Two arrests of prominent New Yorkers alleged to be engaged in massive frauds and the arrest of a governor accused of trying to sell a U.S. Senate seat

Two arrests of prominent New Yorkers alleged to be engaged in massive frauds and the arrest of a governor accused of trying to sell a U.S. Senate seat. And if history proves consistent, there will be many more shocking disclosures to come as the world readjusts to another post-bubble era.nothing new. Excesses during bubble times lead to mistakes, big losses and ultimately the unveiling of frauds. Nobody asks questions when things are going well; they scream for justice when things head south.Bernard Madoff, a well-respected denizen of Wall Street, faces charges he defrauded investors in his advisory firm of $50 billion by running what prosecutors say he admits was nothing more than a gigantic Ponzi scheme. The alleged fraud unraveled when Madoff, who has run the business by himself for years, faced $7 billion in client redemption requests this fall. Ponzi schemes need asset inflows to work and break down when those inflows dry up.Until now, nobody asked loudly enough, however, how it was that Madoff could log such steady and consistent positive returns (reportedly always positive for years even as the markets gyrated). His investment management firm, an affiliate of his market-making brokerage operation bearing his name, had $17 billion under management as of the beginning of 2008, according to the Securities and Exchange Commission, which is pursuing separate civil fraud charges.Rival fund managers and some hedge fund due diligence firms said Friday they had wondered for years how he pulled it off, but few thought to sound alarms with regulators