Madoff investment scandal to enable the Irish regulator to uncover the fraud much earlier than late 2008 when he was finally arrested in New York. The scheme began to unravel in the fall of 2008, when the general market downturn accelerated. Madoff had previously come close to collapse in the second half of 2005 after Bayou Group, a group of hedge funds, was exposed as a Ponzi scheme that used a bogus accounting firm to misrepresent its performance. By November, investors had requested $105 million in redemptions, though Madoff's Chase account only had $13 million. Madoff only survived by moving money from his
Pyramid scheme recruitment costs. In a pyramid scheme, an organization compels individuals who wish to join to make a payment. In exchange, the organization promises its new members a share of the money taken from every additional member that they recruit. The directors of the organization (those at the top of the pyramid) also receive a share of these payments. For the directors, the scheme is potentially lucrative—whether or not they do any work, the organization's membership has a strong incentive to continue recruiting and funneling money to the top of the pyramid. Such organizations seldom involve sales of products or services