Running head: BERNARD MADOFF “If it Sounds too Good to be True” Larry Weyer Business Dynamics South University Abstract What can cause a man to take from so many for so long? What kind of human being can make promises that may only be fulfilled if someone else is left holding the bag? Throughout history, there have been many thief’s and cheats who have stole or ‘borrowed’ way past their limits and many who still financially plague society. In recent light, Bernard Madoff is the man on the stand who is still facing his June sentencing date which could be up to 150 years in prison. When did it all start?
According to Madoff, his Ponzi scheme began in the early 90’s. Madoff created a scheme in which new investments were used to finance payoffs to earlier customers, to falsely make it seem like there were genuine returns. He never imagined that it would last as long as it did but he realized that the snowball was way too massive to stop. What is a Ponzi scheme? “A Ponzi scheme is a type of securities fraud where the promoter makes some sort of false or misleading statement about an investment (often including a guaranteed high rate of return) and pays off older investors with newer investor’s monies.
Eventually, when the promoter can’t find any new investors, the scheme collapses. Ponzi schemes are named for Charles Ponzi who, in the early part of last century, took investors for millions by guaranteeing big returns from arbitrage profits from purported investment called an “International Postal Reply Coupon. ” (American Bar Association. ) In court, he stated that he began by promising strong returns even though the stock market was not doing very well and the country was in a recession during the 90’s. Bernard L.
Madoff Investment Securities LLC was his firm that was used to con thousands of people out of their money, some of the funds provided by his customers were, life savings or retirement funds. Madoff was not shy to admit that he knew the day of December 11, 2008 would come soon enough. What amazed me even more than be able to predict your fate is the fact that he stated in a courtroom filled by those he lied and cheated too, that he was “sorry and ashamed” for his criminal actions. He must be telling the truth when he says that he is sorry, I mean a guy who lied to thousands of people can all of a sudden change and tell the truth, right?
That is funny because he says sorry but he’s not sorry for what he did. If I was him, I would be sorry that I got caught too. If he was truly sorry for what he did, he would not have let this go on for so long. He could have prevented hundreds or even thousands of ruined lives if he would have ended this fiasco and took the punishment a long time ago. Yeah he is ashamed, because now he is the face for one of the most hated humans of this decade. One woman in the courtroom stated “He didn’t seem ashamed,” she said. “This was a man who didn’t care what he did to his friends. If Madoff is sentenced to 3,00,987,000. 08 years in prison, it would not be enough time to reflect and repay those whose life he ruined, unless he was kept alive the whole time and got to experience the same amount of pain he brought to others. Bernie Madoff, is this guy evil? If I was one of the customers he managed to convince to give up my retirement fund with promise of lifetime 10% return a year and ended up with $0 at the end of the day, I would probably say “yes,” but I don’t believe Bernard is and inherently evil guy.
If he was, I think he would have prolonged the court process and fight for as long as he could rather than to admit and to put up a guilty plea. Madoff’s scandal began with some very bad decisions and then became blinded by the billions of dollars. He didn’t take people’s tax dollars and give out multi-million dollar bonuses, he didn’t kill anyone, directly but someone did commit suicide because he lost everything to Madoff, and he never forced anybody to give him their money. When customers decided to back out and requested their investment back, he did so.
The people who invested longer had at least seen some returns from their initial investment, but it was due to the continuing amount of new customers/scammee’s. It will be impossible to get all the questions answered. Many want to know where all the money is and went. Some wonder what caused him to commit this horrible act and continue it for so long. Many people commit crimes for fun, just to get an adrenaline rush. Then you have those who have a need that they ‘must’ fulfill and the only way to do that in their minds it to commit a breach of trust.
Usually the need for quick money is the sole cause for those who commit fraud. My guess is as good as anyone’s why Madoff did this, but we know he saw an opportunity when trading was down and provided people with hope and ‘positive’ returns and greed took over from there. People became hooked and the networking began. There are far more people Madoff effected than just those rich wealthy investors. Many of those investors are big contributors to their communities and after losing so much money, many have had to cut back on donations and charity.
Investment business and investor confidence is now compromised even more than ever, at a time where the stock market and the economy needs as much help as it can get. I feel sorry for those who lost so much of their life savings and retirement funds to Madoff. These are just a few victims who lost great deals of money: Fairfield Greenwich Group- $7. 5 billion… firm statement Banco Santander- $3. 5 billion… El Pais Kingate Management- $2. 8 billion… Bloomerg News Ascot Partners- $1. 8 billion… Wall Street Journal Benbassat & Cie- $935 million… Le Temps Union Bancaire Privee- $846 million… Le Temps
Fix Asset Management- $400 million… firm statement Pioneer Alternative Investments- $280 million… Bloomberg Maxam Capital Management- $280 million… WSJ EIM Group- $230 million… Le Temps Carl and Ruth Shapiro Family Foundation- $145 million… Boston Globe Royal Bank of Scotland- $601 million… Variety Vincent Tchenguiz- $61 million… The Telegraph Banque Benedict Hentsch- $47. 5 million… firm statement Town of Fairfield, Conn. – $42 million… Associated Press Reichmuth Matterhorn- $33 million… Le Temps Bramdean Asset Management- $31 million… WSJ Madoff Family Foundation- $19 million… WSJ
Richard Spring- $11 million… WSJ Richard Roth- $10 million… FINalternatives RObert I. Lappin Charitable Foundation- $8 million… Washington Post Michael Roth- $7. 5 million… FINalternatives Chais Family Foundation- $7 million… WSJ Julian J. Levitt Foundation- $6 million… WSJ David Berger- $5 million… FINalternatives Neue Privat Bank- $5 million… Bloomberg North Shore-Long Island Jewish Health System- $5 million… statement (CEO WORLD) “On March 12th, Mr. Madoff pleaded guilty to 11 felony counts, including securities fraud, wire fraud, mail fraud, money laundering and making false filings with the SEC. (CNN) I imagine that he will seek forgiveness from those he hurt because he will have long days to ponder about the decisions he made and the steps it took to get there. The only way to make that happened is by remembering those faces he looked into and promised he would change their lives. I feel sorry for those he hurt but you have to wonder how the desire to be even richer hindered people’s sight. Learn a lesson from this, “if it looks/sounds too good to be true, then it probably is. References A (Very Brief) Encyclopedia of Securities Fraud. (n. d. ). Retrieved April 20, 2009, from http://www. banet. org/buslaw/blt/2007-03-04/donley. shtml Madoff scandal has ripple effect on community : More Business : The Rocky Mountain News. (n. d. ). Retrieved April 20, 2009, from http://www. rockymountainnews. com/news/2009/feb/26/madoff-scandal-has-ripple-effect-on-community/ FRANK, R. (n. d. ). Madoff Jailed After Admitting Epic Scam – WSJ. com. Retrieved April 20, 2009, from http://online. wsj. com/article/SB123685693449906551. html? Smith, A. (n. d. ). Madoff pleads guilty to all 11 charges in federal court – Mar. 12, 2009 . Retrieved April 20, 2009, from