying for it.
The difference in the Bernie Madoff theme was that he was a highly respected businessman and he’d the capability to forge investment statements so well that even major banks didn't suspect a thing.
Until finally the day came when he realized that sooner or later the house of cards would come to fall down because too many investors were due their money and not enough new ones came into the game to sustain the pay outs.
To do your own research run a search on “Ponzi Schemes” and
High Yield Investment Scams….
Answer:
A Ponzi scheme is a gimmick by which you take money from people and a promise them more back. A few of the first contributors are usually paid money to prove what a great deal the Ponzi really is. It is exactly like the U.S. Social Security system. But, the Madoff scheme at $50 Billion is nothing compared to the U.S. Social Security scam.
Answer:
Bernie Madoff ran a ponzi scheme that cheated investors out of their money. Later investors pay earlier investors.