Bernie Madoff. Mario Tama/Getty Images Harry Markopolos, who initially warned the SEC about Bernie Madoff's Ponzi scheme, revealed he's working on three multibillion-dollar schemes, including one that will be bigger than Madoff's.

Markopolos first submitted evidence to the SEC in May 2000, eight years before the Madoff fraud was revealed.

3 major schemes scamming investors

Markopolos told ABC News that he has found three new schemes that are multibillion-dollar pyramids of fraud.

In an explosive statement, he indicated that one of the three schemes would be bigger than Madoff’s and that one can’t stop them. However, Markopolos declined to identify the names of the scams until he provides the information to government investigators.

Highlighting the plight of gullible investors, he said: “Everybody wants to believe in the holy grail of finance, risk-free returns, and they keep investing in Ponzi schemes.”

Reacting to the new revelation, the SEC said in a statement that it has initiated significant reforms to trim the chance that such frauds could go undetected in the future.

The regulator said it aggressively pursues Ponzi schemes and similar misconduct and has stepped up surveillance and new safeguards for investor assets and established an enhanced whistleblower program.

Whistleblowers caution on ETFs

The term “Ponzi scheme” denotes a scheme in which someone pays profits to earlier investors by using money from later investors. Markopolos was earlier working at Rampart Investment Management where his superiors asked him to design a product similar to Madoff’s scheme that could offer returns of 12% a year. However, on closer scrutiny, he found that Madoff was either “front-running” the order flow or he was running a Ponzi scheme.

He reported his findings to the SEC in May 2000 and eventually in October 2005 by delivering a 25-page report highlighting 30 “red flags” indicating that Madoff was up to no good.

However, the SEC failed to catch Madoff in the act. Markopolos now runs his own company that sniffs out financial fraud. Some consider him the bounty hunter of the finance world, collecting money from the governmental False Claims Act by finding crooks, turning them in and getting a share of the damages.

Of note, while ABC News began to air its two-part series on Bernie Madoff’s fraud, two anonymous whistleblowers have been jointly flooding the SEC with explosive evidence that some Exchange-Traded Funds that trade on U.S. stock exchanges and are sold to a gullible public, may be little more than toxic waste dumped by Wall Street firms trying to come out of illiquid securities.

In their letter to the SEC on January 13, the two whistleblowers compared the ETPs (which include ETFs and ETNs) to the subprime mortgage products that fueled the 2008 credit crisis.

They stated that many of these products may have been designed to take what were originally illiquid assets from the books of operators and bundle them into an ETP to make them appear liquid and hawk them later to gullible investors.