Please explain. Why would people invest thinking there was 'trading' taking place? Geeeze this mess is so out there I am not even sure what questions to ask... Was there ever 50billion in the first place?
He gave his "customers" simple reports that just made up stuff.
You could do this with nothing more elaborate than a pre-printed formal letterhead, Quicken and an inkjet printer.
One guy.
There may be an offshore account. Bernie may yet escape jail if makes restitution...he could return the original investment. This would cost less than 50 billion.
However, he was paying out about 10 % a year to investors and living high on the hog so there not be any money left.
He took money in from new clients, kept a percentage as a fee, and paid the rest out to existing clients as returns. No need to make trades. It works as long as you can keep bringing enough new money in every year. The government calls this Social Security. ;)
Some people thought Maddoff was making his high returns by trading with inside information, e.g. taking advantage of future trades made by his brokerage firm. Of course, doing that is illegal and they had to know that, but it would give them incredible returns.
Personally, I believe he was shipping money to off shore accounts and some insiders, who are crying that they've been scammed, have their untaxed money safely offshore.
Only on paper. My guess is he took in a billion or two and pretended that it grew to 50B. Along the way he also paid out some. But with the returns he claimed, he got to 50B on paper rather easily.