Not everyone lost money with Bernie Madoff

Madoff's Winners

Madoff’s amazing Ponzi scheme had winners as well as losers, as is now clear from recent court filings by the bankruptcy trustee, Irving Picard, and the SEC. While some 4,900 hapless investors, including retirees, family trusts, and charities lost their nest egg, a small group of a dozen or so financiers, all well versed in the arcana of investing other people’s money, made huge fortunes from Madoff’s notional book-keeping. The reason they could profit from this shell game, as the Trustee explains in documents filed in U.S. bankruptcy court, was that "The money received from investors was not set aside to buy securities as purported, but instead was primarily used to make the distributions to – or payments on behalf of – other investors." So people who redeemed the imaginary profits in their account got the actual funds put in by the new investors. According to a lawyer involved in the bankruptcy case, the redemptions in excess of investments, as calculated by the Trustee, amount to over $10 billion. If so, the major redeemers took home many billions of dollars. As it turns out, almost all of fortunate redeemers turn out to be close business associates of Madoff who had been involved in his money game for two decades.