The Madoff Dilemma By mark.gimein Created 12/12/2008 - 3:57pm Bernard Madoff, one of Wall Street's best-known brokers and money managers, was arrested [1] on Thursday after allegedly confessing to his sons in a near nervous-breakdown-type meeting that instead of the $17 billion they thought he had in his funds, there was pretty much zip. The whole thing was—as the criminal complaint quotes Madoff himself saying—"basically, a giant Ponzi scheme" in which investors who wanted their money back got paid with earlier investors' money. /snip The extraordinary thing that Lo does in the third chapter of his book Hedge Funds, published...