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Critically discuss the case bernard l madoff investment and securities broker -dealer fraud
The fraud of the century: the case of Bernard Madoff”
The fraud of the century: the case of Bernard Madoff”
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Recommended: Critically discuss the case bernard l madoff investment and securities broker -dealer fraud
Frauds of the Century In 2008 one of the longest running Ponzi Schemes came to an end. Bernard Madoff had successfully stolen money from thousands of people from all walks of life. In the last 100 years there have been multiple cases of people pulling forms of fraud on others with the goal of tricking them out money or other items claiming to invest the money or items with a promise of consistent monetary returns. Many questions come to mind when talking about this problem. Team 3 will conduct a case study analysis to get to the bottom of the problem with Ponzi and Pyramid and recommend solutions to help prevent these schemes from continuing to happen. After the Madoff scheme came to light Ponzi schemes were brought …show more content…
The victims have the biggest problem when the fraud comes to light as they entrusted the perpetrator to make good investments with the victim’s money and to be conservative againts risk of losing that investment. The victims trusted and believed in the traders not realizing the Ponzi scheme at all. They believed that trusting one of their own seemed like the perfect way to invest (511). Another problem from all perspectives is that no one is able to escape the eventual downfall of the Ponzi scheme and everyone loses in the end. The victims may start out making a return on their investment but when everything is all said and done they will probably lose everything they have worked for their entire lives as most invested more than they actual had to invest as the returns kept coming in. The victims ranged from low- to high-income families. No one was safe from the scheme and everyone …show more content…
One solution would be to educate people about the need to be more aware of Ponzi and Pyramid schemes. With the Madoff scandal of 2008 more people are aware of such scams and schemes but to really have education available to people to know the signs to look for is a huge benefit. As these schemes affect society as a whole, and affect the companies that are actually trying to help individuals who are striving to improve their lives; there has to be transparency, internal controls, and compliance standards within every organization (509). Another alternative is to make sure those in the roles of investigating and the first to learn about such crimes take the tips more seriously. To look beyond the fact that they may know the person or have heard good things about them. The SEC for instance have to become unbiased to reports of red flags or odd behavior. At this point all tips have to be taken seriously when they are first made. Lastly, a great solution would be to teach about ethics and try to find a way to be able to help cultivate people’s values and morals so this doesn’t happen more or even again. With all of these solution one thing stands out that none of them will work unless those involved in changing the problem have higher morals than those who perpetuate the scheme. The ethics that should help to motivate a change and solution to be
There are many crimes in America that people would consider to be major crimes. Some may say murder rape or child abuse but I think Ponzi schemes are the greatest crimes that people commit. A Ponzi scheme uses "investor money to find a productive business venture the con orders channels the proceeds from new investors to pay interest to only earlier ones"( Basu, 2014 pg.1). Ponzi schemes can come in many different shapes and sizes. Those types of disguises makes scheme hard to detect and make it hard for people to take legal actions against a company.
The case that was provided in the Stanwick textbook provided information on the Madoff Ponzi scheme which is said to be the largest of Ponzi schemes in the world. This case was a very interesting case. It showed how Bernard Madoffs massive falsehood created disaster for around 13,600 clients. The impact from Madoff did not end with his clients being impacted but also people far and in between. Madoffs Ponzi scheme was controlled through his company that consisted of his family being the head of the company, friends, and employees. This scheme was a result for the recession that hit in 2008. The two sons of Madoff that were top employees claimed to have no connections with the Ponzi scheme.
The Bernie Madoff Ponzi Scheme is a well-known case and is known as one of the biggest Ponzi scheme’s. In summary the scheme occurred for many reasons that I will some up into 3 points; A lack in competency by regulatory agencies, a lack of regulation, and finally a breach in ethics by Bernie Madoff himself. To explain further, the regulatory agencies like the lawyers and SEC are supposed to prevent schemes such as this one from happening but because they lacked the skills to correctly assess the situation, interpreting the number of tips they had received regarding scheme that had been filed, and to act on those in an efficient manner. One of the tips was made by Harry Markopolos in 2000, of who correctly predicted that Madoff was guilty of fraud. Even after this tip from Markopolos, Madoff was not arrested until 2009. Many family members were also a part of the fraud along with some non-family members such as Frank DiPascali and a team known as the 17th floor team, who helped Madoff carry out his fraud. The idea behind Madoff’s fraud was that he would produce false statements of their investments and when people wanted to pull out their investments, the money wasn’t actually there, which rightfully rose more than a few eyebrows and ultimately led to his arrest.
The stock markets immediately responded to the restatement and the stock price dropped to less than $10 a share (Thomas, 2002). Enron and Dynegy announced the merger agreement of $7.8 billion which would have created Dynegy Corp, where 64% owned by Dynegy and 36% owned by Enron on November 9, 2001 (Enron Fast Facts, 2015). Dynegy terminated merger agreement with Enron on November 28, 2001 due to Enron’s lack of full disclosure of its off-balance-sheet debt. This immediately downgraded Enron’s rating to junk status (Enron Fast Facts, 2015). Enron’s stock price had dropped closely to zero, 26 cents per share on November 30, 2001 (Thomas, 2002). It only took a year for Enron to collapse from its highest point. Enron filed for Chapter 11 protection
Ponzi schemes are a continuing problem in the investment world and can only be stopped if the Securities and Exchange Commission does better safe guarding investors’ money. This paper will address Bernie Madoff’s Ponzi scheme and how he was able to steal billions of dollars from investors. The reasons why the SEC responded so slowly to Bernie Madoff’s Ponzi scheme, and what can be done in the future to make sure another Ponzi scheme of this magnitude does not happen again. Also included in this paper will be examples of good and bad leadership theories.
