Bernie Madoff ran an investment firm that required more money coming in than was going out. He cut huge checks that were hard to believe, because the whole thing was too good to be true.
Then the financial crisis happened around 2008, and people started taking their money out of their investment accounts because they were losing 37% of what they had put in. However, when people went to pull their money out of their accounts, they couldn’t, because it didn’t exist in the first place.
Bernie Madoff became a great scapegoat to the government and population at large. The judge, in fact, said that “the message must be sent that this kind of manipulation of the system is not just a bloodless crime that takes place on paper, but one instead that takes a staggering toll.”
Bernie Madoff became the face of the near end of capitalism, and a show of how greedy capitalism makes people do morally bad things.
And what he does was truly horrible.
It was fraud, plain and simple, which we already have laws on the books for. But when it came to prosecuting him, the government used him to set an example, and he was sentenced to a ridiculous 150 years in prison and restitution of $170 billion.
Not to say he didn’t deserve a big punishment, but murders have an average punishment sentence of 20 years. I think after everyone lost their savings and retirement in the 2007-08 financial crisis, people wanted blood, revenge, and justice to make themselves feel less helpless.
So that is the short story of the biggest fraud in history.