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Topic: Who is bernard madoff Description Topic of research question is who is Bernard Madoff.additionally will need to create 7 sub questions to address in the research paper.I have also written an an


Who is bernard madoff


Topic of research question is who is Bernard Madoff.additionally will need to create 7 sub questions to address in the research paper.I have also written an annotated bibliography using several articles I will list below, please use these in order to complete the research paper.Additionally the format that my professor likes used isHook discussing topic, support, introduction of 2 articles, Thesis statement. Introduction of 2 articles per body paragraph. Body paragraphs must be in the format of topic sentence, support, 3-5 sentences on analysis. Paragraphs may not exceed 8 sentences.No 1st or 2nd person view in writing, introduce terms that the audience may not be familiar with, do not assume the reader knows what you do about the writing, do not address the audience as readers. Do not use the style of announcement rather use the style of showing, ie; do not use, in this paper I will discuss. Show your proof. DO not use the phrase in conclusion. In the concluding paragraph you may utilize 3-4 sentences and please restate the thesis in different words. Finally this is a research paper so please show a new discovery that you could not learn through simply reading these articles.By the end of the article there should be a new discovery from the use of these articles

Williams, David C. “A Timeline and Fraud Triangle Analysis of the Sec’s Madoff Ponzi Scheme Investigation.” International Journal of Business & Public Administration, vol. 14, no. 1, Winter 2017, pp. 98–105. EBSCOhost

Lewis, Lionel. “How Madoff Did It: Victims’ Accounts.” Society, vol. 48, no. 1, Feb. 2011, p. 70. EBSCOhost

Lewis, Lionel. “The Confidence Game: Of Others and of Bernard Madoff.” Society, vol. 50, no. 3, June 2013, p. 283. EBSCOhost

Lewis, Lionel. “The Confidence Game: Madoff and the 17th Floor Ensemble.” Society, vol. 50, no. 5, Oct. 2013, p. 493. EBSCOhost

Lewis, Lionel. “The Confidence Game: Of Ropers and Roping.” Society, vol. 50, no. 6, Dec. 2013, p. 610. EBSCOhost

Lewis, Lionel. “The Confidence Game: Roping in a Globalized World.” Society, vol. 51, no. 1, Feb. 2014, p. 49. EBSCOhost

the login for the ebscohost is 0793266   password is 081892

we did a workshop today on the paper what she was looking for is for the introductory paragraph

0793266 is the username if asked by the mjc website  081892 is the passwords

what is the topic of this research paper, what information is provided in the intro paragraph, what is the arguement that the paper is trying to prove, what did the writer identify as a possible solution to the problem

how did the writer restat the the thesis statement in the conclusion

body paragraphs she is looking for. what is the main focus of each body paragraph, arrange each body paragraph to address one point about the thesis statement, did the writer address opposing views, how many opposing views are addressed, how did the writer refute this view point to persuade the reader

as last time please restate thesis statement in different words in concluding paragraph

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Who Was Bernard Madoff

There have been different and dishonest ways to defraud people of their money since way

before. With the advance in technology, these methods have increased in efficiency, speed,

and returns. In this time, with everyone wanting money and wealth, these methods have

proved capable and promising.

Among one of the largest plots to steal from investors ever carried out was discovered in late

2008, is one of the largest ever carried out schemes in the US history. Bernard ‘Bernie’

Lawrence Madoff was arrested and pleaded guilty to money laundering, fabricating numbers

and mail fraud as charges. How he managed to keep his business going on for 15 or more

years is still a question Security and Exchange Commission (SEC) has to answer. Being in an

economic system that is controlled by rules and regulations that monitor the goings-on of the

economy, it seemed hard. Madoff got arrested for embezzlement totalling to $64 billion.

It was unimaginable to many that such a fraud could go on for such a long time without the

slightest hint of detection. It further is puzzling on how it started given institutions are

controlling the happenings of the economy. The research report provides a clear

understanding of how Madoff carried his treachery, how it was not noticed for such a long

time and how to avoid getting into such a situation.

Bernard Madoff, in 1960, started his first company which he named Bernard L. Madoff

Investment Securities LLC. At 22 and fresh from college, he was able to start this small

penny stock trading with money he had earned from selling lawnmowers and working as a

lifeguard. He persuaded family and friends to invest with him, and his business grew

exponentially, especially with the implementation of computers and the technology available.

The firm was the largest market makers of the time until his arrest in 2008. Bernard L.

Madoff Securities LLC was number six on Wall Street’s most significant market makers.

