How Did Ponzi Schemes Ruining People Live Around The World?

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

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).

Bernie Madoff was one of the most prolific Ponzi-scheme artists in history. Madoff schemes netted him millions of dollars. Mr. Madoff used his BMIS Bernard L. Madoff Investment Securities a New York Limited Liability company, to commit fraud, money laundering, and perjury. This is just a few things that Mr. Bernard Madoff has done to many innocent investors, who believed in Mr. Madoff, and everything he stated. Due to Mr. Madoff’s action he has changed so many people’s lives. Some have lost everything, some committed suicide, and others just humiliated by Mr. Madoff. This paper is to tell you about Mr.

Investment fraud is a maneuver where the operator or individual, pays returns to the investors from fines paid to operators from the new investors, then from the profit earned by the operator or the individual. The Ponzi scheme was an investment fraud were financial returns were not available through traditional investors. The scheme did not invest funds from the individual victims, Ponzi paid dividends which is not a company expense: to initial investors using the funds for future investors. The white-collar offender known for the Ponzi Scheme was called Carlo Ponzi, later known as Charles Ponzi, Charles P. Bianchi, or Charles Ponzi.

Throughout history, the swindler has financially plagued society. Whether it is the get rich quick scheme or the carnival worker’s impossible challenge, people have been cheated out of uncountable sums of money. In the 1920’s a man named Victor Ludsig, posing as a French official, sold the Eiffel Tower to a gullible scrap ironworker for $50,000. Even today con artists are thriving using the Internet to borrow from Peter to pay Paul. This is a scheme made famous by a crook so successful that his name now graces the age-old fraud, the Ponzi scheme. Webster’s Dictionary defines

Named after Charles Ponzi in 1919 a ponzi scheme is a fraudulent investment scam promising high rates of return with little risk to investors, by taking money from new investors in order to pay older investors (Investopedia). It all started when Charles Ponzi guaranteed clients that he was able to bring customer 50 % roi in just 90 days (Business Insider). Madoff received money from new prospective investors, using the new money he received from investors he payed off old investors, who decided to stop investing with Madoff. This caused a huge asymmetric rift that favored Madoff greatly, because his reputation automatically attracted investors to his hedge fund, without investors knowing he was purposely stealing their money. A question remains why was this able to be to continue for so long?

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

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.

The method he chose to utilize was a Ponzi scheme. The Ponzi scheme was invented by Charles Ponzi who used the technique to swindle people out of their life savings. A Ponzi scheme is comprised of a central operator who offers high returns on investments. Once a number of investments are secured and new ones come in, they are used to pay off older investments.

Ponzi's always eventually fall apart because there is no financial growth beyond new investors and who would honestly believe that some lady's from their PTA would have the connections they claimed but those whose greed got the better of their judgement. Same thing happen with Bernie Madoff, who convinced thousands of investors to hand over their savings with consistent return as a profit.

A Ponzi scheme and a pyramid scheme are white collar crimes, that have been around for about a century. While they both differ in many ways, they also share many characteristics. They are both a form of fraud and while most white collar workers commit fraud through Ponzi schemes and pyramid schemes, almost anyone can commit these types of fraud. A Ponzi scheme is when the criminal, often someone that is trusted, respected, and is already successful makes a promise to investors to invest their money into stock but does not actually invest the money at all. Many times these white collar criminals use the money for their lavish lifestyle or to feed their own side business ventures. They often promise a consistent, high return on their investment, which can come off as

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.

Bernard Madoff was able to pull off the largest white collar fraud, in the history of investment trading. His fraudulent activities were later discovered in 2008, when his firm begin to crash. Mr. Madoff was able to gain over $65 billion of investment funds through conducting the Ponzi Scheme. According to Ferrell , Fraedrich and Ferrell (2015), self destruction of the Ponzi scheme results rapidly as the ability to continuously recruit new investors dwindle.

What is right or wrong? People base their values of right and wrong on what they have learned from their experiences (Ferrell, Fraedrich, & Ferrell, 2018). What one person sees as wrong, may be a normal for another. Most people are taught to work hard, save money, and invest for a future retirement. However, when it comes to money, some people lose all principles and standards of behavior. There were several ethical issues in the Madoff case. They include: stealing, cheating, lying, misrepresentation, and deliberate deception. Madoff used the Ponzi scheme or the money pyramid to make his money. In the Ponzi scheme, money was taken from new investors and given to existing customers as earning without being invested. Was this right or wrong? Throughout this case study ethical concerns can be seen on both sides, the investors and Madoff’s.