Ever since Bernie fessed up, I have been saying that was impossible for ONE person, (as Bernie maintains) or even a few, to carry on such a complex financial fraud for decades. You need far more people, far more ACCOMPLICES...this may be the first crack in that facade..
Not yet charged, but Madoff’s bro Peter is being sued by The Frank Lautenberg Foundation (US Sen) b/c Peter’s name was on his phony investment statements.
Recently sentenced mini-Madoff Kenneth Starr (not that Ken Starr, but the the money manager of some the Hollywood actors, producers and celebrities) ran a long $59M Ponzi scheme. R. Allen Stanford allegedly ran a $7B Ponzi scheme of "safe" CDs with more than 7% returns.
Even more "curious case" is Kenneth Wayne McLeod of Jacksonville, FL who ensnared hundreds of current or former law enforcement agents from FBI, DEA, IRS, ICE in his $43M Ponzi scheme running for over 20 years:
From Hundreds of Federal Agents Fall Victim to Ponzi Scheme - AOL, 2010 July 08
Some 300 retired and current federal agents -- representing the FBI, the Drug Enforcement Administration and Immigration and Customs Enforcement -- collectively invested tens of millions of dollars of retirement money in what turned out to be a Ponzi scheme allegedly run by a Florida man who committed suicide last month, an attorney in the case said. ..... < snip > ..... "There are definitely [agents] who have lost their life savings," Fort Lauderdale attorney Michael Goldberg, who is representing the victims, told AOL News. The reaction of the agents? "Pretty much what you expect," Goldberg said. "Shock and anger." Behind it all, authorities said, was a self-described retirement investment adviser named Kenneth Wayne McLeod, 48. For years McLeod served as a trusted adviser to federal agents around the country, making free financial projections for retirement and in some cases offering high-yield returns of 8 to 10 percent on certain investments, according to an SEC filing in the case. ..... < snip > ..... According to the SEC, McLeod for years put on retirement seminars that federal agencies paid as much as $15,000 for. ..... In many instances, he offered high returns -- 8 to 10 percent -- through bonds. "The security of the government bonds was a key element of McLeod's deception but he never purchased any bonds," the SEC said in a statement on June 25. ..... < snip > FBI agents are supposed to unearth scams, not become victims of them. This time is different.
Oh, and because he was "investing in government bonds", these returns were also "safe" and "tax-free". His MMF, F&S Asset Management Group, was legitimate, but his "special bond" operation was basically an equal opportunity affinity fraud.
McLeod was described as a "charmer" who was using his reputation, familiarity and name-dropping to other federal agents, including boasts of his "best friend, Bob" (FBI Director Robert S Mueller) and his wife staying at his place on their vacations. The scammed federal employees were in GS-13/GS-14 wage brackets.
He also scammed clients that he met through charity work and non-profit groups that help families of agents killed in the line of duty.
More details here:
From Wayne McLeod: The Life and Death of a Mini-Madoff
He gave seminars, handled investments, and ran a Ponzi scheme for an unlikely group: law enforcers
Niche-Market Madoff Duped Law Enforcement Agencies in Ponzi With a Twist - RGM/BW, by Robert Schmidt, 2010 September 02
..... As primitive as they are, Ponzi schemes are not easy to spot. As long as money flowing in from new investors covers the payouts to current investors, nobody wises up to the fraud. That often changes during tough economic times as more clients try to withdraw money and the requests can't be covered. ..... < snip > ..... The government's silence on the question of how McLeod was able to conduct the fraud is frustrating to some of his victims, and some wonder privately if their employer is concerned about its liability. ..... < snip > ..... Goldberg says the case is more disturbing than most. McLeod wasn't promising outrageous returns, he notes, and the agents seemed to be relying on the approval of the government when they signed up with the investment adviser. ..... < snip > < snip > ..... McLeod lured them with what he called his "special fund," government bonds that he promised would return 8 percent to 10 percent interest annually, tax-free. Few if any clients bothered to ask how such good returns could be duplicated year after year. Like those who put their money with Bernard Madoff, they didn't think they were being too greedy. They weren't trying to get rich overnight. It all sounded perfectly reasonable. Then, in June, working on a phoned-in tip, investigators from the U.S. Securities and Exchange Commission barged into McLeod's Jacksonville office. ..... < snip >
Just like Madoff who, having been "investigated" a few times by the SEC acting on tips, had the cover and was able to brag about "clean bill of health" of his operation.