The Ponzi scheme, named after Charles Ponzi, is a financial fraud that provides above-average returns to existing investors with funds obtained from new investors. Ponzi schemes that have occurred throughout history have been widely implemented around the world from the 1800s to the present day, and investors have suffered great losses. Among the Ponzi schemes that have occurred around the world, the Ponzi scheme that occurred after the 2008 global crisis and was carried out by Bernie Madoff is stated to be the largest Ponzi scheme in American history. The Madoff Ponzi scheme continued for a long time and gained popularity due to the reputation created by Madoff and the inadequate auditing efforts of the SEC. With the increase in complaints, the haphazard examination of inexperienced personnel in the investigations conducted by the SEC delayed the emergence of the Madoff Ponzi scheme. This study analyzes the Madoff Ponzi scheme. The development of the Madoff Ponzi scheme, investment strategy and red flags are examined within the scope of the study. In addition, the study offers suggestions to investors to reduce the potential of falling victim to future Ponzi schemes and explains the reforms and changes that have taken place within the SEC.