Bernard Madoff's Ponzi Scheme Essay

1907 Words Sep 18th, 2010 8 Pages
Bernard Madoff’s Ponzi Scheme

Successful millionaire, Wall Street celebrity and esteemed philanthropist who ran the largest Ponzi scheme turned in by his own children. Some of the laws he broke include: securities fraud, wire fraud, money laundering and mail fraud among others. As a result of his scheme and disregard for the law many people were affected and lost their savings and retirement plans. The consequence to his actions: life in prison and all of his belongings auctioned off by the U.S. government.
Bernard Madoff was born on April 29, 1938 in Queens, New York and raised in the Jewish faith. He is the son of Ralph and Sylvia Madoff. After he graduated from Far Rockaway High School in 1956, he attended the University of
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During a 1992 interview with The Wall Street Journal, he discussed his “methods”. During this interview he described how, in the 1970’s, he had invested funds in large market capitalization stocks with a promised return of investment of eighteen to twenty percent. He also described how in 1982, he started using futures contracts on the stock index and placed put options on futures during the stock market crash of 1987. Several analysts performing due diligence were unable to replicate the returns Madoff’s firm had using historic price data for United States stocks and the options on the indexes. It was speculated that Madoff’s returns were most likely earned by front running his firm’s brokerage clients.
Madoff’s sales method consisted of offering modest but steady returns to an exclusive clientele. He would tell his customers that his investment method was too complicated for newcomers to understand. He kept his financial statements safeguarded and was close-mouthed about his firm’s business. According to the New York Times, Madoff worked the “Jewish circuit” of wealthy Jews he met at country clubs in Palm Beach and Long Island.
Madoff was considered a “master marketer” and his fund exclusive. He would generally refuse to meet directly with investors, which would make people more interested in investing with

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