In his own words, Bernard Madoff today explained the inner workings of his $50 billion Ponzi scheme and the details are shockingly simple.
Step 1: Get investors to give you cash. Pretend to trade. Lie about your returns.
Step 2: Put the cash in a bank account (his was at Chase Manhattan).
Step 3: Cover up questions by moving cash between New York and London, and pay out the few investors who ask for redemptions (until one too many come calling). Occasionally lie to the SEC, and operate a legitimate market-making business to keep up appearances. Falsify audit reports.
That's basically it. That, plus the ability to charm $50 billion from credulous investors. Amazing.
The WSJ has the text of Madoff's statement following his guilty plea to 11 criminal charges. Madoff told the judge he was "grateful" for the opportunity to comment publicly about his crimes, saying he was "deeply sorry and ashamed."
Related: Bloomberg says Madoff might be in for a tougher time in prison than your average white-collar felon.