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Bernard Madoff, one of Wall Street's most respected financiers, had apparently planned to carve up his last $300m (£200m) between friends, family and employees before making the shocking confession that his investment prowess was really the result of one of the world's biggest ever frauds.
But, according to the Federal Bureau of Investigation, the 70-year-old could not implement his plan before his huge pyramid scheme - whose 10-12% annual returns had attracted top-flight investors around the globe - collapsed with losses of at least $50bn.
His once-devoted followers were today still counting the cost of their investment in the funds run by Madoff. Investors in his native US as well as the UK, Spain, France, Italy, Switzerland and Japan appear to be caught up in the alleged scam.
Thousands of wealthy individuals, largely from Jewish communities in New York and Florida, were also expected to turn to their lawyers as news spread at the weekend that Madoff had been arrested, charged with fraud and released on a $10m bond after apparently confessing to his two sons, Mark and Andrew, and FBI special agent Theodore Cacioppi.
The highest profile loser in the UK so far is Nicola Horlick, the City fund manager whose investment firm, Bramdean, had almost 10% of its assets invested with Madoff. This in turn leaves Horlick's investors, such as local authority pension funds in Merseyside and Hampshire, and property tycoon Vincent Tchenguiz, potentially exposed to the unravelling scandal.
Other possible victims include Royal Bank of Scotland, which is 58% owned by the UK taxpayer, Spanish bank Santander, owner of Abbey, Alliance & Leicester and parts of Bradford & Bingley, and hedge funds such as Man Group, which has an estimated exposure of $240m.
Swiss private bank Reichmuth Matterhorn admitted yesterday it had lost $327m, amid speculation that the total bill in Switzerland could be much higher. US hedge funds are also affected as well as prominent US business executives.
As investigators from US regulator the securities and exchange commission urgently ploughed through the records held at the New York headquarters of Bernard L Madoff Investment Securities, they faced accusations last night that they had not examined his books since he registered the firm in September 2006. The Financial Services Authority, the UK watchdog, was thought to be keeping abreast of the situation.
Madoff is himself regulated by the FSA, along with his two sons, his brother Peter and six other registered individuals, though his eponymous London-based offshoot. However, Stephen Raven, chief executive of London-based Madoff Securities International, said the firm was "not in any way part of" the New York company caught up in the alleged scam.
Unravelling the Madoff investment scheme could take months as he faces questions from both the FBI and the SEC, which has filed separate civil charges.
In a statement signed by Cacioppi, Madoff is quoted as saying that he "paid investors with money that wasn't there", that he was "broke" and "insolvent", and "it could not go on".
Madoff's alleged scam appears to have started to unravel when investors feeling the pain of the credit crunch put in claims for redemptions of $7bn - a sizable sum for a firm that claimed to have $17.1bn under management. Last Tuesday he stunned a senior colleague - believed to be one of his sons - with the revelation that he intended to pay bonuses in December rather than February. When challenged, and appearing under "great stress", Madoff arranged a meeting in his Manhattan apartment where he made the startling confession: "It's all just one big lie."
He said he was "finished", had "absolutely nothing" and his investment firm was "basically a giant Ponzi scheme" - a type of fraud invented by Charles Ponzi in the US after the first world war which involves disbursing "returns" to investors out of money from new entrants.
He said he had planned to hand himself over to the authorities but first wanted to divide up the $200m to $300m he had left among selected employees, families and friends - hence the need to pay bonuses early. Instead, his confession, which was apparently made to his sons, was reported to the authorities and the distribution of his remaining assets never took place.
He is due in court on Friday. His lawyers have said they "will fight to get through this unfortunate set of events". The blame game has already begun, however. Horlick has attacked a "systemic failure of the regulatory and securities markets regime in the US".
"It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades, while investors have continued to invest more money into the Madoff funds," she said.
There are also warnings from lawyers that practices such as these are far more likely to unravel during tricky market conditions. Steven Philippsohn, chairman of the Commercial Fraud Lawyers Association, said: "This is the tip of the iceberg and an early example of the news that we are going to get very used to hearing. The problem in respect of any fraud is that the knock-on effect will be ruinous."
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