Bernie Madoff Research Paper
Joe Lorkovic
Bus 100
The Great Ponzi, Bernie Madoff.
Bernie Madoff is known as The Great Ponzi. Bernie Madoff is a former American businessman,
stockbroker, investment advisor, and financier. On December 11, 2008 he was arrested and charged
with securities fraud. One of the reasons why Madoff's scheme did so well is the fact you had to be
invited to invest with him. It gave it that exclusivity that makes people want to get in on it. Basically he
was paying new clients with money from old clients, the key is to always have new clients. Instead of
investing the money he recived from investors, he just deposited the money into his own bank account
and released completely made up investment reports.
According to Markopolos, he knew within
minutes that Madoff's numbers did not add up, and it took four hours of failed attempts to replicate
them to conclude Madoff was a fraud. He was ignored by the Boston SEC in 2000 and 2001, and by
Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented even more evidence.
These types of schemes always show up when the economy turns.
Page 1
The Great Ponzi, Bernie Madoff. (Continued)
Concerns about Madoff's business surfaced as early as 1999, when financial analyst Harry Markopolos
informed the U.S. Securities and Exchange Commission (SEC) that he believed it was legally and
mathematically impossible to achieve the gains Madoff claimed to deliver. Yet he wasn't arrested till
December 2008. Harry repeatedly called Madoff out to the SEC, he pointed out 12 or more different
red flags concerning Madoff's investments. In 2005 Bernie was investigated for front running but the
charges were dismissed in 2006. It was the market collapse of 2008 that brought Madoff down.
On March 12, 2009, Madoff pled guilty to 11 federal felonies, including securities fraud, wire fraud,
mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan,
and making false filings with the SEC. Madoff had defrauded his clients of almost $65 billion in the
largest Ponzi scheme in history.
Page 2
Bus 100
The Great Ponzi, Bernie Madoff.
Bernie Madoff is known as The Great Ponzi. Bernie Madoff is a former American businessman,
stockbroker, investment advisor, and financier. On December 11, 2008 he was arrested and charged
with securities fraud. One of the reasons why Madoff's scheme did so well is the fact you had to be
invited to invest with him. It gave it that exclusivity that makes people want to get in on it. Basically he
was paying new clients with money from old clients, the key is to always have new clients. Instead of
investing the money he recived from investors, he just deposited the money into his own bank account
and released completely made up investment reports.
According to Markopolos, he knew within
minutes that Madoff's numbers did not add up, and it took four hours of failed attempts to replicate
them to conclude Madoff was a fraud. He was ignored by the Boston SEC in 2000 and 2001, and by
Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented even more evidence.
These types of schemes always show up when the economy turns.
Page 1
The Great Ponzi, Bernie Madoff. (Continued)
Concerns about Madoff's business surfaced as early as 1999, when financial analyst Harry Markopolos
informed the U.S. Securities and Exchange Commission (SEC) that he believed it was legally and
mathematically impossible to achieve the gains Madoff claimed to deliver. Yet he wasn't arrested till
December 2008. Harry repeatedly called Madoff out to the SEC, he pointed out 12 or more different
red flags concerning Madoff's investments. In 2005 Bernie was investigated for front running but the
charges were dismissed in 2006. It was the market collapse of 2008 that brought Madoff down.
On March 12, 2009, Madoff pled guilty to 11 federal felonies, including securities fraud, wire fraud,
mail fraud, money laundering, making false statements, perjury, theft from an employee benefit plan,
and making false filings with the SEC. Madoff had defrauded his clients of almost $65 billion in the
largest Ponzi scheme in history.
Page 2