A History Of The Fraud

Bernie Madoff began his career as an investment broker in 1960, where he legally bought and sold over-the-counter stocks not listed on the New York Stock Exchange (NYSE). From the 1960’s through the 1990’s, Madoff’s success and business grew substantially, mainly from a closed circle of known investors and friends through word of mouth. In the 1990’s Bernard L. Madoff Investment Securities traded up to 10 percent of the NASDAQ on any given day. With the success of the securities business, Madoff started an illegal money-management business, promising his investors consistent returns from 10-12 percent, unheard of returns at the time, which should have tipped off most investors that something was amiss.

Madoff’s scheme to defraud his clients at Bernard Lawrence Madoff Investment Securities began as early as 1980 and lasted until its exposure in 2008. Bernard carried out this scheme by soliciting billions of dollars under false pretenses, failing to invest investors’ funds as promised, and misappropriating and converting investors’ funds to benefit Madoff, himself, and others without the knowledge or authority of the investors. To execute the scheme, Madoff solicited and caused others to solicit potential clients to open trading accounts with Bernard Lawrence Madoff Investment Securities (BLMIS) on the basis of a promise from him. He promised to use investor funds to purchase

Synopsis A childhood friend summed up the driving force in Bernie Madoff’s life: “Bernie wanted to be rich.” As a youngster growing up in New York City, Bernie realized that Wall Street was the greatest wealth creation machine the world had ever known. So, after graduating from college in 1960, he set his sights on joining the exclusive fraternity that ran Wall Street by organizing his own one-man brokerage firm, Madoff Securities. Madoff was one of the first individuals to recognize that computer technology provided the means to “democratize” Wall Street by establishing a system that made securities trading much more efficient and much cheaper. In the early 1970s, Madoff and several other individuals

In March 2009, Madoff admitted that since the mid-1990s he stopped trading and his returns had been fabricated. Madoff's sales pitch, an investment strategy consisted of purchasing blue chip stocks and taking options contracts on them, sometimes called a split-strike conversion or a collar. Typically, a position will consist of the ownership of 30–35 S&P 100 stocks, most correlated to that index, the sale of

Bernie Madoff was raised watching his parents Ralph and Sylvia Madoff run a business that was not successful in the financial trading world. That company was named Gibraltar Securities. Due to the fact that Sylvia failed to accurately report their company’s financial condition, the SEC closed the business in 1963 and started its investigative proceedings to determine if charges were needed to be

Bernie Madoff came from a poor background after his parents emigrated from another country. He had the captivating story of someone coming from nothing and turning it into a lavish lifestyle. With the help of in-laws, he was able to invest in his dream of owning his own financial company. He made a name for himself by volunteering his time at Securities and Exchange Commission and being one of the first firms to use electronic trading. He was also a powerful figure in Washington, D.C. donating to the campaigns of both Republican and Democratic parties. While lobbying for stock market restructuring, he became a big figure among Wall Street and was treated like royalty at social events. He was able to manipulate some of the most wealthiest and

Bernard Madoff founded Bernard L. Madoff Investment Securities in 1960, with an investmento of only $5,000 earned as a beach lifeguard and a lawn sprinkler installer. He was seen as a genius and the most sympathetic and friendly broker in the country. Madoff became the responsible for the largest financial scam in history after applying the most jaded of financial scheme. A stroke of billions of dollars and harmed many customers. But after 20 years of this scam, he admitted having ridden a giant pyramid scheme type after being arrested. The scheme is to pay older clients with money from new investors, without producing real income. Madoff even became chairman of Nasdaq, the

After researching the details about this case there are two questions that I ask “what took so long for Mr. Madoff to get caught, and how did they finally catch him.” According to www.stockpickssystem.com , financial analysts started to become suspicious of the claims that Madoff was making. Logically thinking that realized that things were not adding up. To answer my first question of what took so long for him to get caught, it was a fault on the Securities and Exchange Commission (SEC). This organization completely ignored the suspicions made, which allowed Madoff to continue with his tactics for almost another 10 years. In December of the year 2008, is when Madoff had finally opened up to his children and confessed to his scheme. After confessing to his sons, they reported him to the Federal Bureau of

Bernard Madoff was an investment advisor and former chairman of NASDAQ and he was most famous for perpetrating the largest Ponzi Scheme in history. In 1960, Bernie founded Madoff Investment Securities, LLC, and his firm was one of the first to use computer technology to trade. They specialized in over the counter stocks. He grew his company by networking and got his family involved in running the company. His first clients were people in his neighborhood, and people who went to his same church.

