Overview of the Bernie Madoff Investment Fraud

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Case study: Bernie Madoff Abstract This paper will provide an overview of the Bernie Madoff investment fraud, a Ponzi scheme that continues to affect the lives of the individuals Madoff defrauded under the screen of a legitimate investment firm. It will argue that the signs of the Madoff fraud were obvious and that a combination of a lack of regulatory oversight and incompetence allowed Madoff's chicanery to continue, even longer than Madoff himself thought possible. However, this does not excuse individual investors from taking responsibility for their willful blindness to Madoff's improbably high returns. Introduction Bernie Madoff's conning of some of the world's wealthiest and most powerful people has been called the greatest Ponzi scheme of all time. Many of his victims were not na誰ve and credulous, but rather prominent members of the world of entertainment and finance including billionaires like Steven Spielberg; the owner of the Mets; Carl Shapiro, and Jewish charities, including one run by Nobel Prize winner and Holocaust survivor Elie Wiesel (Con of the century, 2008, The Economist). Reputable banks such as Santander and HSBC funneled money to Madoff's faux investment firm. On the surface, Madoff was running his investment firm like a standard "hedge-fund shop" or like "Merrill Lynch or Smith Barney" with client money in brokerage accounts within his firm (Con of the century, 2008, The Economist). "A lot of this came from funds of funds, which invest

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