Bernard Madoff's investment operation—found this week to be a massive Ponzi scheme that lost as much as $50 billion—raised plenty of red flags over the last decade, the Wall Street Journal reports. As far back as 1999, Madoff’s steady returns in wide-ranging markets seemed unrealistic to some observers, and at least one tried to blow the whistle. “Madoff Securities is the world's largest Ponzi Scheme,” a rival wrote to the SEC that year.
The accusations were sent to the SEC repeatedly over the last 9 years, the Journal reports, but a 2007 investigation ended without action. Routine scrutiny of the company was minimal because Madoff controlled a securities firm, enabling him to process trades for clients himself, rather than using an outside firm, as a hedge fund would, the New York Times reports. Indeed, some wondered why Madoff didn’t take the more lucrative hedge fund route, and became suspicious. His auditor was just a three-person company, including a 78-year-old in Florida and a secretary.