Who Is Bernard Madoff | EssayIvy.com

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Who Is Bernard Madoff

Introduction

Bernard Madoff is best known for perpetrating the largest Ponzi scheme in United

States history. Bernard Madoff established Ponzi scheme by promising his client prospective

returns on their investment. Bernard Madoff established Madoff Investment Security in

1960. The firm was in operation for forty-eight years; the investment funds were from groups

and individuals. Throughout the years Madoff Investment Security continued to operate and

making money despite the security and Exchange Commission series of investigations. The

firm attracted many investors from all over the world until the unpredicted economic

downfall of 2008, which exposed the biggest Ponzi scheme ever in the United States since

time immemorial (Williams, 98). The Ponzi scheme could have defrauded investors billions

of money worth 65 billion dollars. Security and exchange commission (SEC) investigation

did not determine when the Madoff Ponzi scheme started its operation although there are

alleged revelations it could have started in the year 1992. Bernard Madoff life, Investment

scandal, Revelation of Madoff Ponzi scheme How Madoff Did It, Madoff mechanics of fraud

and How Madoff used other to gain.

Many people United States never understood who Madoff was, many people view

Madoff as a great financial advisor. However, Madoff used different trick to gain client trust

to invest with Ponzi scheme. Madoff used vast deception concerning the returns when people

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invest with his scheme. An insight also shows that there were a misrepresentation and

criminal activities in Madoff's con. Madoff did not do all these activities alone he had a series

of people who did it for him, these people are rewarded heavily for facilitating this con game.

Madoff's con game was international, and this elevated him from a millionaire to a billionaire

in a short time.

Madoff Investment scheme

One of the major schemes Madoff used was called Ponzi scheme. Ponzi scheme

entails an investment fraud involving finance where the con person takes the money from

new depositors to pay the earlier depositors. The name Ponzi originated from Boston

businessperson, Charles Ponzi. In the nineteenth century, around 1919 and 1920, Charles

Ponzi conned depositors over 4 million US dollars (Williams David C 98). Charles Ponzi

who was an immigrant from Italy came up with an investment fraud which was established

on postal service between the US and Europe. Due to World War one, the economy was

depressed leading to highly volatile currencies which affected the postal services between the

US and Europe leading to coupons for internal postal service. This service enabled people to

send and receive postal letters from the US and Europe with a preset cost. Charlie Ponzi

postal service was the present postal rate.

In addition, Bernard convinced investors that he can purchase a postal service from

Italy at the cost of 1 US dollar and this has a value of 3 US dollars hence they will be making

double profits. He told them he would pay 50% of the proceeds or profit made from the

investment in 90 days (Williams David C 99). What hit this scheme was the inadequate

supply of coupon for an international reply, which was in circulation. Charles Ponzi had to

stop the purchase of vouchers to pay the earlier depositors. Then finally, the scheme failed

when Ponzi was unable to pay the first depositors and a revelation by a paper in 1920 that led

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to an audit by the federal, which exposed that Charles Ponzi had conned people more than $4

million.

The revelation of Madoff Ponzi scheme

Report by Security and Exchange Commission Inspector General David Kotz

(Williams, 101) had indicated complaints towards Madoff Investment Securities totaling to

six. One by one of the claims stated a Ponzi scheme and revealed the truth to hold

accountable Madoff organization. Despite the indicators or revelations were incomplete and

substandard investigations that led to the Madoff Ponzi scheme that robbed investors billions

of dollars (Williams, 102). According to Avellino and Bienes in 1992, investigation revealed

and indicated that they operated and ran a Ponzi scheme. Through the research, a report

showed that the master advice was from Bernard Madoff. However, there was no in-depth

investigation to question Madoff in his participation of creation of the fraud. The organization

was able to refund the money back to investors, though the report does not show or

investigate where the money for reimbursement originated. In the year 2003, an analysis from

outside of the Madoff Investment securities on the financial performance of the organization

revealed that the offer by Madoff doe does not match the statistics of the market.

