Mr Madoff had a long-established market-making business and a more recent hedge fund. He is said to have told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the US Attorney's criminal complaint against him.

Mr Madoff told two FBI agents: "There is no innocent explanation," according to the criminal complaint. He said it was all his fault, and that he "paid investors with money that wasn't there."

The Securities and Exchange Commission filed separate civil charges against Mr Madoff. "Our complaint alleges a stunning fraud both in terms of scope and duration," said Scott Friestad at the SEC. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."

Authorities, citing a document filed with the SEC on 7 January 2008, said the investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management. Those clients may have included other funds that in turn had many investors.

The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.

Earlier in December, Mr Madoff told a senior employee that hedge fund clients had requested about $7 billion of their money back, and that he was struggling to pay them.