[dennisw]

Madoff would still be going strong except that his “investors” were making redemptions to cover expenses due to their other investments tanking

Before this wave of redemptions Madoff was doing great because his “investors” rarely took money out. They plowed their dividends back in because it was such a great deal growing 12% each year ...on paper

[Ditto]

They plowed their dividends back in because it was such a great deal growing 12% each year ...on paper.

That's how it grew to $50 billion not doubt. The guy had been running this scam for 20 years or so.

[steve86]

Before this wave of redemptions Madoff was doing great because his “investors” rarely took money out. They plowed their dividends back in because it was such a great deal growing 12% each year ...on paper

Yes, but "on paper" had a different meaning here than it normally does. At least with Fidelity Investments, say, the portfolio is really worth what the paper statement says at that point in time (I hope).