In the year between 2006 and 2008, there was a concerned citizen who raised two

complaints to the Security and Exchange Commission, which revealed that Madoff had two

books, which suggest more than $10 billion which were at risk. Moreover, were two articles

on the journal exposing Madoff Investment Securities were, in fact, a big fraud. Madoff con

game was a surprise investigator of the Security and Exchange Commission on how simple it

was. This was because the depositor's funds or money was all in the bank account of Madoff

investment securities. He lied to investors that the fund he had received was closed, and no

more investors would come in but secretly more investors were welcomed and their money

accepted. The trick was that the money could pay for the investors who had lasted much

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longer from new investors. If there, an investor who wanted to withdraw some of him funds

the personnel of the Madoff Investment Securities would fabricate transactions to cover up

the fraud (Williams, 102)

Madoff mechanics of fraud

To achieve his objective Madoff used different fraud mechanics. Madoff managed to

fool so many investors mainly through deceit. He traded large volume and claimed that most

of the trading was happening in Europe and not in the domestic market (Lewis & Lionel,

496). When Madoff realized that people have discover his illegal activities and his account

are subject to closure by Security and Exchange Commission. Madoff came forwarded and

threatened them to close. Moreover, that they do not know how his business worked. He

boasted of his experience of over forty years running the business and thus no one could

question him. He used intimidation to maintain relevance and confidence. Madoff in his

responses to the questioning of his activities of fraudulence did refute away but instead

explained to them stories about his company and forced them to believe everything was okay.

Different companies in United States banked their finances Madoff investment with

aim to gain huge returns to fund their operations. A corporation like A & B revealed that

A&B and Telfran worked closely and even shared offices. The two started by collecting

money from, friends, relatives, family and it started expanding, finding investors all other the

United States. It happened mostly through referrals (Lewis & Lionel, 612). The interest,

which was necessary as promised to clients, was not an issue to Madoff. The most important

thing was the continuous flow of money. In this way, he can be able to keep his fraud a

secret. He was increasing his boundaries day by day, thus enables him to pay those first

investors. His urge for money was in fact beyond any limit. The balancing of books of

account was not a problem given there is money to buy the legal tender.

Madoff conversing tricks

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Since the business that Madoff carried out was not profitable but a fraud, he had to

make it such a way it showed confidence and legitimacy to keep the identity of his firm in

secret. Bernard Madoff used the money he conned from investors to fund lavish lifestyles of

his family members, friends and even paid a lump sum of money some of his investors

(Lewis & Lionel, 284). This is creating confidence enough to lend him more money and

increase their return, as promised by Madoff. He also rewarded and paid many cash

generously to his workers to keep in secret what was going on. Madoff's world was much

different as it was. After his fraud scheme was exposed and was charged, he pleaded guilty.

This raised so many theories why he did it. Some people thought maybe he was a sociopath

or maybe psychologically disoriented in such a way that differ with others. Perhaps the urge

to material and wealth had driven him to that extent.

How Madoff Did It

Bernard Madoff was able to master the art being cool and gave intimidation in his

character. This fostered confidence in people with little questioning on his activities. He is a

man who knows what he wants, and he does not give secrets away that kind of a person who

can hide or cover up something in a twinkle of an eye. He can be termed as a performer with

great discipline (Lewis & Lionel, 71). This means Bernard is someone who has self-control.

This is in that he could fool quite many people for a long time. Because of his activities and

secrecy, Madoff revealed himself differently, not as himself but individually. In addition,

those who knew him they might not have met, or partially know him just as Madoff. Some of

the investors of Madoff Investment Securities had never even heard of Madoff himself.

Many had described Madoff as maybe commanding or want to be in control though

none of this reveals whether he was inspiring or how did he attract so many investors in his

Ponzi scheme. We could expect the significant amount of wealth surrounding him to enhance

his image, but the thing that might have attracted others to him was on when he was

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convincing them to invest their money. In all the activities, he was in the periphery not in the

center stage of action. Thus, this enabled to take advantage and very close not to lose control.

This distance of protection kept his mysterious nature. He had arbitrary decisions such as tell

his investors that the fund is closed, rejected some investors to his fund and continue

accepting others. This made the investors in Madoff Investment Securities to feel so special

and part of the favorites.

In conclusion, traits like ethics, ethical values, and social responsibility defined by

upholding good business morals while obtaining valuable employees who possess personal

ethical traits. To this effect, Madoff lacked ethical trait since he did not care about the value

of his clients. . The Bernie Madoff case was the most well known financial scandals in U.S.

history, which helped to push businesses to adopt a code of ethics.

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Works cited

Williams David C. “A timeline and fraud triangle analysis of the Sec’s Madoff ponzi

scheme investigation” International Journal of Business and Public Administration,

14.1(2017) 98-105

Lewis, Lionel S, “How Madoff Did It: Victims’ Accounts,” Soc (2011) 48:70–76.

Lewis, Lionel S, “The Confidence Game: Of Others and of Bernard Madoff,” (2013)

50:283–292.

Lewis, Lionel S, “The Confidence Game: Madoff and the 17th Floor Ensemble,” (2013)

50:493–502.

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