ponzi went to prison and died a pauper. >> i went out looking for trouble.nd it. >> safer: but his name lives on for the fraud he made famous. >> the basic concept is robbing peter to pay paul. you have a fund of new money coming in, and you use the new money to pay the old investors. but at a certain point, that has to stop. >> safer: gullibility is at the very core of this, correct? >> absolutely. i mean, history is filled with examples. >> safer: mister jay's library is replete with documents about cons, scams, and hoaxes of all kinds. amazing animals... >> and the cynocephalus was often featured on circus lots. and then, eventually people realized that the cynocephalus was a baboon wearing lederhosen. >> safer: (laughs) celebrated conmen, including count victor lustig... >> this is an original wanted poster of the count. one of the things he did in france was he was able to sell the eiffel tower for scrap metal. and he was able to do it twice, which is sort of wonderful. >> safer: mr. jay reports that over the years, people really have tried to sell the

i've been running a ponzi scheme." [ticking] >> do you think you could pull off this scam today? >> given the same security measures? >> yep. >> easily. piece of cake. >> sam eshaghoff's scam was getting paid thousands of dollars to take the s.a.t. test for other students. he did it at least 16 times, scoring in the 97th percentile of the country. >> i would call him an academic gun for hire. that's what he was. >> welcome to 60 minutes on cnbc. i'm bob simon. in this edition, we examine two very different kinds of fraud. bernie madoff's wife and surviving son break their silence about wall street's most infamous criminal. and later, we visit a high school con man who figured the best way to make the grade was to cheat the s.a.t.s but first, in december 2008, bernie madoff confessed to running a $65-billion ponzi scheme, the largest financial fraud in history. while madoff is serving 150 years in prison, his family had to deal with the consequences of his crimes. his wife ruth divested of most of her great wealth and d

bernie is behind bars but ponzi schemes are still alive and well.ay investigates. >> reporter: there's no telling just how many new ponzi schemes are lurking out there until they blow up. this time a man named gerard the mini madoff of minnesota. >> so many zeros there. >> a stunning confession. >> he saw the scheme tumbling around him and he had to get out. >> reporter: a massive ponzi scheme laid out for mike friedman and his team in minnesota. the master mind, gerard, now serving 96 months in prison after pleading guilty to 36 counts of securities fraud in 2011. >> he had about $53 million of these fake printing contracts. >> reporter: the scheme played out here in minnesota, looks like just the tip of the iceberg. we tracked him down in a courtroom in california, moved from his cell in the midwest to face 455 additional charges. >> about $200 million went through this particular ponzi scheme nationwide. >> reporter: like madoff, accused of bilking money from victims all over the country. >> some of my friends and family have lost everything. the

scheme you wrote plan a ponzi you can't you can't taper a ponzi let me ask you you can't taper the ponzi will keep growing and growing and growing and what we're witnessing now is we are in the frenzied state right now of a bubble you know when you have missed allocation of capital to his store epic levels we've got the most mis allocation of capital you've got junk bonds trading where where regular corporates were trading five six years ago junk is junk for a reason all this is going to explode extraordinarily and there's nothing that they can do about it so the markets are broken there are no true price signals there is no price discovery and i guess you henry gave up and you just said ok well you know we've got some charts that i guess we're going to show a little yellow some charts of netflix and you can see that there's a line of people just chasing momentum in the netflix trade it's up six hundred sixty seven percent. in fourteen months you know you also got amazon that's up seven hundred fifty one percent in five years you've got tesla it's up four hundred sixty five percent this

scheme then that was the beginning of the ponzi scheme the first entrants into the ponzi scheme lo and behold they're the wealthiest the next generation then the baby boom generation was up until the next severing the final final severing of the gold standard on international trade and do you notice that the further we get away from the gold standard the poor import you are and yet the media the hollywood myth that is exported around the world it mocks this sort of barbarous relic and this notion that we can have deflationary currencies are not controlled by a command and control central banker is that we keep this ponzi going and if you if you were to wind this ponzi if you were to end this debt based system if you were to return to a gold standard then poverty would ensue and yet the actual data shows otherwise you know that that's absolutely true gold is vilified and unfortunately because gold has been financial because there are one hundred times more paper gold contracts floating around the system than there are bars of gold it's easy for bankers to can made it manipulate the pric

