A Wall Street advisor and former chairman of the Nasdaq stock market has been arrested for fraud after allegedly admitting to running a 'giant' pyramid scheme, US prosecutors announced.
Bernard Madoff, 70, faces a maximum 20 years prison and a fine of up to $5m if convicted on the securities fraud charge, prosecutor Lev Dassin and the FBI said in a statement late on Thursday.
According to the statement, Madoff on Wednesday told his employees at Bernard L Madoff Investment Securities LLC, a securities broker, that an investor advisory business he had been running in parallel was fraudulent.
Madoff filed with the Securities and Exchange Commission on January 7 that his investor advisory business served 11 to 25 clients with about $17 billion in assets under management. But Madoff allegedly told his employees that he was 'finished', that he had 'absolutely nothing' after losing around $50 billion.
According to the prosecutor's statement, he said he had run 'a giant Ponzi scheme' - essentially a pyramid scam.
He told the employees he would surrender himself to the authorities after using his remaining $200-300m to pay selected employees and family and friends, the statement said.
