Could one man operate an alleged $50-billion Ponzi scheme for more than a decade without help from anyone else?

Could one man operate an alleged $50-billion Ponzi scheme for more than a decade without help from anyone else? As investigators comb through books on the 18th floor of Bernard L. Madoff Investment Securities, they are turning their attention to the middlemen who channeled billions of dollars to Madoff, reports the Wall Street Journal.
The middlemen are the “feeders” who helped the Ponzi scheme flourish by funneling larger and larger sums Madoff’s way. They extracted fees from that cash stream, and many of them became enormously wealthy as a result.
To date, none has been accused of being complicit in the fraud Indeed, at least several - including Rene-Thierry Magon de la Villehuchet, a New York-based fund manager who committed suicide Dec. 23 - are believed to have lost their own fortunes, as well as their clients’. These men came to know Madoff through a web of friends and relatives - and, over a period of years, brought in their own extended social and family networks as investors. And so the cycle perpetuated itself, enriching and then robbing entire constellations of friends and families.
Philanthropist Robert Jaffe of Palm Beach was one such node. Jaffe, 64, known for his vintage MG convertible, his consummate golf game and an heiress wife, was a fixture of the Palm Beach Country Club where many investors were recruited.
Jaffe, who started out as a stock broker, is a vice president of Cohmad Securities, a firm co-owned by Madoff that helped attract investors to his fund.As a fixture of the Palm Beach and Boston social circuits, along with his wife, Ellen, Jaffe brought dozens of investors to Madoff. Among them was his father-in-law, Carl Shapiro, the clothing tycoon who launched Kay Windsor Inc., which he sold to Vanity Fair Corp. in 1971. Shapiro has said he lost more than $400 million personally.At a party at The Mar-a-Lago country club earlier this month, the Journal reported that Jerome Fisher, co-founder of Nine West shoes, confronted Jaffe, saying, “You’ve got a lot of nerve showing up here!” Earlier this week, the Jaffes stepped down as co-chairs of the annual fund-raising gala the Dana-Farber Cancer Institute holds every year in Florida. Robert Jaffe has also resigned fom his post as chairman of Palm Healthcare Foundation, a West Palm Beach group that funds nonprofits.Through a spokesman, Jaffe said he “had absolutely no knowledge of the fraud, and like so many others is a victim of these tragic events.”Another node is Jeffrey Tucker, the son of a Queens accountant who spent several years as an attorney for the Securities and Exchange Commission in the 1970s.Tucker met Madoff through his father-in-law, and then introduced him to his partners at the investment firm, Fairfield Greenwich Group, where he had gone to work in the late 1980s. In 1990, the firm introduced the Fairfield Sentry fund, which gave all of the money to Madoff to manage and charged clients a 1% management fee plus 20% of the fund’s profit,.Fairfield Greenwich was at least in part a family business like Madoff’s, and it helped extend Madoff’s reach to Latin America and Europe. The firm’s founder Walter Noel Jr., who maintained homes in Greenwich, Southampton and Palm Beach, employed several of his son-in-laws, including Andres Piedrahita.Piedrahita and his wife, Corina Noel Piedrahita, moved to London, then Madrid, becoming ambassadors for the fund among Europe’s wealthiest families. The Journal reports that Piedrahita was wooing more investors just days before the alleged pyramid scheme collapsed.At the time Madoff was arrested, Fairfield Greenwich had $7.3 billion invested. In a statement posted on its website, the firm said it was a victim of fraud and was considering legal action to protect its clients. Another node was Stanley Chais, a private investor from Beverly Hills whose investors were mostly from well-to-do Jewish families on the West Coast.Originally from the Bronx, Chais, 82, lived in Beverly Hills for many years before recently moving to Jerusalem about six months ago. Touting himself as a financial whiz kid, Chais boasted about his investment pool called The Arbitrage, which received returns of about 10 to 15 percent every year.Chais charged substantial fees - 4.5% of clients’ assets, according to paperwork given to the Journal.

Four of his investors told the Journal that they had never heard of Madoff until his arrest when they received a letter from Chais’ accountant, saying that all their money had been invested with Madoff.

“Mr. Chais was shocked to learn of what appears to be a Ponzi scheme of unprecedented proportions operated by Bernard Madoff, an individual whom he had known for decades,” Eugene Licker, a lawyer for Mr. Chais, said in a statement to the Journal. “If the allegations are true, Mr. Chais and his family, like others, have watched personal wealth evaporate overnight.”
Another node was Robert Schulman, 62, the recently retired chairman of Rye, N.Y.-based Tremont Group Holdings.During his 14 years running Tremont, Schulman is said to have boasted of his close relationship with Madoff, saying they were in contact on a weekly basis.Tremont also touted its track record of bringing investors “the industry’s most experienced and proven investment talent.”Tremont attracted a wide range of investors, according to the Journal, including wealthy individuals who made their money selling businesses or who wanted a safe place for their children’s trust funds. It was also a conduit for professional money managers running funds that invested in other hedge funds. Investors in Tremont’s Rye Select Broad Market funds run by Madoff paid annual fees to Tremont of 1% to 1.75% of assets, according to 2008 marketing documents.In all, Tremont’s investors lost an estimated $3.3 billion with Madoff, the firm said.