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Another way to do this is at one remove from the actual trades. You put all the investors money under the management of some subordinate hedge fund operators.

New money goes into one, and then the other, and back and forth over a long period of time.

It's kind of like the deal your broker wants to set up that gives you several investment quality stocks, and gives you a fall-back with bonds (preferably US securities in recent months). It also enables this kind of crook to point to how much money people are making in OTHER funds he controls. At the same time he doesn't tell new investors about the other fund where they're losing their shirts to the fund making the money.

Anyway, the next step is to convince your hedge fund managers to use ETIFs as an "operating bank". With $50 billion bucks supposedly under management, you get an idea of how he could do this ~ the largest ETIFs are far smaller, though numbers of them float around $5 billion to $10 billion.

There is NO WAY your clients can keep up with this by watching the market indices. They have to assume you've spread their assets around to reflect the markets, so they do.

Not surprising the guy ran this for years. He was also big enough to get away with "naked short-selling" for a very long time.

BTW, one reason to use an ETIF as a "bank" is that NO ONE IS WATChING. After all, these things are not businesses with real expenses ~ so the focus is entirely on the market indices. If the ETIF goes up $5 billion every now and then no one cares except the other guys moving in and out of that ETIF. They cash in, move on to other stuff, and keep their mouths shut.

No doubt there are other operators running the same scheme.

I will predict that confidence in the markets tomorrow will be shaken to the core!