Bernie Madoff Essay

608 words - 3 pages


Bernie Madoff used many of the principles in Cialdini’s book Influence: The Psychology of Persuasion to persuade investors to willing hand over nearly $50 billion dollars in one of the biggest Ponzi Schemes ever seen in the United States. He used behavioral psychology to influence people and his manipulation of others yielded huge returns for decades.
Madoff helped to create the NASDQ and served as its chairman. Madoff had also been in the investment business since 1960. All these credentials hung on Madoff’s wall so to speak for all to see. People were naturally impressed. This is what is known as the Authority principle. This principle is credentialed based and Madoff was seen as an expert. People jumped at the chance to do business with him. The everyone believes/trusts an expert mentality was one of the regularly used items in Madoff’s bag of tricks.
...view middle of the document...

Many of his investors genuinely like Madoff and felt that he was doing them a favor by letting them in on the investment opportunity of a lifetime. This led to what is known as the Reciprocity Principle. Many of his investors felt inclined to tell their colleagues about their investments with Madoff. These colleagues would eventually end up investing with Madoff as well. Because of these principles the Social Proof Principle followed suit. Investors that were paid dividends from the new investments spoke of their positive experiences with Madoff’s firm. Madoff’s name was a household name amongst the rich and famous. These testimonials from investors lured in even more people and this enabled the money train to continue to operate which is imperative part of any Ponzi scheme.
Another Principle that Madoff used quite well was Scarcity. Investors had to be invited into this “Good Ole Boy” club. Madoff used this exclusivity to entice unsuspecting investors. It was framed as a limited time offer and if the investor did not invest immediately, they may not have the opportunity to invest again. Madoff and his employees, which were mostly family members by the way, often presented investments as windows of opportunity that were open for a short time period and if the investor do not act soon that window would be slammed shut. This made many people to want in. Investors’ eagerness to join let their guard down and basically any caution that they would normally have was nonexistent.
Madoff was an extremely intelligent man and had he used these principles for the good, he could have easily been a success. The house of cards that Madoff built was destined to fall, because he used Cialdini’s principles dishonestly and manipulated others. As Cialdini points out, if these principles are used to motivate and inspire people honestly and openly they can be a powerful tool in making agreements, creating new business ventures and successful businesses.

Other Essays Like Bernie Madoff

The Code of Ethics and Evaluation

759 words - 4 pages Elizabeth Thomas Business Ethics February 17, 2015 Professor Mari Hadley Summary and Discussion The author provides an overview of the case of Bernard “Bernie” Madoff, a businessman and investment manager who is believed to have stolen as much as $65 billion from his investors (Stanwick & Stanwick, 2014). Bernie Madoff was operating not only the largest Ponzi scheme in history, but is also believed to have perpetrated the largest

Business Management Essay

726 words - 3 pages THE BERNIE MADOFF'S SCANDAL Jayne Egharevba RES/351 February 16,2015 Business Management/Human Resources The Bernie Madoff’s Scandal The Bernie Madoff scandal is widely recognized as an example of an unethical business research, Bernie Madoff managed to build a multibillion-dollar investment firm based on skewed research and false financial data. The wealth management eluded the SEC and other authorities for decades before finally

Professional Values and Ethics

577 words - 3 pages same. In doing so he set a poor example for his sons; his peers, and gave his profession and Wall Street yet another black eye. References Associated Press. (2008). Ex-Nasdaq Chair Arrested on Fraud Charge in NYC. Retrieved July 30, 2010 from http://www.foxnews.com/story/0,2933,465848,00.html Clark, A. (2010). Bernard Madoff's sons say: we're victims too. Guardian.co.uk. Retrieved July 30, 2010 from http://www.guardian.co.uk/business/2010/mar/17/bernard-madoff-usa Lenzer, R. (2008). Bernie Madoff's $50 Billion Ponzi Scheme. Forbes. Retrieved July 30, 2010 from http://www.forbes.com/2008/12/12/madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl.html

Bernard Madoff

1447 words - 6 pages payments to initial investors and themselves, instead of engaging in any legitimate investment activity (USSEC, n.d.). What is recognized as the biggest Ponzi schemes in history can be attributed to fraudulent business activities of Bernard Lawrence “Bernie” Madoff. Bernard Lawrence “Bernie” Madoff is a former stock broker, investment advisor, and non-executive chairman of the NASDAQ stock market. In 1960 Mr. Madoff founded the Wall Street

Education

573 words - 3 pages Ponzi scheme. A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Madoff took an estimated 65 billion dollars from his investor’s fortunes over the course of nearly two decades. Bernie Madoff became successful in his fraudulent ways as a result of the façade put up by the general public of being highly respected, well established, and an esteemed

Bernard Madoff Scandal

3087 words - 13 pages Starting in 2000 Bernie Madoff acquired one very tenacious opponent, his name was Harry Markopolos. He was a number cruncher that worked at a hedge fund. They asked him to figure out how to match the fantastically consistent returns produced by Madoff in options trading. As he studied the markets, he came to the conclusion that it could not be done and that Madoff had to be cheating in some way. Either by “front-running, which would’ve

Big Business and You!

