Politics & Regulation

Madoff myopia

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Most of Bernard Madoff's capital came from hedge funds, who investors say failed to do the most basic due diligence. Could the big players have been willfully blind?

Most of Bernard Madoff's capital came from hedge funds, who investors say failed to do the most basic due diligence. Could the big players have been willfully blind?

By Josh Friedlander

The self-professed Ponzi scheme of Bernie Madoff ensnared a huge swath of wealthy but painfully unsophisticated investors, as the 8,000 insurance claim forms mailed to Madoff victims from the Securities Investor Protection Corp. can attest. Yet his biggest marketing efforts were by proxy, with nearly $20 billion concentrated at five firms, the biggest of which was Fairfield Greenwich Group.

While Madoff did not, technically, manage a hedge fund, his largest