Bernard Madoff

ACC300-D1

Bernard L. Madoff Investments Securities LLC

Bernard Madoff founded the Wall Street investment firm Bernard L. Madoff Investment Securities LLC in 1960 at the age of 22. He started the firm with his own money that he had saved up from working as a lifeguard and sprinkler installer and through the help of his father-in-law was off to a good start. His firm began to use computer information technology to get the stock quotes needed for trading. This helped give the firm an edge on the other firms. This technology that the firm helped develop became the NASDAQ. BLMIS LLC was the largest market maker for some time and in 2008 it was the sixth largest market maker.

Even though Bernard Madoff was the founder and chairman of a successful investment firm he gave into the temptation of fraud. Madoff plead guilty to securities fraud, investment advisor fraud, mail fraud, wire fraud, money laundering, false statements, perjury, making false filings with the SEC, and theft from an employee benefit plan. He was the mastermind behind the largest financial investor fraud in history. Madoff admitted to start the Ponzi scheme in 1991 but prosecutors believe that it began in the 1980’s. Prosecutors estimate the losses of $21 billion due to Madoff’s scheme.

The first element of the fraud triangle is pressure and Madoff’s pressure to commit such a huge fraud is a little unclear. I have a few possibilities based on the nature of the crime and his lavished lifestyle. The first pressure I would like to explore is financial. According to his 2009 taxes he and his wife were worth up to $126 million and estimated $700 million for the value of his interest in his firm. He owned several multi-million dollar vacation homes, yachts, and jewelry. After years of financial success I think greed overpowered him making him just want more and more.

The second part of the fraud triangle is opportunity. This was probably somewhat easy for Bernard Madoff. He was the founder and...