Bernie Madoff Case Study Essay example

His mother was a housewife and his father was a plumber. Like most families during this time era, they were struggling after the Great Depression. The Madoffs became so fraught over money issues that they began to get into finances. Later, in the 60s his mother, Sylvia Madoff, registered a broker dealer when she opened an office referred to as Gibraltar Securities. Shortly afterwards, the United States Securities and Exchange Commission (SEC) forced closure due to unreported financial conditions. During this time, Bernie Madoff showed little to no interest in finances. As a typical student in high school, Bernie focused on his classes, relationships, and most importantly, the swim team. As a young man, he got a job as a lifeguard on Long Island (Bernard Madoff Biography, 2018). Through this job he was able to save money, which was later used to construct his first

Bernie Madoff, son of Ralph and Sylvia Madoff, grew up in a modest three-bedroom home in Laurelton, a small middle class area outside of Queens, New York. Little is known about Bernie’s parents, except each had one or more issues with the government. Ralph, had a tax debt in excess of $13,000, placing a lien on his home, assessed in 1956 and not paid until 1965. Sylvia was part of Securities and Exchange Commission (SEC) proceedings in 1963 to determine if broker-dealers of Gibralter Securities failed to report financial conditions, which could revoke their registrations. However, in 1964, the SEC dismissed the proceedings with what appeared to be a deal for these identified individuals to stay out of the business.

9. In March 2009, Madoff pleaded guilty to eleven counts of fraud, money laundering, perjury, and theft; in June 2009, Madoff was sentenced to 150 years in federal prison. 10. Fraud charges are still pending against David Friehling; he faces a prison sentence of more than 100 years if convicted of those charges. 11. KPMG became the first of the Big Four firms to be sued as a result of the Madoff fraud; the lawsuit alleges that KPMG failed to properly investigate Friehling & Horowitz while auditing the financial statements of a large “feeder firm” in which the plaintiff was an investor. 12. The SEC has announced a series of reforms to prevent or detect future frauds similar to Madoff’s; one proposal is that investment advisers be subjected to annual “surprise audits” to ensure that customer funds are properly safeguarded.

This implied to the court that there were other accomplices and part of his plea bargain offered him a chance at parole if he cooperated with the courts demand. With this opportunity, Madoff still insisted on remaining silent so the judge, Denny Chin, delivered a maximum sentence and the restitution to be paid at the initial trial was set at $17 billion. In the process, all of Madoff’s known assets were frozen, which totaled to roughly $830 million. These assets ranged everywhere from securities to jewelry along with loans made out to family members. Homes and other commodities along with precious artwork were also a part of the freeze order(Investment).

To begin, Bernie Madoff orchestrated one of the largest Ponzi schemes in American history. What made the scheme so successful was Madoff was selective with clients and did not guarantee overly optimistic returns. Instead he promised consistent and steady returns to a select group of clients. He masked his strategy by created a sense of overly complicated and esoteric policies that few could understand. However, his strategy was not overly complicated. Madoff would essentially take investor money and deposit it into a JP Morgan account. The money was seldom invested. When consumers asked for their

From about 1960 to the 1990’s, Madoff’s business grew like crazy, mainly from some well-known investors and friends. Because of all this Bernie became very successful very fast. This caused him to start getting greedy. In the 1990’s Bernard L. Madoff Investment Securities began conducting illegal acts of fraud, Madoff started an illegal money-management business, promising his investors consistent returns. Investors were so interested in the high returns, that no one questioned Madoff or his strategy. In 2008, investors began requesting payouts for their investments and Madoff started to become very desperate for new funds. His strategy began to unravel and the truth of his actions started to come out, shocking many people. This case blew up like crazy and once investigators started looking into Madoff’s business they discovered all Madoff was doing was running a Ponzi scheme. He would take funds from new investors, and use that to pay off the older investors. While doing this Bernie was also pocketing a large portion of the money, causing this to be one of the biggest Ponzi schemes in

Judge Denny Chin presided over the Bernie Madoff Ponzi scheme case where Madoff was sentenced to 150 years in prison. “The penalty sparked a burst of applause in a courtroom packed with victims of the fraud.” (Frank). Mr. Madoff ruined hundreds of lives that put their life savings and trust in his hands. Bernie expressed remorse after fraud victims address their concerns in the courtroom in regards to massive Ponzi scheme. Friends and family were not there to support Madoff in his day of sentencing and remain inadequate of further information of details about the fraud. Bernie Madoff is believed to have betrayed everyone including his two sons who work for the investment firm. Rich and poor people alike shared in this despair after all of their

One of the biggest scam in the entire United States history was noticed by Harry Markpolo and the criminal was Bernie Madoff who was the reason for $50 billion dollar financial fraud. It took very less time to find the fraud for the investigator Markpolo and few hours to demonstrate the procedure scientifically. As being responsible Markpolo reported to SEC (Securities Exchange Commission) in the year 2000 as it is the initial one. After that Markpolo again reported to SEC in between the years of 2000 to 2008 for five times but the higher authorities are repeatedly ignored about the case. Markpolo was initially in May 2000 found that 3 to 7 billion dollars are looted in this Ponzi scam it was increased to 10 to 12 billion dollar

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.

Bernie Madoff was successful for so long because he kept a high level of secrecy in his firm. If a question or a concern was brought up, he instead focused on his many years of success. In an interview with Frontline, Michael Bienes, a CPA who fed Madoff clients during his early years, explained why so many people never questioned Bernie Madoff. When asked a question, Madoff would answer in a way to confuse even an expert. As was the sentiment of many who worked with

Cohen only paid $2.4 Billion in penalties despite his estimated net worth of $9.3 Billion. Furthermore, regulators at no time attempted discontinuing Cohen’s investment activities. Instead, the law indirectly enabled the creation of Point72 Asset management listed as a private company. Again, Cohen’s status is definitely questionable because of the way the judicial system handled his case. Thus, why would Mathew Martoma remain the only victim serving in prison when he admitted leaking insider trading information allowing Cohen to dispose of his share of pharmaceutical companies Wyeth and Elan Corporation before the big

Just two years later in 1989 Belfort started his own company and started defrauding hundreds of companies. The Securities Exchange Committee began to get a closer look into the company in 1992. In 1999 Jordan Belfort pleaded guilty to money laundering and securities defrauding. He cooperated with the authorities to try to get time taken off his sentence. His sentence was 4 years in prison, and fined $110 million.

Bernard Madoff had full control of the organizational leadership of Bernard Madoff Investments Securities LLC. Madoff used charisma to convince his friends, members of elite groups, and his employees to believe in him. He tricked his clients into believing that they were investing in something special. He would often turn potential investors down, which helped Bernard in targeting the investors with more money to invest. Bernard Madoff created a system which promised high returns in the short term and was nothing but the Ponzi scheme. The system’s idea relied on funds from the new investors to pay misrepresented and extremely high returns to existing investors. He was doing this for years; convincing wealthy individuals and charities to

Madoff reportedly admitted to investigators that he had lost $50 billion of his investors' money, and pled guilty to 11 felony counts—securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the United States Securities and Exchange Commission (SEC), and theft from an employee benefit plan—on March 12, 2009. While the extent of his fraud is still being uncovered, prosecutors say $170 billion moved through the principal Madoff account over decades, and that before his arrest the firm's statements showed a total of $65 billion in accounts.

He was sentenced to 150 years in federal prison. Madoff 's auditor also faces criminal charges, allegedly failing to conduct due diligence (reuters.com 2009).