Never, in the history of the world, has there been a bigger house of cards than what Bernie Madoff created with his Ponzi scheme. It had to crash, and it finally did on December 11, 2008.  That is when FBI agents pounded on his door in his Manhattan luxury high-rise, and Madoff answered, telling them that he was expecting them. 

New files just released by the FBI because of a Freedom of Information Act request paint a dramatic picture of the moments when Madoff morphed from a billionaire Wall Street legend into an accused felon with a fortune created out of fairy dust. 

Madoff told those agents he was preparing to turn himself in that day, having decided according to the files that he “just couldn’t go on.”  

Was it shame that moved him to admit defeat and surrender? Guilt? No, and no, according to the transcripts. The answer was more self-serving, “I’m broke,” he told the agents. 

It’s hard to pay back investors with no more capital, making the scheme impossible to continue. 

What’s incredible about this story is how big the Ponzi scheme was and how successful the government was in retrieving investors’ money. 

The final tally was $18 billion in lost money for clients looking the other way, ignoring some obvious signs of corruption for decades as Madoff delivered on promises of huge returns; the clawback campaign recovered $14.4 billion of that money. 

A day before Madoff’s arrest, he came clean to his sons Mark and Andrew.  They were the ones that tipped off the FBI.  The knock on the door came at 8:03 a.m.   The reports document that Madoff invited them in politely.  When asked if he knew why they were there, he said he did. 

An agent asked Madoff if maybe there was an innocent explanation for it. Madoff told them, “there is no innocent explanation.”  He then walked the agents through the scam, explaining how he used client money to pay dividends to other investors. 

He also tried to tell agents that he was solely behind the scam, saying, “it’s all me doing it.”After that, he said he knew he was “going to jail” and gave the agents his passport. He was sentenced to 150 years in prison and died in 2021. 

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