Madoff Scandal

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.

From about 1960 to the 1990’s, Madoff’s business grew like crazy, mainly from some well-known investors and friends. Because of all this Bernie became very successful very fast. This caused him to start getting greedy. In the 1990’s Bernard L. Madoff Investment Securities began conducting illegal acts of fraud, Madoff started an illegal money-management business, promising his investors consistent returns. Investors were so interested in the high returns, that no one questioned Madoff or his strategy. In 2008, investors began requesting payouts for their investments and Madoff started to become very desperate for new funds. His strategy began to unravel and the truth of his actions started to come out, shocking many people. This case blew up like crazy and once investigators started looking into Madoff’s business they discovered all Madoff was doing was running a Ponzi scheme. He would take funds from new investors, and use that to pay off the older investors. While doing this Bernie was also pocketing a large portion of the money, causing this to be one of the biggest Ponzi schemes in

On Dec. 11, 2008, Bernard Lawrence Madoff confessed that his vaunted investment business was all "one big lie," a Ponzi scheme colossal in volume and scope that cost investors $65 billion. Overnight, Madoff became the new poster child for Wall Street gall, greed and

In, 1960, he decided to open up his own investment firm, Bernard L. Madoff Investment and Securities LLC. He borrowed $50,000 from his in-laws to start the company and ran the company in his father-in-law’s accounting office. (Kennedy, Adrienne A. Salem Press Biographical Encyclopedia, January, 2016). The company started out involved in penny socks. Penny stocks are low priced shares over the counter (OTC) that have a high risk. An over the counter market involves dealers who are geographically spread out, and are linked only by telephones and computers (Nasdaq.com, National of securities dealers automatic quotation system). The company rapidly expanded and became a leader in computer information technology. This lead to the creation of the National Association of Securities Dealers Automated Quotation System (Nasdaq system). According to, Nasdaq.com, The Nasdaq System, is an electronic system that makes price quotations about stock issues in the OTC market available.

The Bernie Madoff case was the largest dollar amount and longest running fraudulent Ponzi scheme identified to date. Madoff has admitted that the fraud started in the early 1990s and ran for 18 years before it was above his head when the economic depression set in and investors began to request payouts.

Bernie Madoff has become somewhat a folk hero in some circles based on the elaborate white collar scam that took place. He has done interviews from prison and even written letters. It has been reported that he has had heart attacks in prison and even been in a prison fight. With every development media articles and a certain level of fascination still exist with Madoff (Fishman, 2010).

“Mr. Madoff 's crimes were extraordinarily evil." "The breach of trust was massive. “I simply do not get the sense that Mr. Madoff has done all that he could or told all that he knows. “These are all quotes given by the US district attorney Denny Chin that give a mere glimpse into the horrible impact that Bernie Madoff has had on 21st century American society. Madoff cheated investors worldwide in the biggest Ponzi scheme in American history stealing over sixty five billion dollars from his clients .His enormous ponzi scheme was essentially evil genius and because of this incredible con Madoff has become the face of fraud in the 21st century and someone who exemplifies the dark side of wall street. This is shown through the incredible

Usually the head of the ponzi scheme is someone trust worthy like Madoff. “Much of the reason why Madoff fraud went so long unchecked likely had to do with his respectability and reputation for being a market genius”(511). Once again, trust

If you were in a discussion and you were to call someone “Bernie Madoff”; that person would immediately be thought of as a monumental fraud. Bernard Madoff started by quite legally buying and selling stocks which could not be found on the stock exchange (Ferrell, 2009). As he grew successful, Madoff served as Chairman of the NASDAQ and developed quite the reputation. With this reputation came the ability to promise investors high returns up to 12% in some cases.

When the financial crisis of 2008 struck the world, there were multiple business scams and schemes that became exposed, creating a colossal uproar and unrest around the world. When the stock market collapsed, people all across America took a hit, with 2.4 trillion dollars of the Americans people’s savings vanishing in just a few weeks. This financial crisis also brought to light an unprecedented amount of fraud, over exposing people who were cutting corners. One of the most famous scams that surfaced in late 2008 was operated and executed by Bernard Madoff, in which he perpetrated the largest Ponzi scam in American history. A Ponzi scheme is a simple swindle where by one set of investors are paid unreal returns out of money received from another investor. A Ponzi scheme is however always disaster prone from the beginning as there is never a strategy to wholly recoup investors money.

Bernard L. Madoff Investment Securities LLC was founded and run by Bernie Madoff from its founding in 1960 until Madoff’s arrest date in 2008. Madoff Securities started out as a penny stock trader with today’s equivalent of roughly $40,000 that Madoff earned in previous jobs. They started off selling shares through pink slips from the National Quotation Bureau. However they wanted to keep up with other firms that traded on the stock floor so they helped develop a program that can publish a firm’s quota. This program later became the NASDAQ. Madoff Securities became a third market provider that was able to execute over the counter orders thus enabling them to avoid all exchange specialist firms. By the early 2000s, Madoff

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

As we look back on the first decade of the 21st Century, we see that Corporate America and the Financial Markets were riddled with corruption and fraud. At the beginning of the decade we saw the likes of Enron and WorldCom become insolvent due to accounting frauds of epic proportions. The one case that stands out amongst all of them is the Bernard Madoff case, which is considered to be the largest fraud case of all time. “Madoff managed to lure billions of dollars away from huge charities, as well as wealthy individuals in both the United States and Europe by getting them to invest in his hedge fund. He did so by claiming extraordinary returns (generally

Operated through a complex, cryptic structure Bernie Madoff, CEO of Bernie L. Madoff Investment Securities (BMIS), perpetuated the most embellished Ponzi scheme the world has ever seen. The basis of the securities fraud that took place approximately between 1991 – 2008 was influenced by Bernie Madoff’s reliance upon an unqualified staff, outdated software, organizational seclusion, a personal halo effect, and weaknesses in the regulating body. Madoff had the confidence of the public, yet to pull off such an elaborate scheme, he relied on a startling number of family members, vital accomplices working on the illegal trading floor such as Frank D. Pascali, IT staff members, and a separate BMIS branch of international employees

avoided paying taxes on tens of millions of dollars in income. He put his wife on the firm’s payroll even though she never worked there. He submitted false filings to securities regulators. But he also emphasized that at no time was he aware that his brother, Bernard, was orchestrating the largest Ponzi scheme in history, wiping out $65 billion in paper wealth and shattering lives around the globe. (Lattman)