NEW YORK (Reuters) - Bernard Madoff, a Wall Street trader who founded Bernard L. Madoff Investment Securities LLC, was arrested and charged on Thursday with allegedly running a multi-billion dollar Ponzi scheme, U.S. authorities said on Thursday.
Federal prosecutors accused Madoff, a former chairman of the Nasdaq Stock Market, of running a Ponzi scheme -- a pyramid-type swindle in which very high returns are promised to early investors, who are paid off with money put up by later investors.
Madoff, who estimated investors' losses at about $50 billion, informed senior employees of his advisory firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," according to a criminal complaint against him.
Madoff, 70, allegedly ran the advisory business from within the broker dealer that bears his name. He was charged with a single count of securities fraud and faces up to 5 years in prison and a fine of up to $5 million, according to prosecutors.
Madoff's attorney did not immediately return a phone call seeking comment.
The U.S. Securities and Exchange Commission also filed civil charges against Madoff.
"Our complaint alleges a stunning fraud -- both in terms of scope and duration. We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors," said Scott Friestad, the SEC's deputy enforcer.
According to the Wall Street Journal, Madoff was arrested early Thursday by the Federal Bureau of Investigation.
(Reporting by Phil Wahba and Rachelle Younglai)