His success made him become one of the first ever brokers to try and perfect the role

computers had in the financial industry. His brother Peter helped input these operations, and

this in turn expanded his client base. Investors came from far and wide and his client base,

including other firms and advisors, grew. They were fascinated by the design such a scheme


Furthermore, as Madoff traded small stock exchanges, he brought to life Cincinnati Stock

Exchange by putting in $250,000 to upgrade their systems. Within 6 years, Cincinnati Stock

Exchange had improved significantly and increased trade volumes. This was done by closing

trading foundations and going all electronic in the stock market.

His assets rapidly grew to a point, until in 1973 it was reported they were at 1.1 million

dollars. He had many friends who were powerful, well respected, influential and wealthy

therefore creating a certain aura. Maybe the reason as to why SEC did not take the allegations

seriously at first was because it was hilarious for such a respectable man to be involved in

some shady dealings.

The ‘Advisory and Investment Management Division’ was a section in his company.

Investors put money in a hedge fund, which impressed the investors by continually delivering

fixed and steady returns slightly above ten per cent. What got people wondering was the high 

returns it had over such a long period. In a 1992 Wall Street Journal, Madoff said there was

nothing significant about the high profits and referred them for the US stock index. It was, in

fact, a Ponzi scheme and one of the largest in US history (Wall Street Journal, 27).

A Ponzi scheme as defined by edX is ‘a situation in which initial debt is serviced by relying

on new investors, rather than being serviced out of future surpluses.’ It promises high return

rates, assuring the investor of little risk involved. By using their client’s money without

borrowing or telling them, this particular segment in Madoff’s company operated this way for

a long time.

It is not known why Madoff went with the decision to get involved in the scheme yet he had

more than enough for himself and his family. “He could have earned the respect of the elite

chief support from Wall Street, without having gotten involved, because as an electronic

trader and a market maker, he was doing well for himself.” (Lewis,70)

‘The Madoff Scam; Meet the liquidator’ an article by CBS News Madoff claimed that this

division began as a perfectly legal and authorized business (Glenn, 33). He also confessed

that not until around 1995, the returns he gave were fabricated. Suppose an investor invested,

all he would do was deposit the money to his bank account, and when the investor came back

to cash out, Madoff would take the other clients’ money in this account. His withdrawals we

reimbursed by new investment deposits.

Market calculation combined with his efficiency and speed in trading was considered

propriety. It was his crucial secret, and by not letting it out, competitors did not have an

advantage over him. Financial experts were to later question him on the methods used.

With a variety of techniques, it was hard for Madoff to get easily discovered. He would sell

all stocks on a monthly basis, so the hedge fund only reflected the amount of money to the 

authorities. Because they could not get their account statements online, investors received

their account information every month via mail. With the help of one of his employees, he

forged these mails which had caused some controversy before.

His sons, Andrew, and Mark Bernard, were the ones who finally exposed him to the

authorities, and also reported the company was indeed a Ponzi scheme. This saw Madoff

arrested on 11th December 2008. Among claims made were those of fraud, money

laundering, and embezzlement of funds that totalled to $65 dollars. He pleaded guilty to all

these charges in June 2009 and was sentenced to 150 years in jail.

One might wonder how Madoff could carry out one of biggest embezzlement fraud for such a

long time without getting caught. But the real question should be why didn’t the United

States Security and Exchange Commission act on this despite receiving warnings from

whistle-blowers close to a decade before his arrest?

To better understand this, we will look at the first whistleblower, Harry Markopolos. This

former security executive in 1999 received word concerning a running fund of $6 billion,

which would have made it as one of the most significant funds on Wall Street by then.

Investors said that they had received interest between 1 – 2% monthly which was steady and

consistent. This raised flags as Markopolos had never heard of Madoff in the context

concerning hedge funds management before. According to William, a researcher on schemes,

‘After number crunching, extensive research and even reverse engineering the system, was he

(Markopolos) able to quickly prove that the whole operation was a fraud” (103).

On 20th May 1999, Markopolos told the Boston SEC on his findings of the scheme and the

man behind it. No action was taken. A year later, with a more detailed report, he approached

the SEC but still, no action was ever taken. In 2005, he sent the SEC management a 21-page

document with records of over 14 years of fabricated numbers named ‘The World’s Largest

Hedge Fund is a Fraud.’ It was not until 2008 that Madoff was arrested. Nine years after

Markopolos first allegations, was what it took for SEC to bring him to justice. How then, did

the mastermind Madoff manage to cheat and con investors, the system and governing

institutions alike?

