A trustee overseeing the dissolution of Bernie Madoff's $50 billion Ponzi scheme says the former Wall Street statesman, a pioneer of computerized trading, apparently hadn't purchased securities for customers in 13 years.

Madoff ran his money-management business on the side from his main business, Bernard L. Madoff Securities, a brokerage firm which processed trades for clients. Unlike most money managers, he never charged customers a percentage of their assets. Instead, he just charged them for the trades he made on their accounts.

But Irving Picard, the trustee now in charge of winding down Madoff's business, said in a hearing today in lower Manhattan that Madoff never made those trades. The falsified trade confirmations Madoff sent out were the small fraud hiding the much larger one.

Picard also gave an indication of the scale of Madoff's fraud: He said he had recovered $650 million for Madoff's investors, and identified another $180 million in assets, on top of the $500,000 in restitution each investor can claim from the Securities Investor Protection Corporation, an FDIC-like fund which insures brokerage accounts. That's a pittance compared to the account balances Madoff promised — or even the money his investors originally put in his hands.

Who would think Madoff was cheating them when he was consistently billing them for trades? For the 2,350 customers who entrusted their savings to him, Madoff's unusual fee structure was, like his unusually consistent returns, too good to be true.

Madoff's firm was one of the first Wall Street operations to adopt electronic trading. His record for innovation led to his appointment as chairman of the Nasdaq.

Wall Street, or what's left of it, is trying to speed up trading further, eliminating the remnants of the paper trail. Most brokerage accounts are merely electronic entries in a database. That creates a desirable efficiency. But it also makes room for a Madoff to invent a $50 billion empire in the bits and bytes of his imagination.

(Photo by Getty Images)