"It's only when the tide goes out that you learn who's been swimming naked."
During the expansion, when credit is readily available, some companies and individuals stretch themselves too far to present a facade of success. Others use illegal tactics to obtain wealth. As the tide continues to lower, the skinny dippers get revealed.
This past week, we heard of another great Ponzi scheme. The lower tide revealed that Bernard Madoff scammed billions of dollars out of individuals, companies, and charitable organizations. It's reported that he provided constant positive results for decades. The most frustrating and concerning aspect of this discovery is that the SEC had investigated his business several times in the past and found no wrong doing. Madoff was a former chairman of the Nasdaq Stock Market.
"A Ponzi scheme is a fraudulent investment operation that involves paying abnormally high returns to investors out of the money paid in by subsequent investors, rather than from the profit from any real business. It is named after Charles Ponzi. A Ponzi scheme has similarities with a pyramid scheme though the two types of fraud are different." SOURCE: wikipedia