Ponzi Scheme Perpetrated By Bernie Madoff

Bernie Madoff began his career as an investment broker in 1960, where he legally bought and sold over-the-counter stocks not listed on the New York Stock Exchange (NYSE). From the 1960’s through the 1990’s, Madoff’s success and business grew substantially, mainly from a closed circle of known investors and friends through word of mouth. In the 1990’s Bernard L. Madoff Investment Securities traded up to 10 percent of the NASDAQ on any given day. With the success of the securities business, Madoff started an illegal money-management business, promising his investors consistent returns from 10-12 percent, unheard of returns at the time, which should have tipped off most investors that something was amiss.

Although it good to apply theoretical rules or in other meaning make a decision with rationality, but in fact most managers interested in action and finally results not in decision itself also sometimes peoples are not behave in rationally because many causes, the first one, that people are not cleaver enough to behave rationally. The second one it is a common and inherent characteristics and features of human being which are difficult to change them by training. And the third one related to decision- makers information who have incomplete information or have more those information which can human beings understand.

Facts: In November 2008, the parties signed an employment agreement providing that Relator was to serve as the director of the school for the 2008-09 school year. The title of the agreement states the dates July 01/2008-June 30/2009. "The first sentence of the agreement lists the administrative positions to which the agreement applies and states, "This is a general at will agreement."(Ellis vs. BlueSky, 2010). Yet the agreement provides that "[p]ositions will automatically

Schneeweis &Szado (2010, p.9) suggested that ffinancial fraud in general and Ponzi schemes in particular continue to maneuver investors. A Ponzi scheme is frequently described as a securities fraud in which the investment manager is in fact taking money from new investors to fund redemptions from current investors. These strategies are often discovered when new investors cannot be found to offset redemptions from current investors. The Ponzi method received its name from Charles Ponzi, who marketed an investment based on managing the International Postal Reply Coupons. Ponzi suggested that an arbitrage opportunity existed because he could exchange U.S. dollars into the necessary foreign currency, and use the foreign currency to purchase postal reply coupons. The postal reply coupons could be redeemed for U.S. postage stamps, which could then be sold for U.S. dollars. Ponzi promoted unusually high returns to investors when in fact he simply used the new investment to pay of the previous investors. While the scheme soon collapsed, there are similarities between him and the Madoff scheme. For example, Madoff sold primarily to the Jewish community and also Ponzi sold primarily to the immigrant community of the North End of Boston, to which he belonged. Along with that, the validity of Madoff's strategy was a subject argued by the public press (Barron's) as well as by individuals (Markopolus) on the grounds. Comparable to Ponzi's investors, Madoff’s investors, have received

I deeply feel that if people in general moved their emphasis on the casualties that were most in require it would most certainly influence the scandals result. In my opinion, organizations that are corrupted by scandal experience the stigma effects of shame a similar way people do. The Stigmatized organizations might be ridiculed in the media, have their charitable gifts rejected, and experience a mass migration of ability.

The majority of Wall Street trusted Madoff, and this included the biggest names on Wall Street. This is because of the 47-year career on Wall Street that Madoff had, and the reputation he built with business techniques that streamlined the execution of trades for other investment companies. His reputation was so respected that his firm was responsible for handling more trading volume on Wall Street than any other firm aside from Nasdaq. Madoff was so trusted and respected that at one point he was made chairman of the exchange. Greed was intertwined with this trust through the fact that no one cared enough on Wall Street if the money continued to flow, investors

While many people associate Ponzi schemes with pyramid schemes, as they do share some similarities, they vary vastly. They are both type of investments that promise extraordinary returns with very low risk, which is always a tell tell sign of fraud. While they are both actually just feeding existing investors with contributions of new investors, one is actually running a “business”, while the other is just shuffling money around.

Garvin, David, and Roberto, Michael. What You Don’t Know About Making Decisions. N.p.: Harvard Business Review, n.d. Pdf

Bernard Madoff was an investment advisor and former chairman of NASDAQ and he was most famous for perpetrating the largest Ponzi Scheme in history. In 1960, Bernie founded Madoff Investment Securities, LLC, and his firm was one of the first to use computer technology to trade. They specialized in over the counter stocks. He grew his company by networking and got his family involved in running the company. His first clients were people in his neighborhood, and people who went to his same church.

I think Bernard Madoff engaged in creating a Ponzi scheme because of greed. His unethical behavior was based on white collar crime (Ferrell, Fraedrich, & Ferrell, 2013). Mr. Madoff met the characteristics of a white collar criminal. The characteristics consist of people who are highly educated and considered as reliable among their subordinates and peers. They are usually in an executive position that would give them the power to commit their crimes to their company, employees, and investors (Ferrell, et al, 2013).

In the Deepwarter Horizon case, the workers from BP and Transocean discussed issues and made decisions jointly. Both of the companies ignored signs of trouble which led to catastrophic problems. Moreover, it is of my opinion the companies applied the garbage can model of decision making. Furthermore, the garbage can model suggest the organizations operate on a basis of inconsistent and imprecise preferences (). In addition, the organizations process are not often understood by workers, and they often work by trial and error (). More importantly, the garbage can model can sometimes result in unsuspected problems in which satisfactory solutions weren’t present ().

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.

Bernard Madoff engaged in his Ponzi scheme due to his greed of wanting more and what he claims to wanting to give the very best to his family. The Ponzi scheme could have been started out of his intentions to provide for his family, but after he saw how well the scheme was working his greed then took over. This is shown by Madoff operating the scheme for more than twenty years and him making enormous amounts of profit from the scheme.

“Bernard Madoff, the perpetrator of the largest Ponzi scheme in history, had a reputation as an upstanding citizen before his fraud was uncovered” (Ferrell, Fraedrich, & Ferrell, 2015). I believe his family were involved in his scheme to a certain degree. Peter Madoff the brother of Bernard Madoff signed compliance reports in one sitting, changing pens and ink colors, and hid millions from the IRS. Bernard Madoff admitted to his sons that he was “finished” and the asset management arm of his firm was a Ponzi scheme. His sons Mark and Andrew then reported him to the authorities in December 2008. Bernard Madoff could not have possibly pulled this scheme off all by himself. How did people in his company internal system such as the accountant

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.