This guy knew about Bernie Madoff's Ponzie scheme nearly a decade before everyone else. How did he figure it out?

Ponzi schemes are a dangerous thing for unknowing investors with a get-rich-quick attitude. As long as they have a little money to throw away, the scheme will suck it right up without thinking twice. So, what's a Ponzi scheme's worst enemy? Math. Too bad nobody listened to Harry Markopolos, a genius financial investigator that exposed Bernie Madoff nine years before his scheme fell apart.

In 1999 Markopolos was tasked with designing a similar product to Bernie Madoff's split-strike conversion of some financial management, which was delivering net returns of 1-2 percent a month. Markopolis instantly saw issues with Madoff's revenue stream that he obtained a copy of.

The strategy was so poor that Markopolos was doubtful it could make any money at all. The biggest red flag was that the return stream steadily rose with very few downticks that looked like a perfect 45-degree angle. With a little analysis, he could tell either Madoff was running a Ponzi scheme by paying established clients with new client's money, or front running, by buying stock for himself with the knowledge of his clients' orders.

In December 2008, the Ponzi scheme came to light. It spanned decades and took about $20 billion from unknowing customers.

(Source)