Bernard Madoff

Rosetta Foster

Strayer University

Business Law I – LEG 100

Dr. Dorothy A. Sliben

November 22, 2010

Bernard L. Madoff

The $50 billion hedge fund scandal involving Bernard Lawrence “Bernie” Madoff is the largest fraudulent scam in U.S. history, to date. This giant financial Ponzi scheme created and implemented by Madoff targeted members of the Jewish community. Moreover, Madoff’s Ponzi scheme impacted upon people from all walks of life. The people involved entrusted him implicitly with large sums of money. The funds fraudulently absconded, regardless of age, whether family, friends, celebrities, or investors encompassed life savings, pensions, institutional endowments; charities, non-profit organizations and/or corporate status. Once again, an individual under the guise of a “so-called” legitimate corporation conducts egregious actions above and beyond the scope of the law.

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.

In the Complaint filed by the United States Department of Justice, Southern District of New York (The United States Department of Justice, 2008), United States v. Bernard L. Madoff, 09 Cr 213 (DC), the government alleged that:

Madoff committed 11 counts of securities fraud, investment advisor fraud (wherein he allegedly misled his investors about the health of his firm, Bernard L. Madoff Investment Securities LLC), wire and mail fraud, money laundering, making false statements, perjury, filing false documents with the United States Securities and Exchange Commission (“SEC”) and theft from employee benefit funds.

According to (Bagley & Savage, 2010, p. 534) under §10(b) and Rule 10b-5 of the 1934 Act, it empowers the SEC to protect investors, deter fraud in the securities industry, in conjunction with §17(a) of the 1933 Act, the U.S. government can bring fraud claims, as in the Madoff...