Well that sort of depends on how compartmentalized things were.
If the traders only traded, and the senior traders only filed their gains and losses to the accountants, and the accountants only sent Madoff spreadsheets, well... it would be quite easy to delete losing trades, add numbers to winning trades, etc. As long as he was able to attract 10% more money each year than he claimed he had on hand, he could pay every investor a 10% dividend.
During good times he may have even made some money. I don’t think it was a straight Ponzi scheme. I tend to think his confession of “Ponzi Scheme” was more a reflection of not just his operation but the market in general. In good years these brokerages were paying out $10’s billions in bonuses and profits but in 1 bad year they go bust! It doesn’t make sense unless the entire place (Wall Street) is crooked beyond all imagination - which I tend to believe is highly probable.
The market makers (of which Madoff was one) get away with murder. They can sell fake shares all day long if they want to. Options market makers too. If they get lopsided on puts or calls they can sell into the market shares that don’t exist to hedge their position. This is entirely unfair to all other market participants.
And Madoff is not the only integrated investor/market maker. All the houses were integrated. They all had their own market making desks, their own investment advisors, their own trading desks. Madoff was no different in that regard than Lehman ($100’s of billions in profit over the decade, defunct in less than 1 year), Merril Lynch (sold out before they went bust) and Goldman Sachs (Paulson’s firm).
I think they are all looking to make Madoff, not just a fall guy, but a guy to pin “market corruption” on. “Hey - that guy was bad, but we’re honest!”. Bull pucky. I am 38 years old and if I don’t see structural reform of the markets I won’t invest another dime in them. I’ll put my IRA into CDs and other hard assets. Maybe eventually buy apartment buildings or something I can see, touch, feel, know the people I’m investing in, fix their sinks and kick them out if they don’t pay the dividend (rent).
“””Wall Street) is crooked beyond all imagination - which I tend to believe is highly probable.”””
All the old folks I have buried in the last ten years from the great depression......said do not trust anybody with your money.....Yeah, I have watched hundreds of stocks with spectacular news run in place for days until the investors lost when it was shorted to pennies...SEC, MM’s, hedge fund’s, gov. they are all crooks, maybe we need GD2 to clean house....