Bernie Madoff Ponzi Scheme

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.

Convictions of the Bernie Madoff conspirators prove the Ponzi scheme could not have been the work of one person. Furthermore, the conspirators each played a critical role in facilitating the Ponzi scheme and concealing it from regulators, and auditors. For instance, Annette Bongiorno, was employed for Madoff for approximately 40 years as his secretary (Lappin, 2014). Consequently, Bongiorno was charged with manufacturing the false statements sent to clients that indicated they were worth a lot more than they actually were. Moreover, Bongiorno transferred $50 million of client’s funds into her own private account (Lappin, 2014).

In December of 2008 the market was doing terrible and people wanted there money back but Madoff did not have it because he had spent it. His sons were the ones who reported him to the authorities. If I worked for Madoff and found out about the scheme I would have reported it to authorities. Even if I was making a lot of money I would still know that I was getting the money in illegal ways and I don't think

An all-around regarded lender, Madoff persuaded thousands regarding financial specialists to hand over their funds, dishonestly encouraging steady benefits consequently. His misconduct was noticed in December 2008 and accused of extortion, illegal tax avoidance, evasion, and burglary. Madoff utilized the alleged Ponzi conspiracy, which attracted several financial specialists in by ensuring uncommonly noteworthy earnings. The name begun with Charles Ponzi, who guaranteed half profits for interests in just short notice. Ponzi plans were controlled by a main administrator, who utilized the cash from new, approaching financial specialists to pay off the guaranteed original returners. That plan made the operation appear to be productive, despite

Introducing Bernard L. Madoff born April 29, 1938 in Queens, NY and is presently serving a one hundred fifty-year prison sentence. Who is this fraudster Bernard L Madoff also known as “Bernie” and what fraud did he commit? Bernie’s parents Ralph and Sylvia Madoff were Polish immigrants struggling and working during the Great Depression Era. In later years, his mother worked in finance as a broker-dealer for their company Gibraltar Securities. The SEC eventually forced the business to close due to non-reporting issues regarding the businesses financial condition. Around age twenty-two, Bernie Madoff started his own investment firm Bernard L. Madoff Investment Securities LLC and was

To combat this assumption it turns out large amounts of money of the value of $300million was invested in Bernard Madoff accounts in the form of pension funds. Some officials knew that the unscathed performance of Madoff securities were too good to be true as their prices consistently climbed up in spite the financial crisis. However, still they pawned its own shareholders’ funds with the hopes of jumping on the same band wagon as Madoff and reaping further profits. Another angle at probing the case was that the CEO, directors as well as executives were only looking out for themselves. Evidently they had direct benefits in the form of handsome compensation packages for retaining high profile clients such as Madoff and Wise which

Madoff admitted to this fraud in March 2009 and was sentenced to 150 years in prison. While the total scheme is estimated to be about $50-65 billion from his investors would account to less than $10 billion when discovered. Although the Madoff scandal revealed the activities were illegal and unethical, another scandal equally present in the scheme was that the U.S. government and regulators failed to protect investors.

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.

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

Madoff Securities Fraud / Ponzi scheme was one of the article I read and I thought that it was interesting because he maculated so many peoples including the employees of the company invested their life saving, and he fraudulent stolen over 50 billion dollars before he was caught. Because he was high in power he was allowed to change records submit important document and get funds without having the approval signatures that was needed. Madoff was able to use the mail, wire communication to launder money from the employees benefit funds to different location and no one question his unethical behavior within the company. He gave false information to the (SEC) Securities and Exchange Commission for

It is almost impossible to believe that Madoff’s sons did not know about their father’s fraud, and thus they were complicit ethically if not legally. They could have simply reviewed the investments that Madoff claimed to have made to generate the returns, which would have revealed no link between investor assets and the investments. Madoff would have had to prevent his sons from reviewing any of the transactions. Madoff’s sons not knowing of their father’s scheme may be far fetched, since his sons were directly involved in trading as the Director of Trading and Director of Proprietary Trading.

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

Madoff admitted to his faults but what he didn’t admit was that he had multiple accomplices. Madoff said he acted alone, but several investigations and convictions prove other wise. Madoff’s right hand man, Frank DiPascali Jr., plead guilty to 10 charges and stated he “ended up being loyal to a terrible, terrible fault.” DiPascali Jr. participated in the scheme for over 20 years. Another significant person in the scandal was Madoff’s accountant and the firm’s auditor, David Friehling. Friehling also plead guilty to numerous charges and stated that he was “unaware of the scandal going on around him.” Bernie’s brother, Peter Madoff, was also involved in illegal activity at Madoff Securities. Peter admitted he:

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 illegal construction of the Bernie Madoff securities pyramid scheme grew to preposterous proportions from legal, auditing, and regulatory weaknesses of the Securities Exchange Commission, the designated regulatory body of the U.S. financial markets. The required expertise, authority, and relevant penalties needed to deter management from committing ethical breaches lacked substance in the case study of BMIS (Crews 11). Even after the wake of the Enron and WorldCom scandals that occurred in the early 2000s, the SEC unexplainably revoked provisions created to help avoid fraud. The provision the SEC revoked specifically mandated firms structured like Madoff’s to be audited by accounting firms registered and audited by the Board. By revoking the provision, BMIS was allowed to continue its Ponzi scheme for another half a decade with the aid of utilizing an unregistered, small accounting firm called Freihling & Horowitz (“Madoff’s Jenga”