Bernard L. Madoff Investment Securities LLC, gained the reputation of being an elite investment fund, in regards to the idea that only certain people were permitted to join. He was able to entice wealthy individuals due to his consistently high returns and low volatility. His clients included Larry King, International Olympic Committee, The Eli Wiesel Foundation for Humanity, New York University, and the Royal Dutch Pension Fund, among a multitude of others (Wsj.net). His exclusivity and charm took away investors fear of losing money and turned it into the fear of losing out on making money, further enticing investors to pour all their funds into Madoff’s lucrative investment firm. According to the Wall Street Journal, Madoff was known as …show more content…
These three elements make up what is known as the fraud triangle. In reference to Bernard Madoff’s Ponzi scheme, pressure existed to continue making his company appear successful to potential investors, in order to gain more clients and keep his Ponzi scheme circulating. Therefore, allowing his own personal income to continue accumulating. In the 1980’s Madoff was showing double digit returns and appealing to investors. Then, the stock market crash of 1987 occurred, this lead Madoff to falsify financial statements to conceal any sign of financial troubles and continue to display big returns. This became the enticement needed to secure more investors. When asked how he managed to stay so profitable, Madoff generally wouldn’t disclose any information. The opportunity to commit such fraud existed on a count of Madoff being the head of his company, and investors being weary of asking too many questions upon fear of being rejected from investing their money in Madoff’s lucrative funds. Concealment thus occurs to prevent detection of inflated assets. “Concealment often takes more effort and time and leaves behind more evidence than the theft of misrepresentation” (Romney, Steinbart 132). According to Forbes, from the start Madoff felt he needed to get even with the financial market after the near ruin encountered with the 1987 crash. Madoff also claimed to put up warnings to potential investors in regards to the risk involved with investing money, which he later justified as permission from his investors to take more money into his scheme
Middle use the money he was stealing for his personal luxurious lifestyle and also for his family and friends. Invest investigators describe Madoff con game like an inside man. In order to keep his con up he had to "work with others who would help him carry out his complex criminal activity and who he could trust not to betray him"(Lewis, 2013 p.289). He works his family members like his brother Peter who later committed suicide during the trial.
Madoff started the scheme by misleading his clients to think that he was an elite investor because he was on a vast amount of important boards. Many believed the scheme and invested billions of dollars with Madoffs company. He was able to achieve some of the scheming through running his investments through a different part of his business. This was a way for only him to see the investments and the financial reports behind the investments. Bernard Madoff involved people
“Bernie Madoff began investing in penny stocks in 1960, and due to his impressive work ethic, received several big breaks. The first of which was his father in-law loaning him $50,000 to invest, and soon after, Carl Shapiro, a man who made his fortune in women’s clothing gave Madoff $100,000 to invest on his behalf” (Collins 2011). With this kick-start, Bernie quickly began making a name for him, especially as he promised clients a guaranteed 20% annual return on investment. This, coupled with his firm’s adoption of the latest technology made them a tour-de-force in the investment world. But what makes his eventual downfall more interesting is that he was not just a crook, Madoff did manage a successful, and legitimate brokerage firm. To some extent, the credibility he earned from these legitimate busines...
In criminology there are numerous theories as to the causes of different types of crime. These theories are extremely important in the continuous debate of the ways in which crime should be managed and prevented. Many theories have surfaced over the years. These theories continue to be explored individually and in combination, as criminologists search for the best solutions in ultimately reducing types and levels of crime. These theories include rational choice theory, social learning theory, and biology amongst many others. In this case study strain theory will be used to describe the reasons behind the white collar crimes of Charles Ponzi.
All in all, I believe and the evidence points to the Madoff scheme taking place because of an ethical dilemma. It’s important to stand strong in your values and do the right thing because not only does that benefit you, but also it benefits the organization you are a part of and with enough ethical people ponzi schemes like the Madoff case can be prevented.
The essay “Ill-gotten Gains” first appeared in a book called ‘Health Care Ethics’ and was written by Tom Regan who is a renowned philosopher, author and animal rights advocate. The essay appeared again in Tom Regan’s best known book called ‘The Case for Animal Rights’ which states Regan’s beliefs regarding animal rights and provides a sound argument as to why animals should not be exploited for our own gain. Tom Regan believes all animal use that benefits humans is morally unacceptable including for food, entertainment, labour, experiments and research. “Ill-gotten Gains” argues that to be on the right moral path we need to view all individuals with inherent value as a ‘subject of a life’. Regan argues that any practice in which a ‘subject of a life’ is used as a resource is immoral, not because of emotion, but because of reason. Any individual with a sense of a future, awareness and purpose is considered to be a ‘subject of a life’ and has equal inherent value. Regan also takes time to explore the argument that humans have souls while animals do not.
