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Alleged Wall Street swindler Madoff to stay out on bail

Bernard Madoff will stay out on bail under tightened conditions, a US judge said on Monday, rejecting calls by the prosecution to detain the alleged financial swindler accused of running a $50 billion 'ponzi' scheme on Wall Street.

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AFP - Once a socialite with a galaxy of friends, Bernard Madoff cut the loneliest of figures Monday as he waited to hear whether he'd be going to jail.

Journalists besieged his posh Manhattan apartment building, newspapers and television commentators bayed for his punishment, and former friends lined up to accuse the financier of ruining their lives.

A judge allowed Madoff, 70, to remain under house arrest on bail despite charges that he ran perhaps the biggest Wall Street fraud in history.

Just a month ago the world was a very different place for the man widely known as Bernie.

A former chairman of the Nasdaq stock market, he had the reputation almost of a guru, a man with a Midas touch who made his own fortune after starting out as a Long Island lifeguard.

With a home in France, a motor yacht and private airplane he had all the trappings that went with being a Wall Street success and pillar of the wealthy Jewish community in New York and Florida.

Indeed, Madoff was genuinely talented. He is credited with helping to revolutionize the shift in trading from telephones to computers, making deals within seconds rather than minutes, and ushering in an era of ever greater stakes and profits.

But Madoff's alleged scam was less about creating wealth as creating the impression of wealth.

In what prosecutors describe as the ultimate confidence trick, Madoff did not have to go out and steal money -- his victims came right to him.

They trusted Madoff and he kept them happy with astonishingly consistent returns on the money they handed over.

What these clients didn't realize was that the returns they liked so much were in fact cannibalized from other clients' principal, prosecutors say.

While no one asked for their principal back -- which is apparently what happened a few weeks ago -- the secret remained unexposed.

The collapse of the alleged scheme in December revealed a list of victims reading like a who's who of savvy investors: everything from big banks like Banco Santander to charities and Hollywood moguls.

Underlining what prosecutors see as Madoff's ruthlessness, he chose his chief victims from fellow members of the tight-knit Jewish community.

A columnist for The Wall Street Journal says Madoff lured his victims with a "mysterious allure and sense of exclusivity."

Initially Madoff would rely on a "macher," the Yiddish term for a big shot, who would go to the country club and "brag, 'I've got my money invested with Madoff and he's doing really well,'" the Journal wrote.

"When his listener expressed interest, the macher would reply, "You can't get in unless you're invited... but I can probably get you in."

Another reason not to suspect Madoff was that in appearance he was the model of decency.

"He was thought of as a great philanthropist, a pillar of the community, the chairman of Nasdaq -- all of that stuff," The New York Times quoted a hedge fund executive as saying.

Madoff, the executive told the Times, would be jokingly referred to as the human equivalent of ultra-safe US treasury bill investments.

"Bernie was actually the Jewish T-bill," the executive said. "He was that safe."

 

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