ponzi comes up with a target of 42. not tall enough for it although i was back about 15 years ago, and that's 53% higher than where the stock is right now. that's right, 53%. and you know what? i don't have any trouble with that. i don't have any trouble believing in it at all because you know why? i too am bullish about hewlett-packard because when i look at hewlett-packard's fundamentals i see a classic turnaround story playing out here and one that can send this stock substantially higher and when you consider better than expected quarter, it is clear that ceo meg whitman has a comeback brewing here. she's streamlining operationses and aggressively cut costs. oh, man, has she ever -- oh, and on the conference call, the chief financial officer and she's real good said there could be more incremental cost savings and better to be a shareholder than a worker. most importantly whitman knows that management needs to figure out what a company's good at and put the chips behind it. she's bet on pcs, printers and information

huge ponzi scheme, massive amounts of money. we devoted the 8:00 p.m. hour to it. of the park that day. as we know in history, this is probably modern history the biggest ponzi scheme ever. cheryl: i was here covering it, by the way. we did a much better job over here. >charlie: i will not argue. i remember saying point-blank at don't think the security exchange commission is going to survive. we got information that they knew about this from a whistleblower. not just one, this was out there. there were others, we should point out i think in the post-financial crisis, we have all of these regulations, more regulations is not going to catch bernie madoff. the regulators examined him about three or four times, but they failed to determine, they failed to look at the one simple thing, did this guy ever complete a trade, if they ever looked at whether he completed a trade, a clearing firm that did the clearing they would have caught it and it would have unraveled this years before they caught it. even to this day, we had a series of interviews back and forth, e-mail an

debt as long as interest rates can keep low which is great to keep the debt mounting in this huge ponzi scheme however does give rise to incest you know was kleptocratic cancer ridden financial terrorist like jamie diamond and the folks you see here in the u.k. well this article points out that for example assets like network rail and taxpayer owned banks should be included in the accounts where they are currently excluded quote in defiance of normal accounting rules so the normal accounting rules but we have an incestuous deformed accounting rules that just decide to say that we could just keep on repackaging the same debt and this call it something else now it's an asset it's not a liability that was on the other side of the accounting ledger even though it's it's the same product at the same father or mother or uncle or aunt this not putting things on the balance sheet is called the enron approach to accounting till such time as you can't hide the incestuous exploding debts off the balance sheet any longer and then suddenly like enron everything goes completely to zero quite rapidly

trading at seven dollars a big going of course now it's over a thousand many at the time called it a ponzi scheme now two years later it's gone over a thousand with loads of volatility along the way but what's next for bitcoin and do see it being used in mexico for example jeff oh absolutely. since we last talked because he has gone through a tremendous evolution it's really caught on around the world i think the biggest reason that it's been rising recently wasn't necessarily that and bernanke he gave it his is his approval but it was mostly china if you look at our feet leak dot com you can see both of the big koreans are going to china right now and most many places and the reason they're going to china is because of the capital controls in china went through with that one a rim of envy and. you can just see it all over the world that this is catching on it's going it's going to mislead well and there's going to be ups and downs going to be volatile it's going to go all over the place this is a total revolution in money and banking and it's fascinating and exciting to watch all right je

obamacare is now another ponzi scheme. the alternative is not the kind of government controlled health care we had before, but a free market we haven't had in decades where bad operators wouldn't survive. they would have their own choice. none of that ppens with obamacare. it is already failing before our eyes and a bailout is imminent. >> last thoughts. >> all of those points are very well taken. the idea that this is -- you know, it is make it up as you go along, and this was not a law. they did 2700 pages of garbage. nobody read it. the people we elect, this is so outrageous the people we elect do not read the legislation they pass. i find thattart leg. no where in the constitution do i read where we are obligated to bail out everyone who has health care. maybe i am not wrong. maybe i missed that. maybe that is somewhere else, but what i am saying is all of th is a coercive plot and we have to get rid of it. >> not only in the constitution, but president obama promised to stop bailing coanies out and yet he is going to

