The Man Who Figured Out Madoff's Scheme Part Pt 1

The Man Who Figured Out Madoff's Scheme
Tells 60 Minutes Many Suspected Madoff Fraud; Says SEC Is Incapable Of Finding Fraud

(CBS) It has been two and a half months since Bernard L. Madoff was picked up and charged with what is believed to be the largest financial fraud in history. Yet we still don't know much more about the alleged $50 billion scam than what Madoff initially told the FBI agents who arrested him. There are still no indictments as federal prosecutors continue to unravel the case and try to figure out exactly what happened and who was involved. But the proof that it happened can be found in the ruined lives of thousands of victims. The one person who knows the most and is willing to talk about it is Harry Markopolos, the man who figured out Madoff's scheme before anyone else. Markopolos sat down with 60 Minutes correspondent Steve Kroft for his only television interview. Until a few months ago, Harry Markopolos was an obscure financial analyst and mildly eccentric fraud investigator from Boston who most people would never notice on the street. But today he enjoys an almost heroic status, pursued by journalists and movie producers, and honored by colleagues as the man who went to the Securities and Exchange Commission and blew the whistle on Bernie Madoff and his $50 billion fraud. But he seems uncomfortable with the attention, and knows that he is no hero. "I stand before you a 50 billion dollar failure," he said at an event. Asked how many times he sent materials to the SEC, Markopolos told Kroft, "May 2000. October 2001. October, November, and December of 2005. Then again June 2007. And finally April 2008. So five separate SEC submissions." "And in spite of all of the things that you did, it still ended up in disaster?" Kroft asked. "There's nothing to be proud about in this case. I feel horrible about the result. It's been a total disaster for the victims," Markopolos replied. It began a decade ago, when Markopolos was working for a Boston investment firm. His boss told him that Madoff, a former chairman of the NASDAQ stock exchange, was running a huge unregistered hedge fund that was producing incredible returns. He wanted Markopolos to reverse-engineer its trading strategy and revenue streams so the firm could duplicate Madoff's results. "He had the patina of being a respected citizen. One of the most successful businessmen in New York, and certainly, one of the most powerful men on Wall Street. You would never suspect him of fraud. Unless you knew the math," Markopolos told Kroft. "I mean, you're like a math guy, right?" Kroft asked. "I've taken all the calculus courses, from integral calculus through differential calculus, as well as linear algebra. And statistics, both normal and non-normal," Markopolos said. Asked how long it took him to figure out something was wrong, Markopolos said, "It took me five minutes to know that it was a fraud. It took me another almost four hours of mathematical modeling to prove that it was a fraud. " It was the performance line that Markopolos said caught his attention. "As we know, markets go up and down, and his only went up. He had very few down months. Only four percent of the months were down months. And that would be equivalent to a baseball player in the major leagues batting .960 for a year. Clearly impossible. You would suspect cheating immediately." "Maybe he was just good," Kroft remarked. "No one's that good," Markopolos said.

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[CanadaUniv1]

Hang the bastard! Americans legal system is so stupid that he is not thrown in jail. Sell all his personal property to recoup the losses. There was a reason Donald Trump didn't invest with this con artist. Too bad Madoff investors were greedy or just plain stupid not to see the red flags of the high yield earnings. Prestigious college educations didn't teach them vigilance. SEC is to blame too for intentionally ignoring red flags for years.

[blldgs101]

I don't know anything, I'm just a peasant.

[zarbon700]

Madoff got away with it for so long cuz he's white. Trust me, if he was black, he would have been quickly investigated and caught.

[SportswithSimon]

@ReallyImportantWork ur fucking retarted u know how many jewish clients he had do ur research biggot

[monk22yrs]

bernie madoff---great american who helped bring down the filthy rich!

viva bernie!

[josemose100]

watch chasing madoff trailer on josemose100 channel

[hilarious7898504]

@Gelnprato.............someone got fucked over

[487shawn]

yep deregulation at its best! The mind set at the treasury didn't want to know! It was against there philosophy, the market would look after themselves, alan greenspan said so to brooksley bourne in the pbs doc the warning and even told her they would'nt persue fraud!

[tairanotomomori]

Could he be just about the only person coming out of the financial industry whose financial math prowess has actually achieved something meaningful in society, instead of, like, structuring financial mostrosities that nearly wrecked the world??

[Man2be23]

He does look like someone that would tell, just saying.

[Horaciow14]

So math actually helps...