Private Investigators Help to Recover Over $10 Billion for Ponzi Scheme Victims

While many people think that being a private investigator involves delving into the personal details of people’s lives, other PIs find their niche investigating high-stakes fraud and recovering money that has been stolen.

The most egregious case of fraud in recent years was the Ponzi scheme of once renowned banker Bernie Madoff. This master con man defrauded his victims of over $17 billion in cash and over $65 billion in investments. A judge sentenced Madoff to 150 years in prison for his scam in 2009.

Private investigators have been working with forensic accountants to trace the money Madoff stole and return it to his victims. While many people thought they had lost everything, investigators have been tracking the money trail through complex offshore accounts and have recovered over $10 billion so far. As of November 2014, those with losses up to $925,000 had been fully compensated.

Tracing financial paper trails might not seem to be a dangerous avenue to pursue, but the specialized fraud investigator Harry Markopolos told Fraud Magazine in 2009 that he and his team feared for their lives as they traced Madoff’s money in off-shore accounts.

Markopolos had figured out that Madoff was running a Ponzi scheme and tried to warn the Securities and Exchange Commission (SEC) in 2000 to no avail. It wasn’t until the stock market crashed in 2008, and Madoff turned himself in, that the SEC realized the extent of his fraud.

It has taken PIs and accountants years to trace the maze of Madoff’s finances, since many of them were run through offshore accounts to avoid detection. One breakthrough was the recovery of $500 million from banks in the Cayman Islands in late 2014.

These investigative financial experts have been succeeding in pursuing justice for Madoff’s many victims that included prominent families in the US and Europe along with a number of charities.