Allen Stanford 's Ponzi Scheme

SOCS10261G Scams Frauds Identity Theft Crimes of Deception in the Information Age - Term 1129, Class 75036

Ponzi Schemes also known as a multi-marketing organization are white-collar crime; it is essentially an individual swindling a quick investment from new investors. Always ends up with investors or victums losing “their shirt” all the profits and many cases the company and is bankrupted and the owner ends up in jail. Two very highly successful Ponzi schemes are Primerica group and Amway. Primerica Group sells insurance and financial services and Amway sells heath insurance, but it doesn’t matter what they sale, its all about recruitment. They take your hard earned money and invest it into there business for a bigger profit in the future for a retirement but many people who try to get some of there money back for emergency are sadly mistaken

Throughout history, people have done unethical things dealing with money. In 2008, the man known for running a massive Ponzi scheme, known as Bernie Madoff, was arrested and charged with criminal securities fraud, and sentenced for a hundred and fifty years in prison.

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.

Describe a Ponzi scheme. Find several examples of other Ponzi schemes that have occurred in recent years.

In December 2008, one of the largest Ponzi scheme surfaced when Mark and Andrew Madoff reported the works of their father, Bernard Madoff to the federal authorities. A Ponzi scheme is an investing scam that promises high rates of return with little risk to investors. The operator generates returns for older investors by gaining new investors. Bernard was arrested on December 11, 2008 and charged with securities fraud. He pled guilty to 11 counts and was sentenced to 150 years in federal prison-the maximum possible prison sentence. A reported $17.3 billion was invested into the scam by Bernie’s clients and only about $2.48 billion have been returned to these victims as of September 2012.

No introduction Bernard Madoff, sentenced in 2009 to 150 years in prison for organizing the largest chain of Ponzi scheme of all time. He had thus managed to rip off nearly 20,000 investors to whom he

The Bernie Madoff case was the largest dollar amount and longest running fraudulent Ponzi scheme identified to date. Madoff has admitted that the fraud started in the early 1990s and ran for 18 years before it was above his head when the economic depression set in and investors began to request payouts.

According to Investopedia.com, “A Ponzi scheme is a fraudulent investing scam promising high rates of return with little risk to investors.” Charles Ponzi was a businessman in the early 1900s. His scheme was promising his client’s 50% return within six months. When in fact, Charles Ponzi was using later investors’ money to give back to the early investors. This financial scheme has been repeated several times since then but in smalls ways changed. The most famous in recent news is Bernie Madoff. Bernie Madoff was a hedge fund investor. As a very famous hedge fund investor, Bernie Madoff was entrusted with individuals’ entire savings (cbsnews). In return, Madoff “cooked” his books and almost always had a positive return. Only in one month out of the year did Bernie Madoff record a down month. According to a 60 minute episode, this is equivalent to a hitter in baseball hitting, .960 (cbsnews). In the end Bernie Madoff lost almost all of his investor’s life savings. So this is another case of the Ponzi except at a bigger scale. These examples prove that although one could be wealthy, they always want

The Ponzi Scheme to Make History: An Informative Speech Presented in Comm 1100 SEC 24d Introduction I. Have you ever heard about the biggest Ponzi scheme that had about 65 billion dollars under management? II. A Ponzi scheme is a type of fraud that works by paying back quick, usually in high returns to investors using money invested by other investors. III.

A Ponzi scheme of this size and magnitude probably won’t happen again. The Ponzi has been around since the beginning of time. It has been documented to be in existence since 1920. The Security Exchange Commission (SEC) has put several detectors in for the Ponzi scheme. This should be labeled a white-collar crime but should be punished as a blue-collar crime. The only to ensure that this does not happen again is to get rid of all the thieves in the world. That will be difficult task.

Over the next decade Mr. Stanford, directly assisted by James M. Davis, Stanford International Bank’s CFO, and Leroy King, Antigua’s chief banking supervisor, executed a massive Ponzi scheme. In addition, Laura Pendergest-Holt, the chief investment officer of Stanford Financial Group (“SFG”) and a member of SIB’s investment committee, gave credence to the fraudulent scheme by misrepresenting herself to investors and to the firm’s financial advisers claiming that she oversaw SIB’s entire investment portfolio and employed a sizeable team to invest in conservative and liquid assets.

This paper introduces Bernard L. Madoff a fraudster who orchestrated a multi-billion dollar Ponzi scheme. The paper discusses elements that make up a Ponzi scheme and explains what a Ponzi scheme is. The paper goes on to introduce some of the victim’s and examines some reasons why someone might fall victim to a Ponzi scheme. The paper describes the three elements making up the fraud triangle and how they relate to the fraud and the fraudster. This paper covers Bernard Madoff’s background and history and how he committed the fraud analyzing the fraud triangle. The paper describes ways to correct the issue, accounting principles violated, and recommendations for a fix. Finally, the paper looks at internal and external controls violated and ends with a conclusion.

A Ponzi scheme is an illegal business practice in which new investor’s money is used to make payments to earlier investors. In many Ponzi schemes, the fraudsters focus on attracting new money to make promised payments to earlier-stage investors and to use for personal expenses, instead of engaging in any legitimate investment activity. The returns are repaid out of new investors’ principal, but not from profits. This can continue as long as new investors line up with cash, and old investors don’t try to withdraw too much of their money at once.

The most famous Ponzi scheme, and which gave rise to the term, involved Charles Ponzi’s sale of international reply coupons to be reimbursed for postage stamps (Grossman, 2012). Like other schemes, Ponzi paid off investors with proceeds generated from newer investors. Ponzi’s scheme is notable because it not only lost investor funds but also brought down six banks. However, this scheme was relatively small compared to the one launched by Allen Stanford, which defrauded investors of more than $7 billion, compared to Ponzi’s $20 million.