Break into elite clubs to attract customers
Founded in 1950s, Palm Beach Country Club is a high-end Jewish club with only 300 members. To apply for membership, you must not only be rich enough (the membership fee is $300,000), but also be a person with high moral character, and the annual charitable donation record is not less than $300,000.
Madoff easily entered the elite country club and attracted many wealthy Jewish members. Madoff is good at reading investors' psychology. He deliberately created an exclusive atmosphere and implemented the policy of "uninvited". Only invited investors can become corporate customers. This means that becoming a customer of Madoff is a bit like joining a club with a high threshold. I can't get in without money and letters of introduction.
This strategy is very successful. For many people, voting for Madoff has become a status symbol. Madoff never explains his investment strategy. If you ask too many questions, he will refuse to accept your investment.
Madoff's name is mentioned from time to time at the club's golf course and cocktail party. Some Jewish old people call Madoff "Jewish bond", which can give an investment return of 8% to 12% every year regardless of the financial market situation. Madoff once boasted: "I make money in the rising market and I also make money in the falling market." Only a market that lacks volatility will make me helpless. "
Friends and old friends will still cheat.
Carl shapiro, a 95-year-old club member and clothing tycoon, is one of the biggest victims of this scam. He has known Madoff for nearly 50 years. He invited Madoff to his 95th birthday party, traveled with him, and even took his great-grandson to play. Shapiro's charity fund invested $654.38+45 billion in Madoff's fund. In addition, Shapiro and his family also gave Madoff another $400 million for management.
With more and more customers, the minimum investment required by Madoff has also risen, from the initial $6.5438+0 million to $5 million, and then to $6.5438+0 million. At least13 club members have invested in Madoff's fund.
Due to the stable return, Madoff's fame is growing, and members are proud of owning Madoff's investment account.
The scam was exposed.
From June, 5438 to early February, 2008, Madoff revealed to his son that customers demanded to redeem the investment of $7 billion, which caused him a cash flow problem. On February 9, 65438, Madoff suddenly said that he would pay dividends in advance. 65438+February 10, Madoff confessed to his son that he actually had "nothing", but concocted a huge pyramid-layered Ponzi scheme to defraud customers of $50 billion. 10 that night, Madoff was reported by his son, which set off the biggest fraud case in history. 65438+February 1 1, Madoff was arrested.
Before the incident, people trusted Madoff, and Madoff did not let them down; The money they gave Madoff can get a fixed return of 10% every year, which is a very incredible rate of return. But in fact, Madoff did not create wealth, but created the impression that others had wealth. What customers don't know is that their considerable return is the principal from themselves and other customers-as long as no one asks for the principal back, the secret will not be revealed. But the game ended when a customer offered to redeem $7 billion in cash.
As of1October 30th, 2008, 165438, Madoff had 4,800 investor accounts, including hedge funds, Jewish charities and investors from all over the world.