the ponzi dough founding a megachurch, private jet time, tickets for sporting events and home arcade. had 11 cars. that last time i checked you can only drive one at a time. >> the next guy number two at air row postal when prosecutors say he got greedy. >> you made $20 million legitimately. did you feel the need to steal $25 million more? >> christopher never fessed up but he's now facing years behind bars. from stealing money to growing pot. >> you're accused in a pot grow operation. is any of that true? >> andrea sanderlin's secret life was busted open. investigators say she lived in luxury in scarsdale, new york, driving her mercedes every day to a warehouse in queens where she had a grow op. >> would you like to talk to us when this is over? we would love to hear your side of the story. >> possibly. >> and look for a whole lot more from crime and punishment right here on "power lunch." >> all right. andrea day reporting. to seema who like share in madonna and gaga has eschewed her last name for now. >> take a look at internet giant baidu leading higher after announcing a $32 mill

in an interview with the "wall street journal," he shared new insight about the massive ponzi schemeerminded. his victims he said has themselves to blame. "my investors were sophisticated people, smart enough to know what was going on and how money was made, but they still invested with me without any explanations." this comes as five of madoff's ex-employees are accused with knowing about the scheme and profited from it. >> he said he felt remorseful, but he didn't spend time dwelling on the impact of the actual ponzi scheme. >> reporter: madoff describes being cut off by his immediate family that won't talk to him and said loneliness is the worst consequence of his conviction. abc news, washington. >> so five years later he's still not getting it. it's the clients' fault. come on. >> of course. not like madoff made off with everybody's money or anything. incredible. somebody on trial is talking about the intricacy of the lie and scheme. he went as far as to make sure the typeface was just right on the blotter forms the size of the asterisk was on forms as well. keep canning up with

morgan deliberately failed to alert regulators to the ponzi scheme despite numerous red flags made off had a two decade long relationship with j.p. morgan prior to his arrest in two thousand and eight and now a central factor in this case is why a formal report was not filed here in the u.s. in regards to concerns about meet us business yet the bank did file such documents with authorities in the u.k. well it looks like twenty years and billions of dollars will buy you a little bit of loyalty at j.p. morgan that's for sure now finally dell is really thinking outside the box here when it comes to trimming fat off its business a spokesperson for the company confirmed that dell is asking its employees to quit what dell is calling a quote voluntary separation agreement kind of like an amicable divorce if there ever was such a thing now in a written statement from the company dell says quote a critical element of our strategy has been and always will be about improving our cost structure and freeing up capital to make investments in growth areas that matter to our customers it's clear that

of former employees is almost five years to the day of his arrest duping clients in a $17 billion ponzicheme. 150-year ing a sentence and he banked with before ther 20 years fraud was uncovered. the bank also facing investor is close to resolving a justice department ignored o whether it warning signs. jamie dimon touched on the issue yesterday. litigation lot of behind us. we have more. you read about made after. we have to get there behind us. our job is to serve clients. get it behind us. address he tkpdidn't specifics yesterday or today a person briefed on the matter $2 billion accord could be announced by year-end. what is the latest on the trial? >> key witness testimony is fascinating details of madoff's final days. is former finance chief testified that madoff cried at the end, meticulously planned arrest to avoid being handcuffed in front of staffed programers wanted to be paid in diamonds in the end. >> how much money has been recovered so far? >> more than you think when not clear where it went. he trustee has recovered about $9.5 billion and there are legal maneuvers that ca

in a recent interview with "the wall street journal," madoff shared new insight about the massive ponzieme he master minded. on wednesday, it will be five years since his arrest. his victims, he said, have themselves to blame. "my investors were sophisticated people, smart enough to know what was going on and how money was made. but they still invested with me without any explanations." this comes as five of madoff's ex-employees are facing trial on charges that they knew about the scheme and profited from it. >> he said he felt remorseful, but he didn't spend a lot of time dwelling on the impact of the actual -- the actual ponzi scheme. >> reporter: madoff describes being cut off by his immediate family, who won't talk to him, and said loneliness is the worse consequence of his conviction. susan saulny, abc news, washington. >> our thanks to susan tonight. >>> and this evening, after a big weekend of football, a heisman hopeful celebrating a victory on the field and one in his personal life, as well, after learning he won't be charged with a very serious crime. but when asked about the

