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Madoff’s Ponzi essay
Bernard L. Madoff: The Fraud of the Century
Bernie madoff ponzi scheme
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No, Madoff did not work the Ponzi scheme alone. No man works a large scheme of this magnitude alone without experienced investors suspecting wrong doings. The conflict of interest is involved in this case because other investors were involved and made large amount of money from the scheme. Madoff is the name that the world recognizes for the Ponzi scheme; however, he did not work the scheme alone.
According to Lappin, Madoff “insisted he acted alone, but after months of deliberations, the jury wasn’t buying it- all five of Madoff’s co-conspirators were convicted on March 24, 2014 for aiding, abetting and colluding with their leader for decades” (Lappin, 2014). Moreover, after a long trial that began the fall of 2014, the NY jurors found
NEW YORK, Apr. 2, 1992 -- The infamous “Teflon Don,” John Gotti, former head of the Gambino family, was convicted and sentenced to life in prison today without possibility of parole. He was convicted on 5 counts of murder (Castellano and Bilotti, Robert DiBernardo, Liborio Milito and Louis Dibono), conspiracy to commit murder, illegal gambling, loan sharking, racketeering, extortion, obstruction of justice, bribing a public official and tax evasion (Goodstein, 1992). Acting as boss, John Gotti was believed to have made the Gambino family more than $500 million in revenue from illegal gambling, drug trafficking, extortion, and stock fraud (“John Joseph Gotti Jr”, 2014). During the trial, the judge ordered that the jurors stay anonymous, identified only by number, in order to avert a repeat of the jury tampering that occurred involving previous trials with Mr. Gotti (FBI, 2007).
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.
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.
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.
Investigations of the case later discovered that over 4,800 account holders were defrauded with balances of nearly 64.8 billion dollars, from which Madoff’s firm owed a “small” fraction. Ultimately, Madoff pleaded guilty to several criminal and regulatory charges and was sentenced to 150 years in jail.
Rajat Gupta's journey into prison for insider trading marks an end to an astonishing success story and punctuates his quick fall from grace. The retired head of Mckinsey and a former Goldman Sachs board member was judged guilty of conspiracy and securities fraud for leaking secrets of the boardroom to billionaire hedge fund manager Raj. After almost a month long trial in Manhattan Fed Court, the jury took only 2 days to reach at a verdict. They found Gupta guilty of leaking confidential information about Goldman Sachs on 3 different occasions in 2008.They also convicted him on a conspiracy charge.
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...
Tommy gun shootouts, big cities full of crime, and a mob boss in a smoke filled room. These are all things that one might think of when referring to a gangster film. However, many fail to see the underlying traits that most of these “cold hearted killers” possess. Take the movie The Godfather for instance. Yes, the Corleone family do kill and cheat in their personal lives and operations, but beneath all that is a sense of loyalty, determination, and business sense. Now, that’s not to say that it justifies any of their lawless actions, but nobody can deny that they know how to get things done. Very rarely do we ever see a poor gangster, and that is for good reason. The classic “Gangster” as portrayed in movies is essentially the ultimate businessman who finds himself on the opposite side of the law.
1994 is a sharp increase, but even if the growth rate for 1994 is not
“Robbing Peter to pay Paul”, Bernard Madoff king of financial fraud will be serving 150 years in prison for running his Ponzi scheme. Now why such a big price to pay for running a Ponzi scheme? Bernard Madoff also referred to as “Bernie Madoff”, was charged with committing eleven charges, including robbery of thirteen thousand five hundred and eighty of his clients. The Bernie Madoff case made waves because it brought attention to how un-educated and unprepared the Securities and Exchange Commission (SEC) was for anything of this matter.
Stewart was convicted of conspiracy, perjury and obstruction of justice in 2001, and for using insider information to sell shares of the company ImClone Systems. This type of fraud damages the confidence of investors, it makes them perceive the lack of equality.
Thank you for your post. Your presentation of Bernie Madoff provided a magnificent insight into the mind of a charismatic leader who used his skills to defraud his investors of almost “$50 billion” (Creswell & Thomas, 2009, para.5). As you pointed out in your post, Bernie Madoff was an exceptionally gifted at attracting many successful people to his Ponzi scheme (Dortch, 2015). Bernie was a master at creating an image of achievement. Creswell and Thomas (2009) stated:
Morgan only had to pay penalties totaling $2.6 billion which only came out to be $0.02 on every dollar the bank had earned after the 5 years since Madoff had been arrested. It was noted that even some of the fines such as one for $350 million was actually less than the profit that the bank generated from serving as Madoff’s main bank. The sad news is that was the main punishment, no bankers were indicted or taken into custody. There could have been actions taken against these indications to stop the fraudulent funds running through these bank accounts. All of the penalties and suffering will ultimately end up getting paid by all the shareholders and investors who had nothing to do with the theft, but ultimately were the ones being conned and perhaps did not even know it (Johnston, D
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
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?