03/18/2010 05:12 am ET Updated May 25, 2011

The $21.2 Billion Halloween Mask

It's that time of year.

Costume shops are jamming as folks hunt for outfits. Twitter is buzzing with "trick or tweets" about Halloween. On Saturday little goblins will sweep through neighborhoods and fill their bags with time bombs for the waist line. The season makes me wonder:

What does it take to become a Halloween mask?

One no-fail way is to get elected as President of the United States. Nixon, Clinton, and Obama are just a few of the faces you can wear this weekend. As best as I can tell, party affiliation makes no difference to mask manufacturers. They offer equal opportunities to Democrats and Republicans.

Or you can star in a horror movie. Who can forget Michael Myers, the lead character in Halloween? And there's Leather-face, the guy with the bad nose and prominent stitching from The Texas Chainsaw Massacre.

How about something less gory?

Well, you could steal $21.2 billion through a Ponzi scheme that spans decades. The scariest face this Halloween may be the Madoff mask, available online and at your local costume shop.

Let's face it. The Bernard Madoff mask exists because of the size and scope of his fraud. He inflated customer accounts to show an aggregate value of $65 billion. The New York Times reported that actual cash losses from his scam now total $21.2 billion.

The total of cash losses by investors in Bernard L. Madoff's giant Ponzi scheme has climbed to $21.2 billion, the court-appointed trustee overseeing victim claims said Wednesday. That is significantly higher than the tally of about $13 billion provided to the court by federal prosecutors when Mr. Madoff was sentenced for his crimes at the end of June, The New York Times's Diana B. Henriques reports.

The fraud is so big that SIPC has agreed to advance $534.25 million to investors, which is more than the combined liquidations of all brokerage liquidations since 1970. SIPC has "slightly more that $1 billion" in reserves, which makes me wonder whether anything will be left when the Madoff case is settled.

The fraud was so mesmerizing that it endured until December 11, 2008. It endured even though Harry Markopolis gift wrapped a lawsuit with his testimony to the SEC in 2005. And now four years later, the government has yet to separate money managers from their custodians.

Two reports to clients, one from the custodian and one from the money manager, would stymie similar frauds. We lack checks and balances, though, which is one reason I was able to write Top Producer and turn fact into fiction. Unfortunately, Madoff -- money manager, custodian, and a guy who understood the system's flaws -- was all too real.

Talk about scary stories.