The tree-lined fairways of the Palm Beach Golf and Country Club in Florida are generally an agreeable place to spend the afternoon. A cooling breeze blows from the Atlantic Ocean and a crowd gathers on the terrace overlooking the 18th, watching the players as they hole out on the last green. The golfers are mainly retired, many of them from the Jewish community, who formed the club in the 1950s because they were excluded from joining anywhere else. It is a tight-knit, well-heeled and exclusive community.
Normally the talk is of mutual friends or who just made a birdie on the last hole. But these days there is only one topic of conversation: Bernard Madoff. After all, it is estimated that up to a third of the 400 members had entrusted him with their savings. Every year, the members give thousands of dollars to good causes; this year, they may be in need of charity themselves. Some of them face financial ruin; others are upset and humiliated. "At least I know how to pronounce his name," said one woman. "It's Made-off, as in he just made off with all our money."
The question they are all asking is how this trusted member of the club - a former captain with a 14 handicap - was able to convince the rest of them for so long that he was legitimate, while allegedly swindling billions. The retired golfers are not the only ones looking for answers to what may be the world's biggest financial con. On the other side of the US, in southern California, a group of mainly Jewish investors are also licking their wounds. A charity called Wunderkinder, founded by Steven Spielberg, has been hit; Jeffrey Katzenberg, a Hollywood producer and, like Spielberg, one of the founders of DreamWorks, is said to have lost "millions" with Mr Madoff's firm.
A number of charities have also been wiped out. Richard Ziman, a board member of the Jewish Federation of Greater Los Angeles - itself down by the tune of US$6.4 million (Dh23.5m), about 10 per cent of its endowment - was shocked by the alleged crimes. "There is no greater shanda [disgrace] than stealing from friends, family and those who gave him such trust and confidence," he said. However, it is not just rich Jews who are out of pocket. There was a queue of financial institutions lining up to give their money to Mr Madoff. These include Banco Santander, HSBC, Royal Bank of Scotland, BNP Paribas and Nomura Holdings. Banco Santander, one of Spain's largest financial institutions, is down $3.1 billion, while HSBC may need to write off $1.5bn. Even Nicola Horlick, the manager of Bramdean Alternatives and one of the City of London's most-feted money advisers, has admitted to losses of $25m. "This is the biggest financial scandal, possibly, in the history of the markets," she said.
All these investors' worlds changed last Thursday, when Bernard Madoff's two sons, who both worked in the firm, realised there could be a problem paying the staff's bonuses this year. "How can we pay bonuses if we cannot pay our investors?" they asked their father. His response, according to prosecutors, was to announce that there was no money to pay either. "It's a big lie," he reportedly said. The charge against Mr Madoff - in fact his own admission - is that he ran a Ponzi scheme. This is a classic pyramid scheme, which pays off early investors with money from new investors. Such schemes eventually collapse when the money stops coming in, or more people demand their money back. Now $50bn has gone missing and nobody knows where.
Those looking for an answer may be tempted to search on the 17th floor of the Lipstick Building, on Third Avenue in midtown Manhattan. It was here that Bernard Madoff dubbed his "hedge fund floor". There were only 20 employees, a paltry number considering the scale of the operation. Firms managing money on Mr Madoff's scale would typically have hundreds of people involved in these administrative tasks. So where has all the money gone? Prosecutors say he claims to have acted entirely alone.
"Our task is to find the records and follow the money," said Alexander Vasilescu, a lawyer in the New York office of the Securities and Exchange Commission (SEC). However, investigators have yet to shed much light on the alleged fraud, or its scale. "We do not dispute his number - we just have not calculated how he made it," Mr Vasilescu said. It is hard to imagine that Mr Madoff was a lone wolf - a Lee Harvey Oswald or a Nick Leeson, the man who brought down Barings Bank in the 1990s. Many of the top staff were family members. Even if that proves to be the case, it is another embarrassment for the SEC, which is already accused of napping while Wall Street burnt.
Even though the former chairman of Nasdaq had been questioned before about his activities, the Wall Street veteran does not appear to have been under any kind of scrutiny. "This will be profoundly embarrassing for the SEC," said John Coffee, a professor at Columbia University Law School. "Congress will predictably give them little mercy." email@example.com * with agencies