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RENEE MONTAGNE, host:

This is Morning Edition from NPR News. Good morning, I'm Renee Montagne. Bernard Madoff was known as a Wall Street investment manager with a golden touch. He brought in enormous sums from people and institutions, and consistently delivered double-digit returns, even in the toughest times. Now Madoff has been arrested and charged with a massive fraud. Federal prosecutors say he ran a giant Ponzi scheme and that he lost tens of billions of dollars of his investors' money. NPR's Jim Zarroli joins us now to talk more about it. Good morning, Jim.

JIM ZARROLI: Good morning, Renee.

MONTAGNE: So we've been hearing about this now for days, but tell us more about the man. How was he able to get his hands on so much money to begin with?

ZARROLI: Well, he was a respected, venerable figure on Wall Street. He had been chairman of the NASDAQ stock exchange. He headed a firm that - a trading firm that bore his name. He also took money from people and invested it. He met a lot of customers through country clubs and charities and in Palm Beach and New York. And he did very well. And that kind of success breeds success. People heard about the gains he was making, and they started coming to him. It was prestigious to invest with him.

MONTAGNE: Talk to us about some of the people who invested with Bernard Madoff.

ZARROLI: Well, they include some well-known names. The owner of the New York Mets, Fred Wilpon. The former owner of the Philadelphia Eagles. New Jersey Senator Lautenberg said over the weekend that money from his family's charitable fund was invested with Madoff. And there were some lesser-known names. NPR interviewed Barbara Flood over the weekend. She's a stylist who lives in New York. She was introduced to Madoff by an acquaintance. And even though she didn't have a lot of money, he agreed to take her on. Here she described what it was like to be one of his investors.

Ms. BARBARA FLOOD (Stylist; Designer): You could never talk directly to Bernie Madoff. He was not available, even to friends. I mean, even to me, he was not available. And you'd get a statement, and you couldn't read the statement. And nobody could understand what the statement said.

(Soundbite of laughter)

Ms. FLOOD: But after trying to figure out apples and oranges, you know, my accountant would say, well, the thing is he's always making money. And always making money sounded very good to all of us.

ZARROLI: And what she says really gets at one of the problems here. There was an emperor-who-has-no-clothes aspect to this case. And everyone was wondering, how can Bernie Madoff make so much money? But no one really thought to look too far beneath the surface because, you know, after all he was Bernie Madoff. He had to have his methods.

MONTAGNE: Now, we've been reading about some, say, nonprofits who have lost everything and been forced to close. Certainly a lot of big institutional investors also gave Madoff money to manage. Who are they?

ZARROLI: Yeah. As you say, some charities. The Robert I. Lappin Foundation, which funds money for young Jewish people to visit Israel, over the weekend it put out a statement on its Web site saying it's basically had to terminate its staff and shut down. Town of Fairfield, Connecticut. But also some big banks - BNP Paribas, the French bank. Some hedge funds. It's not clear how much investments were lost, but it's clearly, you know, a very large part of what they invested with Madoff.

MONTAGNE: Well, it sounds like from the investor we just heard from, the secrecy surrounded his firm raised some eyebrows. How much did federal regulators actually know about what Bernard Madoff was doing?

ZARROLI: Well, the SEC was warned as far back as 1999 by a securities industry executive that Madoff's returns were too good to be true. It's not clear how they followed up. It's not really even clear how much jurisdiction the SEC had because this was sort of operated as a hedge fund, and they don't regulate hedge funds.

MONTAGNE: Jim, thanks very much.

ZARROLI: You're welcome, Renee.

MONTAGNE: NPR's Jim Zarroli.

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