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The Man Who Stole $65 Billion (Bernie Madoff) — Transcript

by ColdFusion · 2,145 words · 331 segments · language en · Watch on YouTube

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0:00hi welcome to another ColdFusion video
0:03there are some people in this world who
0:05were gifted who excelled beyond the rest
0:07their leaders visionaries and pioneers a
0:11mystic all-knowing confidence surrounds
0:14their image Bernie Madoff was one of
0:16these people he was one of the best
0:18traders on Wall Street
0:19he was Wall Street his consistent
0:23investment returns made him one of the
0:25best fund managers in the world he
0:27couldn't just invest with Madoff he had
0:29to know someone be vouched for earn the
0:32right to have your money accepted by him
0:34Madoff served as the chairman of the
0:37Nasdaq and revolutionized the trading
0:39business he had spent decades building
0:41his multibillion-dollar Empire until one
0:44day the house of cards fell and when the
0:47dust settled all that remained was a
0:49decade of liars as sixty five billion
0:52dollars he was the largest Ponzi scheme
0:55the world had ever seen
1:00[Music]
1:00[Applause]
1:02[Music]
1:09[Music]
1:12Bernie Madoff would start his investment
1:14firm in 1960 he started with $5,000 that
1:18he'd made working during the summertime
1:20as a lifeguard and another 50,000 from
1:22his father-in-law in total about four
1:25hundred eighty thousand dollars in
1:26today's money in order to compete with
1:29large investment firms Madoff turned to
1:31technology his firm pioneered the use of
1:35electronic trading opting away from the
1:38historic human traders with this focus
1:40on technology the company was able to
1:43provide a lower cost for their services
1:44which led them to have a substantial
1:46share of market transactions while the
1:48numbers are hard to find
1:50it's believed at at one point five to
1:52ten percent of trades in New York went
1:54through the firm in 1971 the Nasdaq was
1:59born
1:59it came with a wave of new innovations
2:02in electronic trading today the Nasdaq
2:05is the second largest Stock Exchange in
2:06the world
2:07it's where companies like Microsoft
2:09Apple Amazon Google and Facebook choose
2:12to trade their shares Bernie Madoff
2:15would go on to be the chairman of the
2:17Nasdaq in the early 90s it was a very
2:19highly respected position
2:21but as Wall Street was caught up in the
2:24mystic of Madoff no one knew that behind
2:26the walls of Madoff Empire something
2:28else was happening well almost no one
2:31knew enter Harry Markopolos
2:36he was a financial fraud investigator he
2:38back in the 90s was working as a
2:40portfolio manager at rampart Investment
2:42Management in 1999 his firm had caught
2:47wind that a hedge fund manager of one of
2:49their partners was consistently
2:50retaining a 1 to 2 percent profit per
2:52month this turned out to be the work of
2:55none other than Bernie Madoff Harry
2:58Markopolos
2:58was subsequently given the task of
3:00replicating Madoff strategy at his own
3:02firm rampart
3:04as Harry began reverse engineering the
3:07strategy he had no idea that he had just
3:09stumbled across the biggest financial
3:11scam Wall Street had ever seen according
3:14to Harry it took him five minutes of
3:16looking at made us revenue stream to
3:18realize that things just didn't add up
3:20Madoff's returns were too consistent
3:22when the market went up Madoff made a
3:25profit and when the market went down
3:26Madoff still made a profit Harry
3:29Markopolos was adamant that Madoff's
3:31returns weren't real the return seemed
3:33to be unfazed by the market conditions
3:35there was little to no fluctuation
3:37despite the market movements Harry had
3:40two theories either Madoff was trading
3:43on insider information or this was all a
3:46giant Ponzi scheme a Ponzi scheme is a
3:50pretty simple concept investors would
3:53give Madoff their money to invest and
3:55Madoff gives them a healthy return the
3:57return doesn't come from actual
3:59investments he simply gives back a small
4:01portion of their initial investment and
4:02calls that a return eventually the money
4:06dries up so the stock needs to be
4:07replenished Madoff then moves on to the
4:09next investor and so the scam grows
4:12larger on paper the investor has money
4:15invested in Madoff's firm and gets a
4:16good return in reality the money is
4:19being siphoned into Madoff own accounts
