Bernard L. Madoff Investment Securities LLC

Madoff claimed to use a split-strike conversion strategy: buying blue-chip stocks and hedging with options on the S&P 100 index. This strategy was entirely fabricated; no actual trades were executed (per the SEC, 2009).

Madoff cultivated a reputation for being a savvy trader and only accepted capital from select investors, many introduced by feeder funds. His firm provided its own custody and trade confirmation, allowing him to fabricate statements (per The Wall Street Journal, 2008). The SEC received multiple credible whistleblower tips but did not thoroughly investigate.

Major feeders included Fairfield Greenwich Group, J. Ezra Merkin's Ascot Partners and Gabriel Capital, and Kingate Management (per Bloomberg, 2009). These funds channeled billions of dollars into Madoff's scheme, taking fees for their role.

The court-appointed trustee, Irving Picard, recovered about $14.5 billion for victims, but estimated total investor losses at $64.8 billion based on principal and lost investment returns (per the Madoff Trustee, 2010).

Bernard Madoff's sons, Mark and Andrew Madoff, worked at the firm and were executives. They reported their father's confession to federal authorities in December 2008 and were not charged in the scheme. Mark Madoff died by suicide in 2010 (per The New York Times, 2010).