The Pros And Cons Of The Ponzi Scheme

SOCS10261G Scams Frauds Identity Theft Crimes of Deception in the Information Age - Term 1129, Class 75036

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

Bernie Madoff began his career as an investment broker in 1960, where he legally bought and sold over-the-counter stocks not listed on the New York Stock Exchange (NYSE). From the 1960’s through the 1990’s, Madoff’s success and business grew substantially, mainly from a closed circle of known investors and friends through word of mouth. In the 1990’s Bernard L. Madoff Investment Securities traded up to 10 percent of the NASDAQ on any given day. With the success of the securities business, Madoff started an illegal money-management business, promising his investors consistent returns from 10-12 percent, unheard of returns at the time, which should have tipped off most investors that something was amiss.

Trust is extremely important in business transactions. Greed also plays a role in some business transactions. Discuss how these two concepts were intertwined in this case.

Facts: In November 2008, the parties signed an employment agreement providing that Relator was to serve as the director of the school for the 2008-09 school year. The title of the agreement states the dates July 01/2008-June 30/2009. "The first sentence of the agreement lists the administrative positions to which the agreement applies and states, "This is a general at will agreement."(Ellis vs. BlueSky, 2010). Yet the agreement provides that "[p]ositions will automatically

In the past few years, enterprise integrity has come up on a regular subject of conversation. In the past ten years only, we have seen numerous situations associated with collaborative scams which have shaken the people 's trust in businesses and also the general economic climate. A few of the many salient frauds are the WorldCom and Enron 's scams, the ponzi scheme perpetrated by Bernard Madoff 's, the latest accusations of Goldman Sachs tricking option traders to guarantee the company 's personal profit. Incidents such as these designed us all, as upcoming corporation professionals as well as market leaders, think about ethics and its particular function in the commercial world (Gross, 2010.)

This book brought out the failures of the Securities and Exchange Commission (SEC) in one of the biggest Ponzi schemes in America’s history, as orchestrated by Bernie Madoff. Harry Markopolos caught up with Madoff’s Ponzi scheme earlier on in his career and saw all the red flags. There was no explanation of the continuous one percent yield in over forty five stocks that Madoff dealt with. Madoff took advantage of the laxity by the SEC officials in failing to follow up complains with an investigation, and the trust

At first, Madoff was in a broad sense unusual Ponzi manipulator. The extraordinary model was social, connecting with, and set out to bewilderment others with his cerebrum, his thoughtfulness, his thriving. Madoff sharpened a sort of energized spirit about his character, turning that radiant speculation that people would overlook: He won trust not by endeavoring to influence people that he was gorgeous making to move, yet expected that they were well-known. People who may never have fallen for the excellent Ponzi progressive were totally debilitated by Madoff's hypothesis.

Besides Keith Simmons, there were eleven individuals and a few companies linked to the Black Diamond Ponzi Scheme. According to an U.S. Commodity Futures Trading Commission complaint, Deanna Ray Salazar and her companies Life Plus Group, LLC and Black Diamond Holdings, LLC worked closely with Keith Simmons to make the Ponzi scheme expand (U.S.C.F.T.C, 2015). According to the United States Department of Justice, Federal Bureau of Investigation, Deanna Salazar is 55 year-old woman from Yucca Valley, California (FBI, 2013). Salazar is the owner and manager of the limited liability company Life Plus Group, LLC (“Life Plus”) established in Wyoming in 2007 (FBI, 2012).

Fraud in the financial community is consistently hidden in "style." Since its beginnings in the "great depression," to now, "the great recession" fraud has undoubtedly taking many forms and styles. Subsequently, many non suspecting patrons have been severely damaged as result of this greed and corruption. Many of America's largest and most established individuals are not exempt from this form of style manipulation. As we will soon see, many individuals, including Bernie Madoff, have both the ability and incentive to commit fraud. In today's fast paced information age, fraudulent activities are now becoming more difficult to detect, and even more difficult to prove. To begin, I believe it necessary to show how fraud has affected our current economic state. I will then venture as to the means in which Bernie Madoff committed fraud and the implications on current business prospects.

Most people, when they hear the word “crime,” think about street crime or violent crime such as murder, rape, theft, or drugs. However, there is another type of crime that has cost people their life savings, investors’ billions of dollars, and has had significant impacts of multiple lives; it is called white collar crime. The Federal Bureau of Investigation defines white collar crime as

Double entry accounting is based on the fact that every financial transaction has equal and opposite effects in at least two different accounts. In the double entry system, transactions are recorded in terms of debits and credits. Since a debit in one account will be offset by a credit in another account, the sum of all debits must therefore be exactly equal to the sum of all credits. The double-entry system of bookkeeping or accounting makes it easier to accurately prepare financial statements directly from the books of account and detect errors.

Lying Lying…what exactly is lying? The definition of lying is “not telling the truth in the face of society ”. Lying is considered wrong and a sin in places all around the world, including America. When you lie you destroy the shield of trust that people think of when your name is mentioned. This creates tension and feuds with all of the people involved.

The majority of Wall Street trusted Madoff, and this included the biggest names on Wall Street. This is because of the 47-year career on Wall Street that Madoff had, and the reputation he built with business techniques that streamlined the execution of trades for other investment companies. His reputation was so respected that his firm was responsible for handling more trading volume on Wall Street than any other firm aside from Nasdaq. Madoff was so trusted and respected that at one point he was made chairman of the exchange. Greed was intertwined with this trust through the fact that no one cared enough on Wall Street if the money continued to flow, investors

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.