How does a ponzi scheme work?
A ponzi scheme works with trust. People trust a specific person with something like money. The ponzi person promises something, for example a 10% increase on the money invested. The problem is that this increase on money is not made by actual business or trade. It is taken from the new investors. This means, to keep it going, people need to constantly invest into the ponzi company. A ponzi scheme will get caught sooner or later.
How do you think Bernie Madoff was able to keep his scheme going for so long?
Since he had a lot of important investors who didn't know that he was scamming them, they told a lot of people about it and this way, he could keep a lot of investors going (which you need for a ponzi scheme). Also, everybody trusts those important people because they know how to handle business.
What kind of person is a ponzi person?
A person that seems very trustworthy and friendly. They can make people think they are in safe hands even though they are getting scammed.
Why do you think the SEC did nothing after warnings about him?
They were afraid of Madoff. He did not seem like a fraud to them.
Why do you think he did it?
I think he wanted to have money without having a legal business because it would have take too long to build up. He was too greedy money.
Bernie Madoff scammed people for about 65 billion US Dollars.
Bernie Madoff managed to keep the scam hidden for about 20 years!