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Case Study: The Whole Government Is A Ponzi Scheme

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Madoff’s Scheme

“The Whole Government is a Ponzi Scheme” is a quote by Bernard “Bernie” Madoff who was said to have ran the largest Ponzi Scheme in the U.S. Madoff was 71 years old when he was caught for running a Ponzi Scheme. He ran a family business and through that he ran his Ponzi Scheme. He told no one until 10 years after his family business took off. Madoff’s was quite successful in his life, before he made his mistake. His Ponzi Scheme hurt many people who invested in the company, not knowing that it was a swindle all along. Madoff could have avoided this whole issue if he would have just stuck to ethical business practices. He could have done business like he did at NASDAQ, he must have done something right for him to be at a high
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A Ponzi scheme is a fraudulent investment business where the businessman, a person or company, pays returns to its investors from money by new investors, rather than from profit earned from a legitimate source. It is called a Ponzi Scheme after Charles Ponzi, the original Ponzi Schemer. Charles’ Ponzi Scheme was, he bought overseas stamps and exchanging them for U.S stamps which were more expensive. He sold the U.S stamps for a profit of about $250,000 per day. With those profits, he bought a mansion in Lexington, Massachusetts, which made others question how he had the money to pay for such a life. Ponzi was caught in August 1920, when The Boston Post began investigating his “company”. The investigators had investors go in and try to take their money out, but they couldn’t. Charles Ponzi was arrested on August 12, 1920, with 86 counts of mail fraud. He owed about $7 million, he pleaded guilty to mail fraud, and for that, spent 14 years in prison. His wife divorced him while he was in prison and he died impoverished in Rio De Janeiro, Brazil, on January 18, 1949. Therefore, out of his scheme came the “Ponzi Scheme”, it publicized a hidden wrong doing. In fact, many people are participating in Ponzi Schemes throughout the world today. Charles Ponzi’s scheme inspired many, like Bernard Madoff. They both scammed people for their money, except the fact that Ponzi just served years and Madoff is serving 150 years in…show more content…
He got a reduced sentence, originally it was 85 years in prison. Yet he got a sentence of 10 months of house arrest, because he helped convict five of his co-workers. Kugel is very embarrassed and ashamed of what he had done to help Madoff go through with his scheme. Also as part of Kugel’s sentence he had to do 200 hours of community service and give up 7.17 million dollars. The five that Kugel turned in were all tried separately. One of which was JoAnn Crupi, 53, the last of the five that went to trial. She was sentenced to six years in prison, no bail, and the guilt weighing on her shoulders. Crupi claimed that she never knew that the business was fraud and she feels very guilty for taking part in the operation. Now Frank DiPascali, was Madoff’s “Chief Financial Officer” was the second mastermind in this Ponzi scheme. On August 11, 2009 DiPascali pleaded guilty to 10 federal charges after having admitted to knowing about the fraudulent behavior of Madoff’s company. He was facing a 125-year sentence, he got the second longest sentence in this case. DiPascali testified against all his coworkers that were involved in the scheme and died of lung cancer in 2015 before he was sentenced. The other five accomplices got the least sentences due to their lack of involvement in the Ponzi scheme. DiPascali was the courts gem in the Madoff case, at first, he
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