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Mar 11, 2009

Questioning Madoff years before

Mother Jones has a story about Michael Ocrant, a former financial journalist who was one of the first to doubt Bernard Madoff's operation.
The story says that in 2001, Ocrant wrote for a trade publication, MAR/Hedge, that financial experts were "baffled by the way the firm has obtained such consistent, nonvolatile returns month after month and year after year."
From the story:
The story raised the possibility that Madoff was padding his clients' returns with profits from another part of his business, which operated not as a hedge fund but as a so-called market maker—a middleman for the purchase and sale of securities. Madoff denied this at the time, though Ocrant remained convinced that fraud lurked behind the surface of Madoff's thriving enterprise. Even so, he never fathomed that Madoff's fund was nothing more than a Ponzi scheme, paying returns to investors from their own money rather than from profits. For a period of at least 13 years Madoff made no investments at all, according to the Securities and Exchange Commission (SEC). "I just couldn't believe it!" Ocrant says. "I couldn't believe a Ponzi scheme could operate that long."

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