Major Controversies Surrounding Bernie Madoff: A Detailed Timeline

A closer look at the most debated and controversial moments involving Bernie Madoff.

Bernard Madoff was the architect of the largest Ponzi scheme in history, estimated at $65 billion. Once chairman of the NASDAQ, Madoff operated his scheme through his firm's asset management business, promising consistently high returns to investors while using new investor money to pay off existing ones. This fraudulent activity defrauded thousands of individuals, charities, pension funds, and other organizations and led to significant financial losses and widespread repercussions within the financial industry. Madoff's scheme collapsed during the 2008 financial crisis, leading to his arrest and subsequent conviction.

Sections (5)

Full Timeline Early Life & Education Career & Achievements Challenges & Struggles Controversies & Scandals

1964: Early Suspicions of Madoff's Fraud

An investigator charged with reconstructing Madoff's scheme believes that the fraud was well underway as early as 1964.

1991: Ponzi scheme begins

In 1991, Bernie Madoff admitted to starting his Ponzi scheme, falsely claiming he made legitimate investments and instead depositing funds into a Chase Manhattan Bank account, using new deposits to pay existing clients.

1992: First Fraud Investigation

In 1992, Madoff's name first came up in a fraud investigation when two people complained to the SEC about investments they made with Avellino & Bienes.

1992: SEC investigations since 1992

Since 1992, The SEC had six investigations into Madoff that were mishandled due to staff incompetence or ignoring financial experts and whistle-blowers.

2000: SEC Ignores Markopolos' Evidence

In 2000, the SEC's Boston office ignored Harry Markopolos' evidence of Madoff's fraud.

2001: Arvedlund Questions Madoff's Investment Performance

In 2001, Erin Arvedlund publicly questioned Madoff's reported investment performance, suggesting the actual fraud amount might never be known but was likely between $12 and $20 billion.

2001: SEC Ignores Markopolos' Evidence Again

In 2001, the SEC's Boston office ignored Harry Markopolos' evidence of Madoff's fraud again.

2001: Madoff's Sons, Brother, and Niece Accused of Negligence

Trustee Picard sued Madoff's sons, Mark and Andrew, his brother Peter, and Peter's daughter, Shana for negligence and breach of fiduciary duty, for $198 million. The defendants had received over $80 million in compensation since 2001.

2003: Swanson Meets Shana Madoff

In 2003, Eric Swanson met Shana Madoff while investigating her uncle Bernie Madoff and his firm.

2003: Madoff Claims He Could Have Been Caught

In 2003, according to Madoff's statements while awaiting sentencing, the SEC's investigators acted like "Lt. Columbo" and never asked the right questions, which allowed him to continue his fraud. He stated that they never looked at his stock records, and it would have been easy to see the Ponzi scheme if they checked with the Depository Trust Company.

2004: SEC Investigation of Madoff

In 2004, Genevievette Walker-Lightfoot, a lawyer in the SEC, found inconsistencies in Madoff's business but was told to stop the investigation.

2005: SEC Ignores Further Evidence Presented by Markopolos

In 2005, Meaghan Cheung at the SEC's New York office ignored Harry Markopolos when he presented further evidence of Madoff's fraud.

2005: SEC Investigation Concluded

In 2005, the SEC investigation on Madoff's firm was concluded.

2007: SEC Ignores Further Evidence Presented by Markopolos Again

In 2007, Meaghan Cheung at the SEC's New York office ignored Harry Markopolos again when he presented further evidence of Madoff's fraud.

December 10, 2008: Madoff's Sons Expose Ponzi Scheme

On December 10, 2008, Madoff's sons, Mark and Andrew, informed authorities about their father's confession of the asset management unit being a massive Ponzi scheme.

December 11, 2008: Madoff's Arrest

On December 11, 2008, Bernard Madoff was arrested, marking the end of his tenure as chairman of Bernard L. Madoff Investment Securities.

December 2008: Madoff Posts Bail and is Monitored

In December 2008, Madoff posted $10 million bail and remained under 24-hour monitoring and house arrest in his Upper East Side penthouse apartment. Prosecutors filed asset forfeiture pleadings, listing Madoff's valuable properties and financial interests.

December 2008: Peter Madoff Resigns from SIFMA

In December 2008, Peter Madoff resigned from the board of directors of SIFMA as news of the Ponzi scheme broke.

December 2008: Madoff Confides in Son About Redemption Struggles

In the first week of December 2008, Madoff confided to a senior employee, one of his sons, that he was struggling to meet $7 billion in redemptions. His Chase account dwindled to $234 million by late November, a fraction of the outstanding requests. He told assistant Frank DiPascali he was finished on December 3rd and informed his brother Peter about the fraud on December 9th.

