Madoff Caught In New Ponzi Scheme; Prisoners’ Cigs Go Up In Smoke
Tue, 03/15/2011

Bernie Madoff has been caught again involved in an illegal Ponzi scheme, this time an operation he ran from jail.

According to authorities, Madoff was soliciting other prisoners’ cigarettes, claiming that if they invested a pack of 20 cigarettes with him, he’d return to them a half pack every year in “profits.”

Many of his fellow prisoners trusted him as they were not quite sure of who he was and what he was in prison for. Some of the prisoners entrusted him with their life savings of cigarettes. The scheme only came to light when two of his largest investors — each of whom had invested a carton with him — demanded their initial investment back.

Madoff had used those cigarettes to pay out phony “profits” to earlier investors and did not have enough cigarettes to cover their withdrawal from the stash in his cell.

The angry inmates reportedly accosted Madoff and, having no feathers, “tarred and nicotined” him.

Madoff promised to return all the cigarettes he owes his fellow inmates as soon as he is released from prison.