The Fraud of the Century: the Case of Bernard Madoff

The Fraud Of The Century: The Case Of Bernard Madoff

2.1 Present the facts of the case

Bernard Madoff opened his firm in 1960. His business dealt with investment of securities and shares. He used investments by new shareholders to pay returns to earlier shareholders without really making profit from the capital invested. In order to cover for the financial fraud, Madoff used the financial investments as a front for his fraud. He falsified return forms of investors and gave returns according to pre-determined rates in order to avoid raising suspicion.

He used his company as a front to commit a Ponzi scheme which tricked investors of over $65 billion. In 1999, there was concern that the profits made by Madoff Investments surpassed the normal profits expected from a firm in such a venture. Several investigations were undertaken during the next few years and in 2008, Madoff was unable to pay returns demanded by investors.

After Bernard Madoff was arrested on December 2008, he acknowledged that his performance was nothing but the Ponzi scheme. He pled guilty to the biggest investor fraud ever committed by anyone on March 2009. On June 2009 Bernard Madoff was sentenced to 150 years in prison.

2.2 Define the problem/s of the case

The issue in this case study is Bernard Madoff's business it was fraud. A money laundering kind of business. He deceived his investors, his employees and even his own family into believing that he was conducting profitable, legitimate and legal securities transactions. He used multiple strategies to deceived and mislead others.

People invested their money with his firm because they believed that Bernard Madoff was an honest and trustworthy person. He took advantage on his investors that their earnings were due to legal transactions and believed to get extremely high returns. They recognized Bernard Madoff as a skilled, successful, and experienced financial manager. Yes, given you trusted someone as a person but do not forget that when it comes to money you should give someone at least a benefit of the doubt especially if someone promised to have high extremely returns. People get blinded or overwhelmed with the belief about high returns in short terms without understanding that one day it could lose everything.

2.3 Formulate alternative courses of action

If I'm going to base my alternative course of action on what was stated in the case study, it would be to provide education to board members