Bernie Madoff Ponzi Scheme

Bernard L. Madoff Investment Securities Ponzi Scheme

December 7, 2014

Fraud is not a new concept. From the time money started being used for the trade of goods and services, people have been developing ways to get more off it. Employees learned that they could use the normal activities within a corporation to steal money. Technological advances throughout the years have helped corporations evolve and compete on higher levels; however, they have also created new ways for fraudsters to carry out their schemes.

Bernard Madoff founder of Bernard L. Madoff Investment Securities, LLC, carried out one of the largest fraud schemes in U.S. history. Madoff managed to con investors out of an estimated $65 billion dollars in a Ponzi scheme that lasted over 15 years. The fraud was uncovered in 2008 by Madoff’s sons who started to question some of their father’s financial transactions (Bernard Lawrence Madoff, 2014).

Bernard Madoff started Madoff Investment Securities in 1960 with his wife Ruth and $5000 that he earned from a few part time jobs. Madoff used the reputation of his father-in-law, a retired C.P.A, to bring in investors and big name clients such as, Steven Spielberg and Kevin Bacon as well as notable banks Santander and HSBC, and Fairfield Greenwich. Madoff Investment Securities quickly grew it into a successful investment firm. By 1980, Madoff Investment had built a star-studded client list, was posting annual returns of 10% and was handling around 5 percent of all trading on the NYSE. Madoff was becoming one of the leading experts in finance (Bernard Lawrence Madoff, 2014).

In 1970, Madoff hired his brother Peter as the firm's chief compliance officer. Later, Madoff would hire his niece Shana as the rules-compliance lawyer for the trading division of his firm and his two sons, Andrew and Mark as traders. Madoff’s firm began processing online quotes using computer technology. The program they used to process quotes became the National Association of...