Bernie Madoff is an American businessman who is well known for his Ponzi schemes operations around the world. Bernie Madoff was consistently involved in financial and investment scandals in the United States of America. Bernie Madoff was born in a Jewish neighborhood in New York to Jewish parents, Sylvia Muntner and Ralph Madoff on 29th of April (Azim & Azam, 2016). He went to the University of Alabama for one year before transferring to Hofstra University, where he achieved his degree of Arts in political science. Later, Madoff had a brief study of law at Brooklyn Law School where he founded Bernard L. Madoff Investments Securities together with Ruth, his wife, in 1960. He worked at his own company after his studies with his wife, who studied psychology at Queens College.
Bernie Madoff was the non-executive chairman of Bernard L. Madoff Investments Securities. The firm began as a penny stock trader. He expanded the company with the assistance of his father in law who referred some of his friends and family to the company. Madoffs largest competitors were members of the New York Stock Exchange who were trading on the floor of the stock exchange. To manage and compete with his competitors, he began using advanced technology on his firm, which later became the NASDAQ. NASDAQ became a limited liability company after several years of being a sole proprietorship business with Bernie Madoff being the largest shareholder (Azim & Azam, 2016). The firm executed market orders directly over the counter, thus bypassing the exchange specialist firms. Madoff’s company become one of the largest markets at NASDAQ and it was ranked sixth largest company in Wall Street.
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Bernie Madoff developed friendships with influential and wealthiest people in the United States who were his investors. Madoff offered them substantial returns of investments attracting more investors with the previous investor’s positive recommendations. However, not everyone was accepted into his funds except the serious investors who had vast amounts of money. Investors in Madoff’s company were highly respected as it was known to be a prestigious company (Azim & Azam, 2016). As time passed by, Madoffs Company became one of the largest and most prestigious stock markets in the world.
Bernie Madoff downfall began when Harry Markopolos, a financial analyst, questioned his investment management and advisory division publicity. Madoff’s investment management and advisory division were not known to the public. Moreover, some individuals began questioning Madoff’s investments returns credibility and the firm’s auditor, which was a small operation at the storefront. The financial analysts, Harry, took action upon his doubts and published an article about Madoff’s financial integrity as he presented several evidence to the Securities and Exchange Commission (Henriques, 2018). However, even with presented investigation evidence by Harry, Securities and Exchange Commission took no action against Madoff as it was a big prestigious company. Besides, large financial and accounting companies such as KPMG, BDO Seidman and JP Morgan Chase Bank did not believe the doubts presented against Madoff as they saw no signs of money fraud and financial irregularities in the company’s financial review.
Madoff reportedly instructed his employees to fabricate trading records and generate false monthly investor statements. It was possible as Madoff was given permission to book its own trades reason being it was a broker-dealer. No one was aware if the alleged trades were not taking place. Therefore after serious investigations due to several claims of people, Madoff was found guilty of money fraud and money laundering. The investigators found out that Madoff’s company used investments of new investors to pay off returns of previous investors. Finally, Madoff was found guilty of money laundering as he was involved in a Ponzi scheme. Therefore his firm collapsed, and losses were encountered in financial institutions such as Banco Santander of Spain and BNP Paribas in France (Henriques, 2018). Banks encountered huge losses due to the debt offered to Madoff’s investors who were wiped off and were unable to repay them. Madoff’s Ponzi scheme crisis ended up affecting several individual investors and financial institutions.
In conclusion, Madoff was found guilty of fraud, money laundering and other crimes in the year 2009. Bernie Madoff now serves his sentence in prison as more suspects, are being pursued by the United States Federal Investigators including members of his family. Ponzi scheme by Madoff became to be known to be the biggest of all in United States history.
References
Azim M. I., & Azam S. (2016). Bernard Madoff’s ‘Ponzi Scheme’: Fraudulent behavior and the Role of Auditors. Accountancy Business and the Public Interest , 122-135.
Henriques D. B. (2018). A case study of a con man: Bernie Madoff and the timeless lessons of history’s biggest Ponzi scheme. Social Research: An International Quarterly, 85 (4), 745-766. Retrieved from https://www.muse.jhu.edu/article/716113.