he claimed that he told me he started the ponzi scheme in 1992.it of a back and forth. interestingly, frank who was the government witness in the ongoing federal court trial was saying a few days ago, he had been working for bernie since 1975, and fraudulent activity had been going on as long as he could remember. so we're grerting all kinds of different timelines and no one really knows when bernie madoff started the ponzi scheme. maybe not even bernie himself. >> he's got a lot of time to think about it, i suppose, in prison in north carolina. aaron smith with cnn money, thank you very much for sharing your fascinating phone conversations with this man. >>> you use the websites all the time, facebook, google, twitter. tech giants writing a letter to washington, asking tough questions about online surveillance. sounds like they're looking out for you, right? the next guest says the companies are hip krypocrithypo this is a plain, flat public relations move. >>> plus this. ouch. these are sheets of ice crashing onto these cars. smashing them. and

i said to a colleague in court, you know, this is really the faberge egg of ponzi schemes.ry tiny detail that madoff paid attention to, making sure that the font, the type face on some of these forged documents was exactly perfect. that web sites that were created were perfect. so it's been quite enlightening. >> woodruff: it's been enlightening. what a story, it just doesn't seem to come to an endment diana henriques of "the new york times", thank you. >> thank you. >> ifill: finally tonight, a conversation with one of the winners of this year's nobel prize for economics. the prizes were handed out yesterday in stockholm. yale university professor robert shiller was one of three americans honored for research on how financial markets work and how assets, like stocks, are priced. our economics correspondent paul solman recently talked with professor shiller about the award. it's part of paul's ongoing reporting: "making sense of financial news." >> how surprised were you at getting the nobel prize? >> well, there were people telling me i would get it reasons really? >> but

>> good morning, we are seeing a legalized ponzi scheme being run by the fed. >> what do you mean byfed is operating, this is a legalized ponzi scheme where they keep pushing down the money and hoping to devalue the currency so they can pay these debts back down the road. we've got over $300,000 per family in this quantitative easing program. if they had taken that money and put it back into the system, putting people back to work and creating jobs and rebuilding america, we would have -- we would be out of this mess and not be dependent on the fed. >> but that's what the fed thinks it's doing. >> but they have not created any liquidity for the average joe. -- 82% of stocks are controlled by five percent of the people. what we are seeing is a scheme that continues to roll out and we are not seeing the average joe benefiting. >> i don't know about that. rates haventerest helped housing. homeowners are benefiting from that. 57% of the housing has been done in cash. we have not seen the overall move in new mortgages and new money. carrying a line of credit have had difficulty getting mo

it would come as no surprise to us, to those of us that thought it was a bubble if not a ponzi schemethe first place that was driven higher by an awful lot of hot air. >> i'll say this much about gold. i do think the global central banks everywhere will continue to buy gold. >> why is it going up? >> global central banks aren't the ones controlling the market. look at the etf, overall volumes of gold held by etfs. june 2009 lows which tells me the retail investor is out of gold. that's a big deal. i don't think people are going to run away from the gold market. i do think it can go lower. i do think central banks will always buy it. >> got to jump. want to say as well, you can basically look at gold as trading off real interest rates. those are starting to look a little bit better. inflation's still low. greg, final point to you here. here's a line from hsbc. the u.s., japan, europe, they remain extremely dovish. they're going to continue to reinforce the status quo of near zero rates. is there any reason to think that's not going to be the case next year? >> i think what you're going

>> that this was something the company needed to get out of, that they suspected was a ponzi scheme.e was not the chief operating officer at the time, he was the head of fixed income, and those concerns were never reported up to regulators. jamies settling mean dimon and j.p. morgan are admitting guilt, or could one fines, heave paid the wants to start 4014 without an overhang, and want to take all of the litigation off of the books? >> and he is willing to write a big check to do so. we are trying to confirm whether or not jpmorgan is going to admit the middle tilt. -- criminal guilt. we know they will definitely admit to a statement of fact of some sort. whether or not they will admit to criminal wrongdoing, trying to ascertain that, yes, because none of this is public yet. >> nobody inside jpmorgan has been named for being negligent, at the very least? >> i'd not think so, but we are awaiting details. we expect this before the end of the year. >> jamie dimon, one might say he is trying to clean house. dawn kopecki, always on top of jpmorgan, great story, covering five years since

