[28] Madoff's fraudulent activities are believed to have accelerated after the 2001 change from fractional share trades to decimals on the NYSE, which cut significantly into his legitimate profits as a market-maker.

[24] Madoff's sales pitch was an investment strategy consisting of purchasing blue-chip stocks and taking options contracts on them, sometimes called a split-strike conversion or a collar.

[40] A few analysts performing due diligence had been unable to replicate the Madoff fund's past returns using historic price data for U.S. stocks and options on the indexes.

[47][48] Investors who gained access, typically on word-of-mouth referral, believed that they had entered the inner circle of a money-making genius,[47] and some were wary of removing their money from his fund, in case they could not get back in.

[49] The New York Post reported that Madoff "worked the so-called 'Jewish circuit' of well-heeled Jews he met at country clubs on Long Island and in Palm Beach.

"[50] The scandal so affected Palm Beach that, according to The Globe and Mail, residents "stopped talking about the local destruction the Madoff storm caused only when Hurricane Trump came along" in 2016.

[62] She in 2007 married former assistant director of the SEC's Office of Compliance Inspections and Examinations Eric Swanson,[63] whom she had met in April 2003 while he was investigating her uncle Bernie Madoff and his firm.

[72] In February 2006, Swanson was emailed by Assistant Director John Nee that the SEC's New York Regional Office was investigating a complaint that Bernard Madoff might be running "the biggest Ponzi scheme ever.

[24][40] Through Sorkin, who once oversaw the SEC's New York office, Avellino & Bienes agreed to return the money to investors, shut down their firm, undergo an audit, and pay a fine of $350,000.

[78] During the 2005 investigation, Meaghan Cheung, a branch head of the SEC's New York's Enforcement Division, was the person responsible for the oversight and blunder, according to Markopolos,[13][82] who testified on February 4, 2009, at a hearing held by a House Financial Services Subcommittee on Capital Markets.

When high-volume investors who were considering participation wanted to review Madoff's records for purposes of due diligence, he refused, convincing them of his desire to keep his proprietary strategies confidential.

In 2003, Joe Aaron, a hedge-fund professional, believed the structure suspicious and warned a colleague to avoid investing in the fund, "Why would a good businessman work his magic for pennies on the dollar?"

[113] Madoff asked others for money in the final weeks before his arrest, including Wall Street financier Kenneth Langone, whose office was sent a 19-page pitch book, purportedly created by the staff at the Fairfield Greenwich Group.

Madoff said he was raising money for a new investment vehicle, between $500 million and $1 billion for exclusive clients, was moving quickly on the venture, and wanted an answer by the following week.

At that point, Madoff asked his sons to follow him to his apartment, where he admitted that he was "finished" and that the asset management arm of the firm was in fact a Ponzi scheme – as he put it, "one big lie."

[14] Harry Susman, an attorney representing several clients of the firm, stated that "someone had to create the appearance that there were returns", and further suggested that there must have been a team buying and selling stocks, forging books, and filing reports.

[193] While awaiting sentencing, Madoff met with the SEC's Inspector General, H. David Kotz, who was conducting an investigation into how regulators failed to detect the fraud despite numerous red flags.

[196][198] Former SEC chairman Harvey Pitt estimated the actual net fraud to be between $10 and $17 billion, because it does not include the fictional returns credited to the Madoff's customer accounts.

Chin dismissed Sorkin's plea for leniency, stating that Madoff made substantial loans to family members and moved $15 million from the firm to his wife's account shortly before confessing.

[239] On July 28, 2009, he gave his first jailhouse interview to Joseph Cotchett and Nancy Fineman, attorneys from San Francisco, because they threatened to sue his wife, Ruth, on behalf of several investors who lost fortunes.

He also agreed to surrender his interest in Primex Holdings LLC, a joint venture between Madoff Securities and several large brokerages, designed to replicate the auction process on the New York Stock Exchange.

Other notable clients included former Salomon Brothers economist Henry Kaufman, Steven Spielberg, Jeffrey Katzenberg, screenwriter Eric Roth, actors Kevin Bacon, Kyra Sedgwick, John Malkovich, Zsa Zsa Gabor, and Rue McClanahan,[265] politician Frank Lautenberg,[266] Mortimer Zuckerman,[267] Baseball Hall of Fame pitcher Sandy Koufax, the Wilpon family (owners of the New York Mets), broadcaster Larry King and World Trade Center developer Larry Silverstein.

[294][295] The Innocence Project was partly funded by the JEHT Foundation, a private charity backed by a wealthy couple, Ken and Jeanne Levy-Church, financed with Madoff's mythical money.

In April 2010, Connecticut Attorney General Richard Blumenthal sued the Westport National Bank and Robert L. Silverman for "effectively aiding and abetting" Madoff's fraud.

[300] In June 2012, Madoff's brother Peter was "expected to appear in Federal District Court in Manhattan and admit to, among other things, falsifying records, making false statements to securities regulators and obstructing the work of the Internal Revenue Service.

[302] On December 23, 2008, one of the founders of Access International Advisors LLC, René-Thierry Magon de la Villehuchet, was found dead in his company office on Madison Avenue in New York City.

[314] In his lawsuit, Picard stated that Mark and other Madoff family members improperly earned tens of millions of dollars, through "fictitious and backdated transactions", and falsely documented loans to buy real estate that weren't repaid.

Following the exposure of the Madoff investment scandal, the SEC's inspector general conducted an internal investigation into the agency's failures to uncover the scheme despite a series of red flags and tips.

The bank admitted to failing to file a "Suspicious Activity Report" after red flags about Madoff were raised, which, prosecutors alleged, did not have adequate anti-money laundering compliance procedures in place.

Analysts suspected that these parties remained silent because their investments were from illegal activities such as drug dealing or tax evasion, or because they had civil liabilities in the United States and did not wish to subject themselves to the jurisdiction of the U.S.