539 words - 3 pages What is a Ponzi Scheme? It's basically a financial scheme where the first in get all the money, and the last in lose everything. The first in are paid by the money invested by the last in, and since they're making money, it makes it look legitimate, drawing even more investors into the scheme(Crudele). Also called a "pyramid scheme", it is the slimiest of slimy dealings, because the perpetrator knows exactly what he's doing. This is what Bernie

Sarbranes-Oxley Impact on Corporate America

1468 words - 6 pages accounting fraud is the Bernie Madoff scandal of 2008. How did he get away with such a scam after Sarbanes-Oxley was put into place? Madoff was a well trusted, highly respected business man. He was a well-known investor and even helped found the NASDAQ, sat on the board of National Associations of Securities Dealers and even advised the Exchange Commission on trading securities. Another thing that bought Madoff some time was when his customers wanted to

Business Ethics - an Oxymoron

954 words - 4 pages -based and attitude-based, and not suited to some individuals, who, by their very nature, have consistently demonstrated selfishness and greed. Can any ethics training program prevent Bernie Madoff, Vincent Lacroix, Conrad Black, etc. from being themselves? No, but a well-designed & implemented program can (a) help good people to do the right thing consistently (b) make it more difficult for wrong-doers to succeed & (c) raise people’s

Lying, Cheating, Stealing: White Collar Crime

1080 words - 5 pages to receive sentences such as home detention, community service, or minimum-security prisons. For example, according to ABC News and 20/20, Bernie Madoff wrote about his incarceration, “As you can imagine, I am quite the celebrity, and am treated like a Mafia don.” “They call me either Uncle Bernie or Mr. Madoff. I can’t walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up.” “It’s really quite sweet

What Does Representative Democracy Really Mean in the United States?

853 words - 4 pages anything at the end against them as we are going to explain in this paper work. If we analyze the case of Wall Street in 2009 we realize that society has no way to reclaim their “Representatives" by act or omission errors they have committed. Nothing could be done to prevent the disgraced tycoon Bernard Lawrence "Bernie" Madoff through his investment firm that bears his name, swindled the American people the amount of US$ 50,000 million dollars

Related Papers

Bernie Madoff Essay

703 words - 3 pages BERNARD LAWRENCE “BERNIE” MADOFF KIM JONES PROFESSOR RYAN KOPF BUSINESS LAW I AUGUST 20, 2010 1. Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior, explain how the behavior is illegal or unethical in the conduct of business. Mr. Madoff engaged in fraud, theft and deceptive practice while operating a ponzi scheme for over 20 years. Fraud was committed because he

Bernie Madoff Essay

903 words - 4 pages Bernie Madoff $50 Billion Ponzi Scheme Bernard Lawrence Madoff was born April 29, 1938 in Queens, New York. After attending University of Alabama for one year, he transferred to and graduated from Hofstra University in 1960. Upon graduation he started the Wall Street firm Bernard L. Madoff Investment Securities LLC and was chairman of the company. It started very small with only $37,000 (present day value) and grew due to help from his

Bernie Madoff Essay

1324 words - 6 pages , accepting that to ask Bernie to reveal his strategy would be as crass as demanding to see Coca-Cola's magic formula. Mr Madoff reinforced the message by occasionally ejecting a client who asked awkward questions. The trading business was hardly pristine either. It had been probed for front-running (trading for its own account before filling client orders) and separately found guilty of technical violations. Some clients reportedly suspected that Mr

Bernie Madoff Case Study

3380 words - 14 pages Case Study: Bernie Madoff Eric Ranzinger Organizational Behavior – OL 500 Jascia Redwine Abstract Bernie Madoff was one of the top dogs on Wall Street for over 20 years. He managed tens of billions of dollars in client’s funds. His firm was one of the most consistent with profitable returns. When most others were reporting losses during the recession, his firm was consistently reporting net gains. Many celebrities even entrusted their