Calling Madoff's fraud a pyramid scheme would not be accurate. Each layer in a pyramid scheme consists of willing fraudsters who are trying to pass the cost of the fraud on to a new layer of people. Whoever gets stiffed at the end isn't innocent--they thought they could recoup the cost of their buy-in to the pyramid by tricking a new layer.
Madoff's fraud was a Ponzi scheme, which is very different. The people defrauded were truly innocent--they though they were buying into a legitimate investment management service. Madoff is following in the footsteps of Charles Ponzi, who paid his old investors with the buy-ins on the new investors without the old investors figuring out that anything fishy was going on for quite a while.
Also, perhaps we can avoid comparing actual Italian names to Muppets?