4:21as well as paying off old investors to
4:23keep the lie afloat it almost seems too
4:26ridiculous to believe how could this
4:29have happened on such a scale under the
4:31noses of some of the greatest financial
4:33minds in the world but that was the
4:35talent of Madoff he knew how to lie and
4:37how to be convincing of it and besides
4:40who would dare question the man who
4:42helped build the modern Wall Street
4:46as Harry began further deconstruct
4:49Madoff strategy he immediately ran into
4:51mathematical inconsistencies for example
4:54he calculated that an order for Madoff
4:56strategy to work he would have to abort
4:58more options on the Chicago Board of
5:00Options Exchange than actually existed
5:03in addition he couldn't find a single
5:06transaction by Madoff firms on the
5:08exchange
5:08Harry spoke with a dozen equity firms
5:11but none of them had made any trades
5:13that Madoff and this was strange
5:15in reality Madoff hadn't made a single
5:18trade since 1993 or perhaps even earlier
5:22in 2000 Harry Markopolos took his
5:26findings to the Securities and Exchange
5:27Commission otherwise known as the SEC
5:30but Harry didn't have any hard evidence
5:32against Madoff it was just a theory and
5:34some red flags therefore an
5:37investigation wasn't opened but Harry
5:40wasn't the only one who was suspicious
5:41over madoff when asked about at several
5:44years later he confirmed that hundreds
5:46of people within Wall Street had been
5:48suspicious but when asked why none of
5:50them ever reported anything he responded
5:52quote people in glass houses don't throw
5:55stones by 2005 Marco Polo's had
6:00uncovered many more red flags
6:01surrounding Madoff and the SEC
6:03eventually opened an investigation in
6:062006 but Madoff had ties with the SEC
6:09and on occasion was even called to
6:11provide advice Madoff also knew how to
6:14get around the auditors testimony from
6:16former staff describe how they cooled
6:18down falsified documents in the fridge
6:20so that auditors wouldn't notice that
6:22there had been freshly printed the
6:24investigation was closed eleven months
6:26later due to a lack of evidence and soon
6:29after madoff audaciously praised the SEC
6:31same quote in today's regulatory
6:34environment it's virtually impossible to
6:37violate the rules many people couldn't
6:40believe his crimes had gone undetected
6:42for so long and that astonishment it
6:44turned to anger when it was revealed
6:46that one man uncovered the Ponzi scheme
6:49even went to the Securities and Exchange
6:51Commission five times to try and expose
6:54it he was stealing my clients and I
6:57wasn't going to tolerate that if you
6:58steal from a Greek we come after
6:59the stakes were so high that he bought a
7:01gun and routinely would check his car
7:05for bombs I realized then that Bernie
7:08was stealing from the Russians from the
7:09Colombians and if he was doing that that
7:12was a very dangerous game for him to
7:13play because if they found it they were
7:15gonna kill him
7:15but Madoff at this time must have known
7:18that it was only a matter of time before
7:20the hypocrisy in his words would be
7:22revealed ironically in the end it wasn't
7:26anything that the SEC or Harry
7:28Markopolos did that caught Madoff out
7:30greater forces came into play it was
7:34December 2008 and Wall Street was
7:37illuminated in red so almost everything
7:40there completely wiped out in the Nasdaq
7:42everything and more has been completely
7:44wiped out the Dow traders are standing
7:46there watching in amazement I don't
7:47blame them 676 points down waiters here
7:52working the phones say a lot of their
7:54customers are freaked out waiting to see
7:56how low will go they'll you're seeing
8:02just broad-based declines across all of
8:04the major technology sectors Apple's
8:05under pressure trillions of dollars was
8:07wiped out from the stock market as
8:09subprime mortgages in the u.s. tumbled
8:11the global economy in rushes of panic
8:14people were reining in their investments
8:16and cutting their losses Madoff knew the
8:19end was near he knew that would no new
8:21money pumping his account and his
8:23clients asked him for their original
8:25investments back the scam would soon be
8:28over
8:28so Madoff pulled every string to get
8:31some new cash Bernie had created the
8:34firm madoff securities international a
8:36subsidiary based in London he
8:38suspiciously had no clients this
8:41fraudulent firm transferred 164 million
8:43years in November
