Bernard Madoff, former chairman of Nasdaq, is accused of using money from new investors to pay of old ones. The 70 year-old is out on a ten million dollar bail.
"Under a Ponzi scheme, also known as a pyramid scheme, investors are promised very high returns on their investment, while in reality early investors are paid with money collected from later investors." So basically Madoff ran out of money to pay people the money he owed.
Madoff faces 20 years in prison.
2 comments:
Sounds like Madoff is mimicking the Pay-in pay-out system of our social security fund in the United States. Not so smart of Madoff. However, some ego's wont allow themselves to ask for help or declare bankruptcy.
BBC just posted a graph showing how this scam is affecting the world...
MAJOR POTENTIAL LOSSES
Santander, Spain - $3.1bn
HSBC, UK - $1bn
Natixis, France - $605m
Royal Bank of Scotland, UK - $601m
BNP Paribas, France - $460m
BBVA, Spain - $400m
Man Group, UK - $360m
Reichmuth & Co, Switzerland - $325m
Nomura, Japan - $303m
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