this is a ponzi scheme. the chairman of the bank of china said it was a ponzi scheme.y invest in real estate and other bubbly assets and then released each security and some new ones and pay off investors and keep the game going. when there is a financial panic, people will line up to redeem these things and the banks will shut their doors. they will not be able to redeem these. this is an accident waiting to happen. continue this conversation in a moment. a quick check on the marketeer. you have stocks in the green on this last trading day of the year. more in a minute. ♪ >> this is "money moves" where we focus on innovative alternative investment. it is already 2014 in hong kong and other parts of the world. here is a look at the fireworks display over victoria harbour. and in china, there were light shows as part of the great wall in beijing. one million people are excited to greet the new year from times square. warren buffett is expanding his bet on oil transportation. berkshire hathaway is swapping about $1.5 billion in shares in phillips 66. it is worth full own

bill ackman calls it a ponzi scheme. carl icahn has defended it.ount kyle bass among their believers. >> when a particular short seller released a report, it had a kind of abnormally large negative effect. i think that this business is one that is fascinating. it generates significant cash flows with no debts. it is growing. when you have this large cohort of the unemployed, that may be unemployable forever -- there is this new normal in a natural unemployment rate. when you look at these countries with 50% or 60% youth unemployment, there is an interesting percentage of young people who are in these businesses. that may be where this growth is coming from. from a timing perspective, this all played into something that fits into a macro ideology as well. it is interesting. i think that we are catalyst driven investors. in this case, the catalyst is coming in the next 60 days. i think they will have their three-year audit redone. remember why they have a three- year audit? one of the auditors was insider trading on their equity. there were allegatio

gerri: five years ago the ponzi schemes of bernie madoff made headlines. victim, thank you for coming on the show tonight. so what are the lessons and what should we know, having read a lot about it and people tend to forget these lessons. >> yes, they do. the main thing to do to avoid this kind of scandal. here he was, a wealthy jewish mandalas targeting other wealthy jewish people and its sort of a feel-good kind of approach that approaches you at a vulnerable place and he would say that you are jewish, i am jewish, we are both wealthy, we understand each other. i will tell you what, i will be conservative with your money and that's another smart thing he did. he did not over promise. gerri: just making that promise was such a red flag for people. >> in the stock market you cannot promise that. he was running such a complicated strategy. many people would've said, i'm not giving you a penny. that's another thing. complicated strategy. gerri: talking about red flags, we talked about a wealthy florida congressman that lost $18 million in the scheme. this g

." -- bernieur customer made off's ponzi scheme. the finest $2 billion.cher is slated to be vice chairman of the federal reserve. and will you pay for your chicken fettuccine out all curry with rice pilaf with bitcoin? matthew miller tipped the waitress to the percent --or to 30%! --in bitcoin. she threw it back at him. i am tom keene. i will not be tipping in bitcoins. alix steel and scarlet fu. >> will you tip 30%? i would like that when i was a waitress. >> in bitcoin? >> let me tell you, when you are a waitress, it doesn't matter. 8:30 a.m. initial jobless claims. 9:40 5 a.m., bloomberg consumer comfort. then business inventories for october. before the bell, earnings from lulu lemon. some other things happening today. the sec holding a hearing to discuss ending the in-flight phone call ban. really don't want that to happen -- >> that is the most important thing of the day. >> and jamie dimon speaking in d.c., speaking about closing the workforce skills cap. >> could you see me and michael mckee on a phone call together? >> you would scream and be ter

i think this is a legalized ponzi scheme of free money that continues to push the markets higher.'m saying and what i'm telling my people is i'm not bringing any new money to this market. whatever money i have in the market, i'm going to let work and i will use stops to get out if the market decides that it's time to correct. but i am certainly not going to get in front of this train, as well, and try to stop it. but what we see here is a market very similar to the internet bubble in the 90s, similar to the cheap money in the '87 crash. so at some point, we're going to have some correction here. at some point we're going to have some profit taking. now, the question will be will that be an opportunity to step in and buy here? this has been the most hated rally in wall street history because nobody believes in it. just now after the rally is the mom and pop, the retail trader starting to get involved. usually that's a sign of a little concern for professional traders. when we start to see the money flow, it means it's a little bit of a problem. the other thing i am seeing is a lot