Bernie Madoff's Ponzi Scheme

Before the exposure of his scheme, Bernard L. Madoff Investment Securities seemed to be a normal investment firm (Bandler & Varchaver, 2009). Bernie was a well-respected in the financial industry, evidenced by being named chairman of the NASDAQ and by being asked to testify before congress (Bandler & Varchaver, 2009). Bernie’s brother, Peter served as the head of compliance in the legitimate trading side of the firm. While Peter was technically savvy, Bernie was anything but (Bandler & Varchaver, 2009). His computer was set up to report financial news and nothing else (Bandler & Varchaver, 2009). He didn’t have an email account, and it was said that “he could barely turn his computer on” (Bandler & Varchaver, 2009).

Schneeweis &Szado (2010, p.9) suggested that ffinancial fraud in general and Ponzi schemes in particular continue to maneuver investors. A Ponzi scheme is frequently described as a securities fraud in which the investment manager is in fact taking money from new investors to fund redemptions from current investors. These strategies are often discovered when new investors cannot be found to offset redemptions from current investors. The Ponzi method received its name from Charles Ponzi, who marketed an investment based on managing the International Postal Reply Coupons. Ponzi suggested that an arbitrage opportunity existed because he could exchange U.S. dollars into the necessary foreign currency, and use the foreign currency to purchase postal reply coupons. The postal reply coupons could be redeemed for U.S. postage stamps, which could then be sold for U.S. dollars. Ponzi promoted unusually high returns to investors when in fact he simply used the new investment to pay of the previous investors. While the scheme soon collapsed, there are similarities between him and the Madoff scheme. For example, Madoff sold primarily to the Jewish community and also Ponzi sold primarily to the immigrant community of the North End of Boston, to which he belonged. Along with that, the validity of Madoff's strategy was a subject argued by the public press (Barron's) as well as by individuals (Markopolus) on the grounds. Comparable to Ponzi's investors, Madoff’s investors, have received

Madoff was well aware of the fact that these representations were false. Madoff failed to keep his promises to BLMIS clients by failing to invest the BLMIS investment clients’ funds in securities like he said he would. Madoff caused there to be tens of thousands of account statements and other documents sent through the United States Postal Service to BLMIS clients throughout the operation of his scheme. Madoff was able to steal billions from his victims through his scheme. This large making came from more than just individual investors but also from charitable organizations, pension funds, and some victims even lost their life savings due to this scheme. Madoff also obtained investor funds through interstate wire transfers from financial institutions located outside New York State and through mailings delivered by the United States Postal Service.

Plato argues that a justice will lead us to the good and happy life. So, if Plato had seen the Madoff’s case, he would assert that first, we must arrest and punish Bernard Madoff because this guy is a classic representation of an injustice man. His career as a crook started unjustly from the very beginning. He began to work as a stock broker in 1930 (I will check the exact period later) without an official stock broker license. He registered his first firm illegally. After that, the rest is a history. He cheated, lied, and committed all kinds of unjust actions to deceive the clients and stole their millions and billions of dollars by using a Ponzi scheme, the scheme that guarantees the 12-percent-annual return without no downfalls. For Plato,

In essence, the majority of the people who fall victims to cases of fraud are the successful and sophisticated as well as educated individuals (Biegelman, 2013). The persons are easily taken advantage of due to their status in society. Most of them will most likely not talk about a case of fraud if they fall, victims, as they will not want to be viewed as anything other than triumphant. This fact that the thriving people in society want to remain and be seen as successful is what Madoff used in convincing investors to sponsor his Ponzi scheme. Also, Madoff is most likely to have relied on investor’s psychology such as blindness of the sponsors (Carlson, 2015). The majority of the investors must have been reading the newspapers rather than following

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.

According to Ferrell , Fraedrich and Ferrell (2015) text, The Chair of SEC disclosed that the SEC examiner missed several red flags while reviewing the Madoff firm. Madoff also admitted to the unethical and illegal behavior of deceit. Madoff disclosed operating the Ponzi scheme since 1990 (Ferrell, Fraedrich, & Ferrell, 2015). The Ponzi scheme was very successful until the crash of the economy and the inability to bring in new investors. Madoff was able to maintain this scheme for well over 30 years. There had to be several accomplices that were intended or unintended participants.

