Where did the money go? It has become the biggest mystery to emerge from the $50 billion Bernard Madoff scam. Several theories have emerged among financial experts. Maybe Madoff lost a bundle in bad
Real Estate investments.There is also the possibility he inflated his claim of $50 billion in losses to the Federal Authorities. We know He has plenty of houses and yachts, but not certainly enough to account for all this money,says a professor of finance at New York University.Madoff, 70, a former Nasdaq stock market chairman, has become one of the most vilified people in America since news broke Dec. 11 that he allegedly had been running a giant Ponzi scheme, paying returns to certain investors out of the principal received from others.The scam included a global roster of investors, from retirees on Long Island to the International Olympic Committee, to charities worldwide. So far, investors have said that they have lost more than $30 billion, according to an Associated Press calculation.Here are some possible scenarios: Mayble he LOST IN THE FINANCIAL MELTDOWN: Madoff's scheme was partly undone by this year's crisis in the stock and credit markets. The Dow has lost nearly 36 percent since the start of this year, and the credit market has largely been frozen.
In the federal complaint, Madoff said that investors were seeking approximately $7 billion in redemptions. Madoff boasted of producing returns of about 10 percent for years, so individual investors who were getting battered in other parts of their portfolio might have taken some of those purported Madoff profits off the table.
At the same time, hedge funds were facing an unprecedented run on redemptions from their own investors. That meant the hedge funds may have had to quickly extract cash from their Madoff positions in order to pay their own investors back.It is unclear how much of that $7 billion Madoff paid out to investors, but when things came crashing down, just $200 million to $300 million was left in the pot. Authorities say he intended to pay out that money to employees and friends before the alleged fraud was discovered.
Another theory is the he TRADED it all AWAY: What's unclear at this point of the investigation is when the scheme began, but reports have indicated that it had been going on for decades. In the criminal complaint against Madoff, he told investigators that he "had personally traded and lost money for institutional clients, and that it was all his fault."
Maybe it all WENT TOWARD THE LIFESTYLE: Madoff could have spent some of the money on his lifestyle, which included multiple homes and yachts and memberships at some of the nation's most prestigious country clubs. His three U.S. homes one of which is a Manhattan penthouse, another is a beachfront mansion in the Hamptons. Finally his home in Palm Beach, Fla. all of which together have an estimated market Real Estate value of more than $30 million..The white-glove co-op in Manhattan where he lives requires residents to have at least $100 million in liquid assets so that they can cover any expenses even if their business goes bust or the market is hit with declines, said Faith Hope Consolo, chairwoman of the real estate firm Prudential Douglas Elliman's retail leasing sales division. The firm has leased retail space in that building, and she said it is "the epitome of luxury."The office rented by Madoff's firm was in New York City's Lipstick Building, where rents command about $3 million to $5 million annually for the space Madoff had, Consolo said.There is also speculation that the money could show up in other spots — maybe in offshore bank accounts, in family members' names or elsewhere.
One more theory is that is WENT INTO INVESTORS' POCKETS: While many of investors lost everything, some of them must have received payouts from Madoff over the years. Given that this was a Ponzi scheme, Madoff had to keep up his credibility by allowing people to tap their cash when they wanted.
