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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 father-in-law and accountant Saul Alpern. To compete with other firms on the New York Stock Exchange his firm used new computer information technology which is known today as the NASDAQ. The company acted as a third market provider which allowed the ...view middle of the document...

In the first week of December 2008 Madoff said he was struggling to meet the $7 billion in redemptions, but told his sons Mark and Andrew he planned to pay out $173 million in bonuses two months early. This raises suspicion from his children because it does not make sense to pay bonuses to employees if the firm was not able to pay clients. Bernie Madoff then proceeded to tell his family that his investment fund was a giant lie and a Ponzi scheme. According to their attorney Mark and Andrew decided to report their father to authorities. On December 11th, 2008 Madoff was arrested and charged with securities fraud.

The case United States of America v. Bernard L. Madoff was brought to the United States district court in the southern district of New York. The relevant entity/person being charged was Bernard L. Madoff for his involvement with Bernard L Madoff Investment Securities (BLMIS). He controlled the business activities, owned majority of voting shares and served as the Chairman of the Board of Directors. From the early 1980s through about December 11, 2008, the defendant organized a scheme to defraud clients of BLMIS by distributing billions of dollars of funds under false claim failing to invest the funds as promised. He took the funds and used them to benefit himself and others without the knowledge or authorization of investors. To execute the scam Madoff lied to clients promising that if they opened trading accounts with BLMIS they would invest funds into shares of common stock, options and other securities of large, well known corporations, and promise of high return with limited risk. BLMIS received billions of dollars from individual investors, charitable organizations, pension,...

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