Bernard Madoff created an image which ultimately allowed him to defraud over 4,800 people in a multi-billion dollar Ponzi scheme spanning over a possible 30 year timeframe (Ferrell, 2009). Maddof’s Ponzi scheme was made possible by his ability to secure new investors to fund the existing clients. “Ponzi scams are like fires with plenty of fuel: They keep going until the new money stops. Then they collapse” (Wasik, 2012, n.p.). Madoff built a “family” business, as well as a credible reputation (Ferrell, 2009). He made a name for himself in the investment world by effectively networking, NASDAQ chairman services, and falsely convincing investors a high rate of return on investments.

Madoff was able to successfully woo his victims due to his charisma and also him having the ability called “the gift of gab”. Due to this he was able to persuade his victims into investing in his firm. Madoff’s firm appeal was also another reason why he was successful in soliciting cash out of these people,

One of the largest financial frauds in history ended in 2008. A scheme that involved many people and the man behind it managed to keep the scheme running for over 15 years in one of most monitored economic systems in the world. Bernard L. Madoff, was arrested for his scheme and pled guilty to the embezzlement of billions of US dollar, he was sentenced to 150 years in prison. It was a great shock to many, as imagine how such a big swindle could occur in an environment so carefully controlled by regulations and supervised by different institutions. The discovery of the scheme rose questions on how this could go unnoticed for such a long time, many people believe that the Ponzi scheme was a failure of the government regulators. This report gives

Bernard Madoff ran the worlds largest ponzi schemes; he lost investors approximately seventeen billion dollars in principle. The following report goes through the events in general from begging to end including a description of the fraud committed, the stakeholders involved and the consequences for them, the role of the auditors and finally the outcome for those held responsible for the ponzi scheme.

“Bernard Madoff, the perpetrator of the largest Ponzi scheme in history, had a reputation as an upstanding citizen before his fraud was uncovered” (Ferrell, Fraedrich, & Ferrell, 2015). I believe his family were involved in his scheme to a certain degree. Peter Madoff the brother of Bernard Madoff signed compliance reports in one sitting, changing pens and ink colors, and hid millions from the IRS. Bernard Madoff admitted to his sons that he was “finished” and the asset management arm of his firm was a Ponzi scheme. His sons Mark and Andrew then reported him to the authorities in December 2008. Bernard Madoff could not have possibly pulled this scheme off all by himself. How did people in his company internal system such as the accountant

Just a little over five years ago one man named Bernie Madoff was sentenced to 150 years in prison for running the biggest fraudulent scheme the U.S. has ever seen. (Yang, Stephanie. "5 Years Ago Bernie Madoff Was Sentenced to 150 Years In Prison – Here's How His Scheme Worked." Business Insider. Business Insider, Inc., 2014.) Still till this day many of the people caught in this scheme have not regained what they contributed towards this scheme. In his time Madoff made over $65 billion dollars from people he got to believe to invest in him. He was well respected and worked in finance in which during his run he falsely advertised for his investor’s consistent profits if they were to donate. Which leads to the question, what kind of scheme

By staying on top of federal and state securities regulations, Crosby-Brown and others at Regulatory Compliance keep client firms aware of the ramifications of current regulations and abreast of the latest changes. They educate clients on the impacts of new regulations, how to mitigate the impacts, and how they can prepare for regulatory examinations, such as reviewing supervisory procedures, accurately documenting policies and procedures, and monitoring firm activities.

Ponzi scheme was first known as robbing Peter to pay Paul, meaning you borrowing money from one person or thing to pay back the money you borrowed from someone else. In a classic Ponzi scheme, investors are informed that they will earn unusual high returns because the con artist extraordinary skills and master plan the investors believe in them. However, there was only one known Ponzi scheme before Charles Ponzi came along and it was committed by William Miller in 1899.