Holy shit. Fifty billion up in smoke because of a pyramid scheme. Also, some balls on that lawyer to say that this is an "unfortunate set of events".NEW YORK (CNN) -- Former Nasdaq chairman Bernard Madoff was arrested Thursday and charged with a single count of securities fraud for allegedly operating a multibillion-dollar Ponzi scheme from his investment advisory business, federal authorities said.
Madoff, 70, operated the advisory business separately from his Bernard L. Madoff Investment Securities, a securities broker dealer with its principal office in New York City, the Department of Justice said.
A source with knowledge of the investigation told CNN that Madoff appeared in court Thursday and bail was set at $10 million bond. The bond was signed and Madoff was released.
According to the complaint filed with the U.S. District Court of Southern New York, two senior employees of the securities broker firm told investigators that Madoff ran the advisory business from a separate floor of the securities firm offices. One of the senior employees said that Madoff kept the advisory business' financial records under lock and key and was "cryptic" about its business.
A document filed by Madoff with the Securities and Exchange Commission early this year said the advisory business served between 11 and 25 clients and had about $17.1 billion in assets, the complaint said.
But on Wednesday, the complaint said, Madoff told senior employees that the advisory business was a fraud, that he was "finished," had "absolutely nothing," that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme."
Madoff said the business had lost about $50 billion and that he planned to turn himself in to authorities in a week. But, the complaint said, he told the employees he wanted to distribute the $200 million to $300 million he had left to certain selected employees, family and friends.
Madoff faces a maximum penalty of 20 years in prison and a $5 million fine if he is convicted.
Bloomberg also reported that the SEC sued Madoff Thursday, accusing him of a "multi-billion dollar Ponzi scheme that he perpetrated on advisory clients of his firm." In the suit filed in Manhattan federal court, the SEC said it was seeking an asset freeze and appointment of a receiver for the firm as emergency relief for investors, Bloomberg said.
There was no immediate comment from Madoff or his attorneys.
Madoff's attorney, Daniel J. Horwitz, said, "Bernie Madoff is a longstanding leader in the financial services industry. He intends to fight to get through this unfortunate set of events."
Ted Weisberg, president of Seaport Securities, said that Madoff "was an innovator" who, for years, offered investors a guaranteed return and that he continued to attract investors in that way.
Madoff was known as a hard-working, solid broker, Weisberg said, and the news is "inconceivable" to people who knew him.
Madoff founded his securities firm in 1960 and expanded to a worldwide client base.
Sounds to me like the penalties for these things aren't nearly big enough. People like this cause devestation on an incredible scale, but because it's "only money" the penalties are basically a slap on the wrist.