There’s no real reason as to why Madoff planned to do this scheme, but it seems that he did it, simply because he was in a league of his own and he knew it, which is why it’s possible he went South. The only reason he came forward was because he failed to follow one of the first rules of a Ponzi scheme, he had too many investors in one year and on top of that, he had the global market crisis in 2008, which had opened up the skeletons in his closet. He later began telling his two sons of what he had been doing the last decades, and it wasn’t until Andrew Madoff had told FBI authorities, that his father, Bernie Madoff would be arrested the next day. It wasn’t until 2009 that Madoff pleaded guilty to securities fraud, investment adviser fraud, mail fraud, wire fraud, perjury, money laundering and etc. His assets were then sold in order to try and repay all the investors; evidently it wasn’t enough to repay $65million. He was then sentenced to the maximum sentence of 150years in prison. One law that was put in to place was that the SEC now requires all independent public accountants to double check an investment advisor’s numbers. In addition, all investment advisors are subject to surprise exam and custody controls. Also, in corporation with the Dodd Frank Act, whistleblowers can now receive up to 30percent of what the SEC recovers in fines. This will
Bernard Madoff had full control of the organizational leadership of Bernard Madoff Investments Securities LLC. Madoff used charisma to convince his friends, members of elite groups, and his employees to believe in him. He tricked his clients into believing that they were investing in something special. He would often turn potential investors down, which helped Bernard in targeting the investors with more money to invest. Bernard Madoff created a system which promised high returns in the short term and was nothing but the Ponzi scheme. The system’s idea relied on funds from the new investors to pay misrepresented and extremely high returns to existing investors. He was doing this for years; convincing wealthy individuals and charities to invest billions of dollars into his hedge fund. And they did so because of the extremely high returns, which were promised by Madoff’s firm. If anyone would have looked deeply into the structure of his firm, it would have definitely shown that something is wrong. This is because nobody can make such big money in the market, especially if no one else could at the time. How could one person, Madoff, hold all of his clients’ assets, price them, and manage them? It is clearly a conflict of interest. His company was showing high profits year after year; despite most of the companies in the market having losses. In fact, Bernard Madoff’s case is absolutely stunning when you consider the range and number of investors who got caught up in it.
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 Ponzi Scheme as
Bernie Madoff is one of the greatest conman in history. The Bernie Madoff scandal takes the gold as one of the top ponzi scheme in America. Madoff started the Wall Street firm, Bernard L. Madoff Investment Securities LLC, in 1960. Starting off as a penny stock trader with five thousand dollars, earned from his workings as a lifeguard and sprinkler installer, his firm began to grow with the support of his father-in-law, Saul Alpern, who helped by referred a group of close friends and family. Originally, his firm made markets by the National Quotations Bureau’s Pink Sheets. However, in order to compete with the bigger firms that were trading on the New York Stock Exchange floor, his firm started to use very intelligent computer software that help distributed their quotes in second’s rater then minutes. This software later became the NASDAQ that we know today. In December of 2008 Bernard Madoff confessed that he had embezzling billions of dollars from investors. It is estimated to have lasted nearly two decades, and stolen approximately $64.8 billion. On December 11, 2008 he was arreste...
In this essay, I will be examining the financial events surrounding Bernie Madoff, and the events surrounding Enron. Bernie Madoff, “a former American stock broker, investment advisor, non-executive chairman of the NASDAQ stock market, and the admitted operator of what has been described as the largest Ponzi scheme in the history of the world”. Bernard Madoff, 2011, para. 78. 1) Bernie was able to convince investors to give him large sums of money with the promise that they would receive between eight percent and twelve percent return a year.... ...
A Ponzi scheme is an investment fraud that involves the payment of returns to previous investors from funds paid by new investors.With little or no legal earnings, Ponzi schemes require a consistent flow of money from new investors to operate. Ponzi schemes tend to collapse when the operator is unable to recruit new investors ,when a large number of investors ask to cash out or if the operator disappears.These types of financial fraud have had a tremendous affect on the accounting profession, in the form of forensic accounting.
What is the possible meaning of the change in stock prices for Berkshire Hathaway and Scottish Power plc on the day of acquisition announcement? Specifically, what does the $2.55 billion gain in Berkshire’s market value of equity imply about the intrinsic value of PacifiCorp?
For those who do not know what fraud is, it’s basically deception by showing people what they want to see. In business it’s the same concept, but in a larger scale by means of manipulating figures that will be shown to shareholders and investors. Before Sarbanes Oxley Act there was “Enron Corporation”, a fortune 500 company that managed to falsify their statements claiming revenues over 101 billion in a span of 15 years. In order for us to understand how this corporation managed to deceive the public for so long, the documentary or movie “Smartest Guys in the Room” goes into depth by providing viewers with first-hand information from people that worked close with or for “Enron”.
Smith, Aaron, “Five things you didn't know about Bernie Madoff's epic scam” (December 11, 2013) http://money.cnn.com/2013/12/10/news/companies/bernard-madoff-ponzi/ (March 31, 2014)