The World's Largest Ponzi Scheme

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

These types of criminal offenses are unlawful, but look upon as non-violent offenses. These Ponzi types schemes have been in existence for years, but was not well known until the late 1990’s with the fall of JP Morgan and Bennie Madoff.

Describe a Ponzi scheme. Find several examples of other Ponzi schemes that have occurred in recent years.

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).

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.

The Ponzi scheme as a whole was very unethical. A Ponzi scheme is a fraudulent investment operation that pays returns to separate investors, not from any actual profit earned by the organization, but from their own money or money paid by subsequent investors. (Ponzi scheme, 2011) Madoff was taking investor's money and investing it into unregistered securities. When investigating these assets, they were found to be missing. This unethical act of defrauding his investors out of millions of dollars led to the charge of securities fraud.

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.

One of the schemes includes Bernie Madoff’s Ponzi scheme. Bernie Madoff was the head a huge investment firm that catered to thousands of people. Bernie claims that the firm was “just one big lie ” which was an understatement, for the huge stunt that he managed to pull off. Over the years, Bernie had collected over fifty billion dollars for his personal investors. To keep the fraud hidden from the public he used a famous con move known as the Ponzi scheme.

The Ponzi Scheme to Make History: An Informative Speech Presented in Comm 1100 SEC 24d Introduction I. Have you ever heard about the biggest Ponzi scheme that had about 65 billion dollars under management? II. A Ponzi scheme is a type of fraud that works by paying back quick, usually in high returns to investors using money invested by other investors. III.

Ponzi adopted from contemporaries the notion of sharing enormous profits with investors, adding his own twist: trade in postal reply coupons. This idea, the keystone of his swindle, was made more plausible with tales he spun about how he received the brilliant inspiration. On one occasion he said that in August of 1919, when he was considering issuing an export magazine:

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.

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.

As Amir Weitmann (2009) said “In fact, fraud was not so obvious. Many competent and professional investors have lost money in this case, and are very easy to say they are all inept, incompetent, or corrupt. "But it is to believe. The mechanism Madoff was a Ponzi scheme, where profitability is not paid for the assets invested but by contributing to the fund money. The technique was not financial but personal: lie and have credibility. This is what Madoff did with great skill. In addition to its long experience, perfect background and charitable donations. Bernard Madoff paid investors every year an unspectacular but respectable profitability and stable. In it he settled the evil genius of Madoff, an attraction for investors in the hope of winning and the fear of losing. However, unlike the rest of fraudsters, who did not propose too high as to arouse fear of risk performance.

One of the most notorious persons that people remember for committing one of the largest Ponzi schemes was Bernard Madoff. It was claimed that he stole over 65 billion dollars, but in actuality, he stole 20 billion dollars. His firm was responsible for making false reports claiming that they earned returns of 65 billion dollars. There is little evidence on when Bernard started his Ponzi scheme. Bernard claims that he started it in 1992 but research has showed it possible could have been started in the 60’s.