When Madoff's Investors Wanted Their Money...???

I think what you said is correct. Plus he had the charm to often (as shown in the movie) persuade people not to withdraw their funds. He was making (well, claiming to make) profits well above the market. I'm sure many/most people would keep their $$ to continue to make higher profits. Or so they thought.

he started it in the 70s

he pulled the same scam that he did with that one woman in the office in part 1

he would cut a check that showed them how much they were earning and they would hand it right back

he played on people's greed

Simple. He borrowed from Peter to pay Paul. That's why you saw scenes where he and Frank were scrambling to put money together to payout. A lot of people needed there money at times. If Junior was entering Harvard and this was considered his education fund, sooner or later they needed the money. The truly big guys like Carl Icahn (250 mil?) just let it ride. They could afford to. But the little people like the widow would eventually need it.

I think you guys are missing some key aspects of this scheme. Madoff actually had $50 billion (or more) at one point. Meaning, people actually gave him that money. And since he never traded, he just let it sit in a bank account, using it for his personal needs, but most of the money was actually there. So when people wanted to withdraw money, it wasn't really a problem for him to pay them out, because he had so much on deposit.

The problem comes when A LOT of people want to withdraw at the same time, which is what happened during the financial crisis of 2008. When everyone wants to withdraw, and you are telling them they are making 15% returns per year, even if you never spent a dime of the $50 Billion (which obviously he was spending the money himself), you dont have enough to cover them.

So as the movie pointed out, as redemptions kept coming, Madoff got more and more nervous. To the point where he literally almost ran out of money. He had a few hundred million left in the end that he wanted to disperse. But people who hadnt redeemed were left holding the bag, because there wasnt enough left to cover their fake returns.

The scheme is actually pretty brilliant in the sense that he had such a good reputation, that everyone kept giving him money. Had it not been for the financial crisis that caused people to panic and redeem their money, he may have never been caught. Because like I said, it took everyone redeeming at the same time to blow his scheme up. That's why he got away with it for so long.