Fraud, scams and cons are everywhere. They affect many people every day, making this a form of crime likely to affect most people, in some way, during their lifetime. The various types of scams and cons are staggering. A Google search for a list of frauds netted over 1,000 types of schemes, scams, frauds and cons. The simple truth is this: There are people out there with the desire and motive to profit from the misfortune and deception of others. They will use the methods they know to succeed (usually financially) and make a situation profitable for themselves. Some schemes are very simple, while others are incredibly complex; walking a fine line between legal and illegal. We will examine some of the various schemes and scams that have been used in the past and many of which are still used today.
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...
On the above date and time, I responded to 6333 Ridge Road, (lobby of the Port Richey Police Department), in reference to a fraud report.
In September 2008, Federal agents swarmed the offices of Tom Petters uncovering a billion dollar Ponzi scheme. A similar case in dimension and scale of the well-known Bernie Madoff case is Tom Petters; the mastermind of a 3.7 billion, fourteen-year long deceit, the second largest Ponzi scheme in the United States. Similarly, Robert Allen Stanford, whose scheme emerged in February 2009 and is thought to have lasted ten years, involving the enormous sum of $8 billion, as well as S. Rothstein, who admitted to managing an approximate 1.2 billion dollars Ponzi scheme at the end of 2009. According to Maglich (2014) Ponzi schemes continue to thrive and leave a trail of financial destruction. “In the first six months of 2014, at least 37 Ponzi schemes were uncovered, with a total of more than $1 billion in potential losses” asserts Maglich (2014). Even though Ponzi schemes eventually collapse, Ponzi schemes remain
Embezzlement has become more common in the last few years. No one knows for sure whether the problem has increased due to the bad economy, less ethical behavior among employees or other attitudes toward the government or businesses in general. Charleston, South Carolina is no exception to the rising number of fraud cases. Every year more cases are being discovered and exposed to the public. One such case is the embezzlement of cash from a county owned garage. The embezzlement case of Martina Moultrie Richardson will be discussed as well as types of evidence desired in this case, methods/procedures for gathering the evidence and procedures for cataloging and maintaining the evidence.
A Ponzi scheme is a type of fraud called investment fraud. It, “involves the payment of purported returns to existing investors from funds contributed by new investors” (6). Investors are usually promised a high return rate. The fraudsters attract new investors and pay back their old investors with the new investor’s money. Ponzi schemes are named after Charles Ponzi who created scheme by getting residents to invest in a postage stamp scheme. Bernie Madoff is a well known and not well liked Ponzi scheme fraudster. He is currently in federal prison. These types of fraud schemes hurt hundreds or millions of individuals and families.
The most controversial case of fraud in history left more questions than answers. Bernard Madoff, with his company "Investment Securities LLC", chose the easy way to give him greater gains scamming people. Using the prestige he had and giant Ponzi scheme. That was how he was creating his fraud. Madoff did not steal the money immediately but was paid the promised returns with money paid by the entry of new customers paying its customers their profits and not realize and would not take legal action, this intelligent man or charlatan achievement out this scam film for over 20 years. Madoff achieving the greatest fraud in history with losses of more than 50,000 million alone was compared with the Enron case. In June 29, 2009, he was sentenced to 150 years in prison.
150 Ponzi schemes collapsed in 2009 alone, resulting in more than $16 billion in losses to tens of thousands of investors. These victims confront the challenge of calculating their losses for recovery claims as well as tax purposes. Ponzi scheme investigations currently account for approximately 21% of the Securities and Exchange Commission’s (SEC’s) enforcement workload — up from 17% in 2008 and 9% in 2005
Many white-collar offenders may start off as trustworthy, respected businessmen/women in their workplace. Motivated by greed and power, these highly skilled people will use cunning and deceit to earn what they want from innocent people. Some people are very well known through their illegal white collar activities that are brought to light. After a competitor’s representative met with The Securities and Exchange Commission (SEC) with suspicion about Bernard Madoff, founder of Bernard L. Madoff Investment...
Jordan Belfort is the notorious 1990’s stockbroker who saw himself earning fifty million dollars a year operating a penny stock boiler room from his Stratton Oakmont, Inc. brokerage firm. Corrupted by drugs, money, and sex, he went from being an innocent twenty – two year old on the fringe of a new life to manipulating the system in his infamous “pump and dump” scheme. As a stock swindler, he would motivate his young brokers through insane presentations to rile them up as they defrauded investors with duplicitous stock sales. Toward the end of this debauchery tale he was convicted for securities fraud and money laundering for which he was sentenced to twenty – two months in prison as well as recompensing two – hundred million in restitution to any swindled stock buyers of his brokerage firm. Though his lavish spending and berserk party lifestyle was consumed by excessive greed, he displayed both positive and negative aspects of business communications.