December 11, 2008: Bernie Madoff is arrested, serving as a convenient symbol of the year's economic meltdown and the fraud of the super-rich.
Born in Brooklyn in 1938, Bernard Lawrence Madoff grew up in Far Rockaway, Queens. He founded a securities firm with his own name on it in 1960, with money h made working as a lifeguard on his home neighborhood's beach. After 41 years as a sole proprietorship, Madoff Securities incorporated in 2001 as a limited liability company, with Madoff as the sole shareholder.
The firm functioned as a third market trading provider, bypassing exchange specialist firms by directly executing orders over the counter from retail brokers. At one point, Madoff Securities was the largest market maker at the NASDAQ, and in 2008 was the 6th-largest market maker in Standard & Poor 500 stocks.
The firm also had an investment management and advisory division, which it did not publicize, that was the focus of the fraud investigation. Madoff was "the first prominent practitioner" of payment for order flaw, in which a dealer pays a broker for the right to execute a customer's order. This has been called a "legal kickback."
In 1999, financial analyst Harry Markopolos had informed the Securities & Exchange Commission that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver. He said it took him four minutes to conclude that Madoff's numbers did not add up, and another minute to suspect they were fraudulent. He was ignored by the SEC's Boston office in 2000 and 2001, as well as by Meaghan Cheung at the SEC's New York office in 2005 and 2007 when he presented further evidence.
On December 11, 2008, with the economic meltdown that began in September not yet over, the FBI arrested Madoff for securities fraud. David Sheehan, chief counsel to one of the victims, stated on September 27, 2009, that about $36 billion was invested into the scam, returning $18 billion to investors, with $18 billion missing. About half of Madoff's investors were "net winners," earning more than their investment. The withdrawal amounts in the final six years were subject to "clawback" (return of money) lawsuits.
On March 12, 2009, Madoff pleaded guilty to 11 federal felonies, and admitted to turning his wealth management business into a massive Ponzi scheme. He was sentenced to 150 years in prison, a fine of $17.2 billion, and a lifetime ban from the securities industry (which was just symbolic, as nobody lives 150 years, and he was already 70 years old).
The joke was that "Bernie made off with all our money." But there was also a joke that Madoff is the only person who went to prison as a result of the Crash of 2008, because he stole from the rich, not from the poor like so many others.
On April 14, 2021, Madoff died of long-term kidney issues at the hospital for federal prisoners in Butner, North Carolina. He was just short of his 83rd birthday. He had outlived his son Mark, who hanged himself in 2010, and his son Andrew, who died of lymphoma in 2014. Both sons had cooperated with the authorities to expose their father. Madoff's brother Peter also went to prison as part of the scheme, in 2012, and was released in 2020.
At the time of Bernie Madoff's death, the Securities Investor Protection Corporation (SIPC) estimated that, of the $18 billion lost, $14.4 billion had been recovered and returned.
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December 11, 2008 was a Thursday. Baseball was out of season. Football was in midweek. There were 3 games in the NBA:
* The Boston Celtics beat the Washington Wizards, 122-88 at the Verizon Center (now the Capital One Arena) in Washington.
* The Dallas Mavericks beat the Charlotte Bobcats, 95-90 at the American Airlines Center in Dallas.
* And the Utah Jazz beat the Portland Trail Blazers, 97-88 at the EnergySolutions Arena (as the Delta Center was then known) in Salt Lake City, Utah.
And there were 8 games in the NHL:
* The New York Islanders lost to the Pittsburgh Penguins, 9-2 at the Mellon Arena (as the Civic Arena was then known) in Pittsburgh.
* The Tampa Bay Lightning beat the Montreal Canadiens, 3-1 at the Bell Centre in Montreal.
* The Philadelphia Flyers beat the Carolina Hurricanes, 6-5 in a shootout at the Wells Fargo Center (now the Xfinity Mobile Arena) in Philadelphia.
* The Columbus Blue Jackets beat the Nashville Predators, 2-1 in a shootout at the Nationwide Arena in Columbus.
* The Florida Panthers beat the Edmonton Oilers, 2-0 at Rexall Place (as the Northlands Coliseum was then known) in Edmonton.
* The Phoenix Coyotes beat the Minnesota Wild, 3-1 at the Jobing.com Arena (now the Desert Diamond Arena) in the Phoenix suburb of Glendale, Arizona.
* The Los Angeles Kings beat the St. Louis Blues, 6-2 at the Staples Center (now the Crypto.com Arena) in Los Angeles.
* And the San Jose Sharks beat the Anaheim Ducks, 2-0 at the HP Pavilion (now the SAP Center) in San Jose.
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