This website uses cookies to ensure you have the best experience. Learn more

Bernie Madoff And His Ponzi Scheme

1752 words - 8 pages

Bernard Lawrence Madoff, the brain behind the largest Ponzi scheme in American history, was born in 1938 during a depressing era. America just went through the Great Depression and was now headed into World War II. The Madoff family was Jewish, and Bernie grew up in a prodominitly Jewish community in Queens, New York. In high school, Bernie Madoff met his future wife, Ruth Alpern. Bernie and Ruth Madoff had two sons, Mark and Andrew.
Madoff’s scam started through an affinity bunko scam, which led to an enormous Ponzi scheme. Most affinity criminals target “victims who are linked to them by religion or ethnic background” (Rosoff, Pontell, & Tillman, 2014, p. 40). A Ponzi scheme is when a con-artist pays their first group of investors with their own money, while gaining new investors. The fraudster must continually gain new investors in order to keep his perpetual scheme going. As the amount of people being deceived increases, the con-artist has more money to splurge on himself. Ponzi schemes usually end when too many investors want their money back and the fraudster is unable to pay them all or he cannot find any new investors.
Bernie Madoff used his Jewish heritage to connect with other Jews and gain their confidence in him. By believing in his own power of confidence, Bernie Madoff convinced his targets that he was rich, powerful, intelligent, and could make them wealthy. Madoff promised to invest his targets’ money and in the beginning used his own money to pay the investors their interest. After the events of the recent trial, there was evidence proving Bernie Madoff’s despicable scheme dated back to the early 1970s, but no one has been able to find an exact time when Bernie began collecting funds for fake investments.
Madoff’s company, Bernard L. Madoff Investment Securities LLC, was located on the 17th through 19th floors of the Lipstick Building in Manhattan, New York. On the 19th floor, actual stock-trades were made everyday; the 18th floor housed paperwork for the 19th floor’s transactions; and the 17th floor was top secret. Access to this floor was limited to Bernie Madoff and a select group of people. This floor was where the fraud took place. About two dozen employees, produced fake trade receipts for Madoff’s investors on outdated computers and printers. Bernie Madoff’s extensive client list was not discriminatory. It included a few famous names (such as: Kevin Bacon, Kyra Sedgwick, and Steven Spielburg); many charitable organizations; and multiple financial firms.
Many people have speculated Madoff’s reasoning behind his decision to commit fraud. One article stated he was “a greedy manipulator so hungry to accumulate wealth that he did not care whom he hurt to get what he wanted” (Creswell & Thomas, 2009). The obvious motivation is greed; however, was it just greed for monetary gain or the power that money brings?
Regardless of his rationale, Bernie Madoff was an egomaniac, who convinced a vast amount of people he was investing...

Find Another Essay On Bernie Madoff and his Ponzi Scheme

Ponzi Scheming Essay

1739 words - 7 pages Before the exposure of his scheme, Bernard L. Madoff Investment Securities seemed to be a normal investment firm (Bandler & Varchaver, 2009). Bernie was a well-respected in the financial industry, evidenced by being named chairman of the NASDAQ and by being asked to testify before congress (Bandler & Varchaver, 2009). Bernie’s brother, Peter served as the head of compliance in the legitimate trading side of the firm. While Peter was

Bernard L. Madoff: The Largest Accounting Fraud in History

2395 words - 10 pages that made it clear Madoff was lying about his investment strategy and his returns. According to, a red flag is a warning or a danger sign. These red flags were obvious signs that something that wasn’t quite right was going on with Bernie Madoff’s wealth management business. During the life of Madoff’s Ponzi scheme, there were many red flags present. Obviously, Bernie Madoff had no strategy and no returns. Markopolos

The Bernie Madoff Scandal

1128 words - 5 pages " Division stopped operating as a legitimate hedge fund firm and started operating as a sort of Ponzi scheme. Madoff targeted an exclusive group of Jewish businessmen (himself being Jewish) and interested them in a modest, but very consistent, “investment strategy”. He marketed the strategy as “too complicated for outsiders to understand” in order to further promote his reputation without divulging too much information. Madoff then took their

The Lying Crisis if Bernie Madoff

2634 words - 11 pages one and only Bernie Madoff. Kalen Smith explains in “What is a Ponzi Scheme,” how Ponzi schemes seem to appear regularly; however, Madoff's strategy had a whole different twist to it. Ponzi schemes usually operate on a small-scale, though this man went so far as to create a name for himself and did not stop there. Smith also addresses how Madoff’s whole strategy was “keeping his victims close and the SEC off his back” (Smith). The U.S. Securities