Madoff was a portrayed as a person with good intentions. He provided clients with investment sheets that appeared to be genuine and he provided a sense of commitment to the clients. He portrayed an act of teleology to his clients, which is morally right and acceptable, but in reality, his actions are that of a person makes a decision based on the best need for the individual to gain power, pleasure or satisfying a career. In addition, Madoff portrays a trait of enlightened egoism as he was interested in gaining new clients and helping them, he was using their money to pay the dividends for older established clients (Ferrell, Fraedrich & Ferrell, 2011).

He was running his firm, Bernard L. Madoff Investment Securities LLC, using a Ponzi scheme. According to the CNNMoney (Smith, Aaron., 2013), no one knows when Bernie Madoff started his Ponzi scheme towards people because he first claimed that he started in 1987, but later he said that it began in 1992, while some reports claim that he started when he first started working on Wall Street which was in the 1960s. I personally think that he probably used the Ponzi scheme for more than 20 years since he got arrested

Madoff was operating what is commonly called a “Ponzi scheme,” named after a fraudulent investment plan devised by Charles Ponzi a century earlier (Stanwick & Stanwick, 2014). A Ponzi scheme involves the taking of money from investors on the promise of a higher than normal return on the investment. However, the money that is collected from investors in never actually invested into any legitimate businesses or financial operations. Instead, the money that is collected from new investors is used to pay previous investors. Both Bernie Madoff and Allen Stanford were investment managers who engaged in multi-billion dollar Ponzi schemes in recent times (Tolson & Schiller, 2009).

During the financial crisis of 2008, the biggest Ponzi scheme in history was uncovered. It was run by Bernard Madoff and encompassed roughly $65 billion (Ferrell, 2009). Madoff first entered the investment business in 1960 when he started his own company, Madoff Securities (Ferrell, 2009). As his business grew, Madoffbegan employing some of his family members: Peter, Madoff’s brother, joined the firm and helped set it apart from the competition by introducing modern technology. Other family members to join were Madoff’s wife, Ruth; Peter’s niece, Shana; and both Madoff’s sons, Mark and Andrew (Ferrell, 2009). Madoff’sbusiness was flourishing, trading billions of dollars of investors’ money, establishing Madoff as a credible and respected figure on Wall Street. Madoff expanded his influence and reputation by serving as the chairman of NASDAQ for three years in the early 1990s (Ferrell, 2009). It is assumed that the beginning profits ofMadoff’s business were legitimate earnings and not based on fraud. The Ponzi scheme is estimated to have started around 1990, in order to keep up with the high 10-12% return on investments that he promised to his clients (Ferrell, 2009). Madoff’s investors were affluent, prestigious and very intelligent and they trusted him with their money. Throughout the course of the fraud, Madoff was investigated numerous times by the SEC, without any findings or actions taken. There were many individuals who suspected Madoff was running a Ponzi scheme, the

To begin, Bernard Madoff is a businessman and he understands being successful in business; one needs to take risks. Therefore, Bernie was taking risks aiming to achieve big business goals, but unfortunately, he did not make it. (Sullivan, 13th February 2017). The financial statements were perfectly false and they have mirrored Madoff's dreamland of exchanging actions. They were packed with misrepresentation and without any association with advertising costs.

Bernard L. Madoff Securities, LLC was formed by Mr Madoff in 1960 with $5,000 that he had earned lifeguarding (A&E Television Network, 2014). Bernie also secured a loan from his father-in-law in the amount of $50,000 to further fund the newly formed business. At this stage in his career, Bernie was making the firm’s profits by trading in penny stocks. He would receive requests to make investments from his clients. He would then contact another investor or broker to seek out the best price. The difference between what his clients were willing to pay and what he could buy for represented the profit.