The Fraud of the Century

Bernard Madoff was a creditable man that people trusted him with their money because “he created an image of power, trust and responsibility. ” (Ferrel, 2013, p. 416) He was able to scam and scheme his investors from the early 1990s up until December of 2008 when his Ponszi scheme was discovered. Over the course of a decade he was simultaneously running a legitimate business and earned his investors’ trust because he didn’t make any promises of unbelievable returns. He was a financial expert, served as chair on NASDAQ, and a seat on the government advisor board on stock market regulations.
These titles have added to his creditability and people didn’t question him when they hand over their money. He wasn’t able to continue with his scheme and cover it up once the economy started collapsing in the late 2008. This was when his scheme was starting to expose because he wasn’t able to pay back his clients when they requested for their money back. March of 2009 he plead guilty to the charges and later in June 2009 he was sentenced to 150 years in prison. It’s amazing how he was able to pull the fraud of for so long without anybody questioning his strategy.
As early as 1992, federal regulators were investigating Madoff and the investigation was dismissed because there was no improper trading practices found. In fact from 1992-2005, his business was continuously being interviewed and investigated, but no wrongdoing was found. In 2006, his business was registered with SEC and that’s when they found misleading behaviors and in 2008 there was an alert stating all his records maybe pointed to possible corruption. Even with the 2008 alert, the allegations were dismissed and no further investigations would happen.

Finally in 2009, SEC received enough evidence to convict him of his fraud because two of Madoff’s investors filed a lawsuit against the SEC. The way he conducted business was unethical because not only did he mislead his clients but also he misled his friends and family. He was able to gain their trust and con his way through a long prosperous deceiving investment. People were guided and yet blind sighted by his character. Another unethical business transaction was using money from an illegal business to cover up the losses for his legal one.
Not only that when he needed quick cash to try and save his scheme in 2008, he solicited and even threatened some of his clients for more money to invest. This is an ethical issue because the clients felt guilty for not being a better client and investing more into this “ privilege” and exclusive” investment opportunity. I think that Bernard Madoff was not operating alone. I think his family was somewhat suspicious and went along with the operation but did not know entirely what was going on. I think with their experience and knowledge, they should have questioned when Madoff chose to hire inexperienced and uneducated people to work for his investment management business.
I think they chose to ignore the situation because of his high and respectable reputation. Also because he was family and they felt that he wouldn’t harm them. I think that in order to avoid this type of Ponzi scheme, an audit should be done every year along with any transaction of high value. Some type of documents and records of investments should be easily assessable for investors to follow and understand. Clients should be able to view their portfolio at any given time.