Still a mystery how $50 billion vanished from Madoff's hands
By Rachel Beck
Associated Press
| |||
 |
|
||
NEW YORK — It has become the biggest mystery to emerge from the $50 billion Bernard Madoff scandal: Where did all the money go?
Federal investigators are likely to take months trying to answer that question as they dig through the disgraced investor's records and attempt to unravel what may be the biggest financial fraud in history.
But several theories are being discussed among financial experts and at Wall Street watercoolers, Palm Beach country clubs and the offices of university accounting professors.
Among the theories: Madoff lost a bundle in bad investments; paid some of the money out to investors; stashed cash in foreign banks; and spent some on his lavish lifestyle. There is also the possibility he inflated his claim of $50 billion in losses.
Madoff, 70, a former Nasdaq stock market chairman, has become one of the most vilified people in America since news broke Dec. 11 that he allegedly had been running a giant ponzi scheme, paying returns to certain investors out of the principal received from others.
The scam included a global roster of investors, from retirees on Long Island to the International Olympic Committee and charities worldwide. So far, investors have said that they have lost more than $30 billion, according to an Associated Press calculation.
Some possible scenarios:
That suggests he may have blown investors' money through a failed trading strategy, and at some point felt compelled to cover up the mistakes.
So investors getting battered in the markets might have withdrawn their Madoff investments because they needed the money.
It is unclear how much Madoff paid out to investors, but when things came crashing down, just $200 million to $300 million was left in the pot. Authorities say he intended to pay out that money to employees and friends before the alleged fraud was discovered.
His three U.S. homes — a Manhattan penthouse, a Hamptons beachfront mansion and a home in Palm Beach, Fla. — together have an estimated market value of more than $30 million.
There is also speculation that the money could show up in other spots — maybe in offshore bank accounts, in family members' names or elsewhere.
J. Boyd Page, a partner at the Atlanta law firm Page Perry who has represented clients in previous ponzi scheme cases, noted that a good portion of Madoff's business was done internationally, and said some of the money could have been moved there.
