ABC News' Stu Schutzman reports:
With news of a possible plea deal in the works, it may be of little consolation to his clients who lost their life savings, but some financial experts believe that Bernie Madoff allegedly bilked them out of far less than the government has claimed.
Madoff is accused of running the largest Ponzi scheme in history, stealing some $50 billion dollars from unwitting investors both big and small, from individuals to national banks. But according to interviews done by the Associated Press, some experts put Madoff's alleged fraud in the $10 to $20 billion dollar range; still probably the biggest con ever but a far cry from $50 billion dollars. The reason may be the nature of the Ponzi scheme itself.
Stephen Harbeck, who runs an investor protection company, told the AP he believes much of that figure "includes entirely fictitious profits." Madoff could have lied about those profits in order to lure more investors into the scheme. "If that's the case," says Harbeck, "And I believe it to be the case, then the real dollars lost would be considerably lower."
Others agree. "Madoff probably inflated the amount of money he had under management," says Harvey Pitt, former head of the Securities and Exchange Commission. Again, little consolation for those who lost their shirts, but that's the way Ponzi schemers operate. To lure investors in, they phony up the fund's profits, investments and rates of return.
Over the years, some money experts raised red flags over Bernie Madoff's tactics. They tried but repeatedly, but were never able to duplicate his fund's incredible success. It would be like a scientist unable to replicate a so-called successful experiment the lab. Something was fishy which finally led to his arrest. But today the case may be winding down, if reports of the possible plea bargain are true. A deal with prosecutors Madoff and his lawyers conceivably negotiated from his $7 million dollar New York apartment where he and his wife still live. Little consolation for those he allegedly swindled, most of whom want to see him rot in jail.