Madoff family gained access and came to contact with the regulators and the governing

bodies after his niece, Shana Madoff was married by a SEC official. Also through the years,

they had in some way made it to the top of the list of the Washington regulators. He was

chairman of the Securities Industry Association, together with his brother, Peter Madoff.

Madoff’s firm parted with close to $400,000 to Bond Market Association and the federal

government by using his rank in SIMFA to remain and keep his status and company. Also, by

not having anything to do with corruption, his company went undetected for long.

A professor at Boston University, Mitchell Zuckoff says ‘The 5% payout rule aided in the

secrecy of his business and in slipping through the authority’s finger for such a long time’

(35). This 5% payout rule requires private organizations to pay 5% of their earnings annually

and he avoided these withdrawals by handling and managing charity money (Mitchell, 34).

Perhaps Madoff’s ability to stay unnoticed while running this scheme was because of SEC

and it could be the number one reason why Madoff was never caught early. In 2011, SEC’s

eight employees were disciplined with allegations of handling the Ponzi scheme and how six

warnings, within 16 years, were overlooked concerning Madoff’s illegal investment business.

The report further claimed that the mishap was due to staffs that were not experienced and the

long time it takes for an investigation to be done. Reviewers point out that SEC is usually

understaffed and the number of employees does not match the amount of workload they

receive. Though this may have also played a part in Madoff not getting caught earlier, it

could lead to future frauds in the future.

Another reason why the Security and Exchange Commission (SEC) might have avoided these

declarations was that of the secrecy involved. Bernie had created a private club where his

investors got some form of individual, exclusive privileges. Each investor felt like they were

Madoff’s favorite while in the real sense they were quite a number of them. They were sworn

to secrecy, and anyone who did otherwise would get their membership revoked and their

investments without any returns.

So how do we prevent future frauds, you may wonder. This may be a hard question to answer

as a lot of aspects have a role to play especially technology which is ever-changing. History

has shown how Charles Ponzi did the same with investor money, how Madoff himself came

up with electronic trading and how new inventions especially in the technological arena

increase speed, efficiency, and returns.

SEC takes the lead in enabling Madoff to trick investors for close to three decades. Some of

the reasons include their ignorance of the claims made by Markopolos even after receiving

the memo elaborating and offering proof of the most extensive scheme. Also, the employees

who got disciplined show the lack of standards in the company. Errors made prove the lack of

competency in the organization, adding to the fact that they are understaffed. Probably more

factors played a role, like corruption, but it is SEC who takes the bigger part of the blame.

After Madoff was sentenced, Markopolos in his testimony told the Congress, ‘It is often the

case as with SEC that many of the staff lawyers are not experienced or trained in the industry,

especially on how to investigate. It is in my opinion that should SEC receive a case, it is to

fully claim ownership and no longer involves the investigator’. Not only does SEC need an

increase in staff members, but it also needs experienced and qualified ones who can handle

such scenarios and tackle those that might come in the future.

ince Madoff’s trial, SEC has performed ‘post-Madoff’ amendments including a change in

leaders, forming alliances with insiders, encouraging togetherness with recruiting staff to hire

those experienced. All this is to ensure it directs its energy of important cases. SEC learned

from the case of Bernard Madoff though four years later, the financial industry seems

unaffected. Security industry attorney Bill Singer said, “There are people on Wall Street,

even as Madoff was sentenced, who were saying that they could have pulled off what Madoff

did and not get caught”

Works Cited

Duke K. Bristow et al., Venture Capital Formation and Access: Lingering Impediments of the

Investment Company Act of 1940, 2004 COLUM. BUS. L. REV. 77, 116–17

Glenn Rifkin, Financial Advice for the ‘Mass Affluent’, N.Y. TIMES, vol. 33, no 4, Apr. 6,

2006, at C7, available at


Lewis, L. “How Madoff Did It: Victims’ Accounts.” Society, vol. 48, no. 1, Feb. 2011, p. 70.

Williams, David C. “A Timeline and Fraud Triangle Analysis of the Sec’s Madoff Ponzi

Scheme Investigation.” International Journal of Business & Public Administration, vol. 14,

no. 1, Winter 2017, pp. 98–105.

Lewis, L. “The Confidence Game: Of Others and of Bernard Madoff.” Society, vol. 50, no. 3,

June 2013, p. 283.

Mitchell Zackoff. Posner, Rational Choice, Behavioral Economics, and the Law, 50 STAN.

L. REV. 1551, 1575 (1998)

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