The Largest Financial Fraud in History
1970-2009
PONZI SCHEME: Taking money from the new investor to give to the old investor.
THE CASE:
The Bernie Madoff Ponzi Scheme was a 50 billion dollar financial fraud led by former businessman, stockbroker, investment advisor and financier Bernard Madoff. People were investing into funds that both didn’t exist and/or were falsely represented. Madoff had many investors into his “company” and they kept bringing in new money to pay off what people perceived were their profits. He stole from the new investor and gave it to the old investor while stealing some money for himself. This was false representation of product and services. In most cases in this situation there was no product, just deception.
HOW HE GOT CAUGHT:
Madoff was turned in by his investors who realized that the money they were apparently making didn't match the numbers on the stock. He avoided confrontation with the SEC by keeping good relations with them throughout the scandal while making false filings at the same time. He was eventually charged and proven guilty. He expected to be caught within 10 years of starting this, but since he wasn't, he continued for almost 40 years.
SENTENCING:
Madoff was sentenced to 105 years of prison on account of 11 federal felonies.
In the video attached, Barbara Walters talks about her interview with Madoff while he was in jail. He talks about how he is happier that he is in jail because is isn't afraid anymore. His son killed himself and his wife left him, but it almost seems as if Madoff is at peace with himself after committing such a horrible crime.
- Fairfeld Greenwich Advisors--- $7.5 billion
- Tremont Group Holdings--- $3.3 billion
- HSBC--- $1 billion
- Ascot Partners--- $1.8 billion
- Banco Santander--- $2.8 billion
HOW HE AFFECTED SOCIETY:
- Made people lose trust in investment companies
- People started to not trust other companies because they didn't think they were real
- The people involved lost a lot of money
Madoff kept this scheme going on for so long and affected so many Americans including charities, universities, companies and people. He deserved to have a life sentencing of jail, but he proved to be a brilliant man by having this scheme last for so long. As said earlier, he expected to get caught within 10 years of starting this and it lasted for 39 years. No other person has kept a scheme going on for that long in history. Although he is a criminal and deserves to spend the rest of his life in jail, he did make history for the length that this scheme went on. Society learned from this that we need to be more aware about where we put our money because we don't really know what this person is doing with it. There is no law that can stop this from happening because it is already illegal to perform a crime like this, but the SEC has become more aware of the problem, and is starting to catch more people who are participating in this.
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