Bernie Madoff Scandal

1451 words - 6 pages directors of the NASDAQ stock exchange until his arrest on December 11th, 2008. On March 12th 2009, Madoff admitted that his business was an elaborate Ponzi scheme and in June, “was convicted of 11 charges totaling over 150 years in prison and $7.2 billion in restitution” (Wasik). The Bernie Madoff scandal is considered the largest accounting fraud in American history. It is estimated to have lasted nearly two decades, and stolen approximately $64.8

Ponzi Schemes

1150 words - 5 pages believe he was entirely sure of the intricacies of investing. Madoff on the other hand if anything was more unethical in his scheme as he knew how to cover his tracks, how to avoid being discovered, and how to use creative bookkeeping techniques to avoid detection. As CNN correspondent Bandler illustrates “People believed in Bernie. Nasdaq made him its chairman; the SEC appointed him to industry panels; Congress invited him to testify” (Bandler). He

Bernard Madoff: Scam Artist

2211 words - 9 pages In December 2008, one of the largest Ponzi scheme surfaced when Mark and Andrew Madoff reported the works of their father, Bernard Madoff to the federal authorities. A Ponzi scheme is an investing scam that promises high rates of return with little risk to investors. The operator generates returns for older investors by gaining new investors. Bernard was arrested on December 11, 2008 and charged with securities fraud. He pled guilty to 11 counts

Bernie Madoff Analysis

3010 words - 13 pages deserved their fates. Others come off as fools who cannot grasp the basics of a trader's life -- chief among them Irving H. Picard, the bankruptcy trustee trying to track the cash that flowed through his fraud and distribute it to its rightful owners” (Henriques 44). Bernie Madoff seems to blame everybody, but himself in the Ponzi scheme. He blames the managers, investors, and bankers. He thinks of them as fools and that they deserved what they

The Collapse of the Madoff Pyramid

2506 words - 11 pages oversight been of such importance to the prosperity of our country. As an example, Bernard Madoff is known to be the executor of the most fraudulent and deceitful Ponzi scheme in history, creating a stark reminder that the corrosion of ethics and lack of basic moral principles have taken this country to the point where trust in institutions and the very market driven systems that make our society work are in imminent danger of collapse. The Bernie

Illegally Downloading Music, Movies and all Copywrighted Materials

1368 words - 6 pages to people within the industries as a result it most likely has had a negative effect on them in the loss of jobs. For this reason alone piracy is becoming an issue when it come to the point where peoples livelihoods are at stack actions have to be taken. Because of this piracy is no different than the Ponzi scheme that Bernie Madoff was convicted of. He ended up stealing $20 billion from his investors over the years causing many to lose their life

The Bernard Madoff Investment Scandal

2674 words - 11 pages Madoff, a former NASDAQ chairman, was arrested on December 11, 2008, he acknowledged that his performance was nothing but the Ponzi scheme. He pled guilty to the biggest investor fraud ever committed by anyone on March 12, 2009. On June 29, 2009, he was sentenced to 150 years in prison. Stakeholders Madoff was able to align himself with wealthy individuals, leaders involved in foundations, business entities, and government. This gave him

Similar Essays

Bernie Madoff And The Greatest Ponzi Scheme

1334 words - 6 pages Bernard Lawrence Madoff, the brain behind the largest Ponzi scheme in American history, was born in 1938 during a depressing era. America just went through the Great Depression and was now headed into World War II. The Madoff family were Jewish, and Bernie grew up in a prodominitly Jewish community in Queens, New York. In high school, Bernie Madoff met his future wife, Ruth Alpern. Bernie and Ruth Madoff had two sons, Mark and Andy. Madoff’s

The Ponzi Scheme And Mental Illness

1420 words - 6 pages $5 million and then $10 million. (Sanders, 2009) With steady returns every year. No matter what the market was doing. Even in a down market Madoff was able to “make money”. People were so wrapped in Madoff’s OZ like persona that investors were afraid to with draw their money for fear on not being able to get back in with his company. Madoff avoided suspension by showing small reasonable returns. In a typical Ponzi scheme there are very large

Lack Of Ethical Behavior In The Cases Of Bernie Madoff And Enron

836 words - 3 pages been described as the largest Ponzi scheme in the history of the world”. (Bernard Madoff, 2011, para. 1) Bernie was able to convince investors to give him large sums of money with the promise that they would received between eight percent to twelve percent return a year. Bernie ran a pyramid scheme where Bernie kept the large sums of money for himself, and then he used the new investors funds to pay off the older investors the return they was

Ponzi Scheme Essay

1263 words - 6 pages Bernie Madoff of the Wall Street firm Bernard L. Madoff Investment Securities LLC is responsible for embezzling fifty billion dollars from his investors in the worlds largest ponzi scheme in history. The system that Bernie Madoff used for the Ponzi scheme was rather basic. It used one large hedge fund that many clients would put their money and Bernie would simply take money out to pay the returns to the clients. This scheme began in the late