8:45billionaire carl shapiro invested 250
8:48million dollars at the start of December
8:50and Madoff received another 10 million
8:52dollar investment a few days later
8:55Bernie Madoff had seemingly asked the
8:57whole of Wall Street for cash dishing
9:00out a 19 page booklet detailing his new
9:02investment scheme but it seemed that
9:04thing was enough the withdrawals were
9:07still more than madoff could bring it
9:09investors wanted their money back and
9:11now the simple fact was he didn't have
9:14the money so finally madoff decided to
9:18turn himself in he didn't try to run or
9:21hide
9:21he simply knew that it was the end the
9:24game was over and 65 billion dollars was
9:27gone and thousands of investors were
9:29left to pick up the pieces madoff had
9:32been running this scam in parallel to a
9:34legitimate side business a business in
9:36which his sons mark and Andrew worked he
9:39told them that he planned to give out a
9:41nearly 200 million dollar bonus to the
9:43staff two months early despite the firm
9:45hemorrhaging cash amidst the global
9:47financial meltdown his sons argued
9:49against it but Madoff had no choice but
9:52to tell them exactly why it needed to be
9:53done he told him about the Ponzi scheme
9:55and that he was planning to turn himself
9:57in at the end of the week after the
9:59bonuses were handed out according to his
10:01sons this was the first that they'd ever
10:03heard about it
10:04fearing that they'd become accomplices
10:06in their father's crimes they called a
10:08lawyer and turned their father in before
10:10he distributed the bonuses and the
10:12decision to determine well we knew we
10:17knew right away that this was that that
10:22was our only course of action Madoff was
10:24later arrested at his home then released
10:26on bail under house arrest as Bernie
10:30Madoff and his wife Ruth sat at home on
10:32Christmas Eve the reality of their world
10:35falling apart sunk in the two childhood
10:38sweethearts laid down in bed and
10:40consumed a cocktail of prescription
10:42medications on Christmas Day the couple
10:45workup to realize that their attempt to
10:47run away from their problems had failed
10:49Bernie would now face life in prison
10:52I don't know whose idea it was but we
10:57decided to kill ourselves because it was
11:01it was so horrendous what was happening
11:04we had terrible phone calls hate mail
11:07just beyond anything and I said I can't
11:13I just can't go on anymore
11:15I mailed them it was Christmas Eve I
11:18added to the whole depression he took
11:21pills and woke up the next in the end
11:26madoff didn't fight he admitted his
11:28crime he offered his remorse but offered
11:31no excuses 65 billion dollars of
11:35investments had been wiped out from
11:37billionaire's holdings to everyday
11:38people's pension funds across the u.s.
11:40as if it wasn't bad enough that the
11:43economy was in meltdown people had now
11:45lost their savings to Madoff pleaded
11:47guilty and within a few months were
11:49sentenced to 150 years in prison
11:52today he is simply known as inmate
11:55number six 177 - zero five four at a
11:59medium security prison in North Carolina
12:01at age 81 he will live out the remainder
12:04of his life there while in prison
12:07both of madoff sons had passed away mark
12:10committing suicide after the scandal and
12:12Andrew died from cancer and as for his
12:16wife Ruth she no longer speaks with him
12:18Bernie is allowed a 15-minute phone call
12:21each day but he doesn't use it because
12:23in his own words he doesn't have anyone
12:26to talk to
12:39moral of the story don't let great get
12:41the best of you it's really not worth it
12:44why did he do it there's a word that's a
12:48very simple word that I think we all
12:50understand it's called greed and with
12:54that that represent I'll look at Bernie
12:56Madoff next week in the next episode of
12:59cold fusion we'll be taking a look at
13:01the we work disaster so make sure you
13:04subscribe so you don't miss out on this
13:05episode it's a really good one thanks
13:09for watching if you did enjoy this video
13:10and want to see more stuff from science
13:12technology history and business feel
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13:19anyway this has been to gogo and you'll
13:22be watching cold fusion and I'll catch
13:23you again soon for the next video
13:25cheers guys
13:27[Music]
13:28[Applause]
13:29[Music]
13:45[Music]
13:56[Music]

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