Bernie Madoff

INTRODUCTION

Bernie Madoff was a well-known and a well-liked man on Wall Street. Madoff had an impeccable reputation, not only in the investment market, but socially, too: “Nasdaq made him its chairman; the Securities and Exchange Commission appointed him to industry panels; Madoff was even able to arrange with the Wilpons, owners of the New York Mets, for his staffers to play charity softball games on the field at Shea Stadium” (Bandler et al. 52). That is why the nation was stunned to learn that on December 11, 2008, Bernie Madoff was arrested on charges of theft of billions of dollars from his clients over the decades prior to his arrest (Dodge “The IT Secrets” 26).

Bernie Madoff had run an elaborate Ponzi scheme at his investment company, Bernard Madoff Investment Securities, with the assistance of Frank DiPascali. DiPascali was accountable for overseeing the seventeenth floor, the location where the illegitimate business trades occurred (Bandler et al. 50). Madoff conducted the Ponzi scheme in the following way: he would receive investments from outside investors; he would, in turn, use those funds to pay senior investors. The funds that Madoff received were never used to make actual trades; the company, instead, produced fictitious trades. To keep suspicions low in the investors, Madoff had the staffers of the seventeenth floor create fictitious quarterly statements to mail out. The investors were pleased with the returns that the statements reports, so no suspicions ever arose (Dodge “The Technology Behind” 22).

Although suspicions never arose with the investors, suspicions did, however, arise with the Securities and Exchange Commission. The SEC, on at least five occasions beginning in 1992, investigated Madoff and his company. On each occasion, though, the SEC’s auditors never uncovered any fraudulent activities, which allowed Madoff to continue the illegitimate business trades for an extended period of time (Rhee 366). Madoff continued the...