2008: Hadassah Withdraws Funds

By the end of 2008, Hadassah had withdrawn more than $130 million from its Madoff accounts.

2008: Bongiorno's testimony about Madoff's fraud

In 2008, Bongiorno, who spent over 40 years with Madoff, told investigators that she was doing "the same things she was doing in 2008" when she first joined the firm.

2008: Irish regulators failed to uncover Madoff's fraud

In 2008, the Central Bank of Ireland failed to spot Madoff's gigantic fraud when he started using Irish funds and had to supply large amounts of information, which would have been enough to enable Irish regulators to uncover the fraud much earlier.

2008: Madoff's Suicide Attempt

On Christmas Eve 2008, Ruth Madoff claimed that she and Bernard attempted suicide after his fraud was exposed, both taking a bunch of pills in a suicide pact.

February 2009: Madoff Accepts Lifetime Ban from Securities Industry

In February 2009, Madoff reached an agreement with the SEC, accepting a lifetime ban from the securities industry. Trustee Picard sued Madoff's family for negligence and breach of fiduciary duty.

March 12, 2009: Madoff Pleads Guilty

On March 12, 2009, Bernard Madoff pleaded guilty to 11 federal felonies, admitting to turning his wealth management business into a Ponzi scheme.

March 2009: Madoff Admits to Ponzi Scheme

During his guilty plea in March 2009, Madoff admitted that the essence of his scheme was depositing client money into a bank account instead of investing it, using funds from other clients to pay those requesting redemptions.

March 20, 2009: Appeal Denied, Madoff Remains in Jail

On March 20, 2009, an appellate court denied Madoff's request to be released from jail and returned to home confinement until his sentencing.

June 17, 2009: Madoff Claims Friendship with SEC Officials

In an interview on June 17, 2009, Madoff stated that SEC Chairman Mary Schapiro was a "dear friend" and SEC Commissioner Elisse Walter was a "terrific lady" whom he knew "pretty well".

June 22, 2009: Defense Requests 12-Year Sentence

On June 22, 2009, Madoff's lawyer hand-delivered a pre-sentencing letter to the judge requesting a sentence of 12 years, based on life expectancy tables.

June 26, 2009: Assets Forfeited, Wife Agrees to Forfeit Assets

On June 26, 2009, Judge Chin ordered forfeiture of $170 million in Madoff's assets. Madoff's wife, Ruth, agreed to forfeit her claim to $85 million in assets, retaining $2.5 million in cash, and Massachusetts regulators accused her of withdrawing $15 million from company-related accounts shortly before his confession.

June 29, 2009: Madoff Sentenced to Prison

On June 29, 2009, Bernard Madoff was sentenced to 150 years in prison, the maximum sentence allowed for his crimes.

September 2009: Homes Auctioned by U.S. Marshals

In September 2009, all three of Bernard Madoff's homes were auctioned by the U.S. Marshals Service.

September 27, 2009: Sheehan States Amounts Invested and Missing

On September 27, 2009, David Sheehan, chief counsel to trustee Picard, stated that about $36 billion was invested, with $18 billion returned and $18 billion missing.

October 2009: Civil Lawsuit Filed Against Madoff Family

In October 2009, a civil lawsuit was filed alleging that Peter Madoff deposited $32,146 into his Madoff accounts and withdrew over $16 million, Andrew deposited almost $1 million and withdrew $17 million, and Mark deposited $745,482 and withdrew $18.1 million.

November 2009: Accounting Front Man Pleads Guilty

In November 2009, David G. Friehling, Madoff's accounting front man, pleaded guilty to multiple charges, admitting to rubber-stamping Madoff's filings. He cooperated extensively with prosecutors. Frank DiPascali pleaded guilty to 10 federal charges.

May 4, 2011: Picard Updates on Amounts Owed and Recovered

In a statement on May 4, 2011, trustee Picard said that the total amount owed to customers was $57 billion, with $17.3 billion actually invested. $7.6 billion had been recovered, but only $2.6 billion was available to repay victims. The IRS ruled that investors' capital losses would be treated as business losses for tax deduction purposes.

November 2011: Kugel Pleads Guilty

In November 2011, former Madoff employee David Kugel pleaded guilty to charges related to creating a phony paper trail for Madoff's scheme.

2012: Peter Madoff Sentenced

In 2012, Peter Madoff, Bernard Madoff's brother, was sentenced to 10 years in prison for his involvement in the Ponzi scheme.

May 2015: Friehling Sentenced; DiPascali Dies

In May 2015, David Friehling was sentenced to one year of home detention and one year of supervised release due to his cooperation. Frank DiPascali died of lung cancer before he could be sentenced.