Where did the money go?

Bernie Madoff took in, the news tells us, billions of dollars — a $50,000,000,000 scheme.

Now, the pregnant question is “where is it now?”

The essence of a Ponzi scheme is that early investors are paid off with the “investments” of later investors and relies on an ever increasing number of investors to maintain the fraud.  These pay-outs to the early investors are liable for recovery under the doctrine of “fraudlent conveyance,” which means those payments to early investors are potentially recoverable.  Likewise, other financial institutions dealing with Madoff were paid for their services.  Presumably these monies are recoverable.  Lastly, there is the question of the salaries and bonuses paid to Madoff’s co-conspirators employees.

From the New York Times:

“Clients of Fairfield, a secretive hedge fund advisory company based in Connecticut, lost $7.3 billion to Mr. Madoff’s fund. But for Fairfield, working with Mr. Madoff was hugely profitable.

Internal documents from Fairfield show that the firm has taken more than $500 million in fees since 2003 alone from the money it placed with Mr. Madoff. Nearly all those fees went to a handful of Fairfield executives, including Walter M. Noel, Fairfield’s founder, who used the money to build a glamorous life, splitting his time between homes in New York, Connecticut, Florida and the Caribbean.

As it raised money all over the world, Fairfield also made detailed pledges about how it would monitor and track Mr. Madoff’s investments, the documents show. Now, investors and regulators are sure to ask whether Fairfield made good on those promises — or whether it was a facilitator of the Madoff scandal as well as a victim.”

Where did the money go?  And who shall watch the watchman?