“Bernie Madoff: How “One Big Lie” Can Destroy Thousands of Lives,”

Bernie Madoff: How “One Big Lie” Can Destroy Thousands of Lives,”
Order Description
Read Case Study 1, “Bernie Madoff: How “One Big Lie” Can Destroy Thousands of Lives,” on pages 258-264. Summarize the overall viewpoint of the author, and discuss the major issues presented in the case. Review the “Questions for Thought.” Answer the four “Questions for Thought” using the business ethics principles from the textbook.
Your summary of the author’s viewpoint and your discussion of the major issues presented in the case must be in paragraph form. However, your responses to the four “Questions for Thought” can be answered either in paragraph form or as a numbered list. Ensure to include your summary of the author’s viewpoint, your discussion of the ethical issues facing Bernie Madoff, and your responses to the questions.
Deliverable length is a minimum of 500 words, double spaced, 12pt New Times Roman font. Title page, abstract, and running head are not required; however, if you paraphrase or quote words or ideas from your course textbook or other resources, you must cite your sources following the APA style citation guidelines.
Information about accessing the Blackboard Grading Rubric for this assignment is provided below. This paper is case study
C A S E 1/Bernard Madoff: How One 819 he (an Destroy Thousands of Lives)
I n the 19205, Charles Ponzi introduced the “Ponzi” scheme to the American public. The scheme’s
simplicity is one of its best traits: By promising above-average returns for their investment.
individuals appear willing to stand in line to give you their money. The only problem is that the
Ponzi scheme makes no “real” investments other than paying back previous investors. The cycle
of paying one investor (and pocketing a lot for himself) by collecting from another investor should
only work for a short period of time before the “pyramid” of investors collapses under the weight
of money owed.
Almost 100 years after Charles Ponzi showed the World how the scheme worked. people are still
convinced that the administrator of the investments can guarantee above market returns. The under-
lyingreason why Ponzi schemes will continue to be tried in the future is greed. As long as some
people believe they can get more money from an investment than the average investor, they will
continue to line up to give their money away in return for this empty promise.
Bernard Madoff went to prison for pulling off the largest Ponzi scheme in history, a fraudulent invest-
ment scheme that lasted an estimated 20 years}I The eventual downfall of Madoff’s Ponzi scheme was
not caused by regulators. investors, or even his employees but. rather. was the result of a global financial
recession. When the financial crisis hit. Madoff had many billions of dollars of outstanding debt. Typical
of a Ponzi scheme. when Madoff’s investors made a “run on the bank” to take out the money that they
invested with his firm. he did not have enough money to pay the above-average returns that he had
promised. He did not even have enough to cover his clients’ initial investment money.
Furthermore, there is no evidence that Madoff even made any trades to invest the money that his
clients gave him. For example, Madoff had listed transactions in Fidelity Investments’ Spartan Fund.
yet Fidelity had no record of any account or transactions by Madoff’s company.2
On the morning of December 11., 2008. the pyramid collapsed on Madoff when he was arrested
in his apartment for criminal securities fraud. As a well~respected investor and part of New York’s
social elite. Madoff pulled off the largest Ponzi scheme in the history of commerce. Estimates are
that Madoff stole more than $50 billion from investors over three decades. It is also estimated that
Madoff, the former chairman of the NASDAQ Stock Exchange. had defrauded thousands of people
including individuals. corporations. endowments. universities, foundations, and other investment
funds. Before he was arrested. he told his sons Andrew and Mark. who worked for him. that his
financial operations were “all just one big lie . . . basically a giant Ponzi scheme.” The day before
his arrest. his wife Ruth withdrew $10 million from a brokerage firm that was partly owned by
Bernard. This followed a withdrawal made November 25. 2008, for $5.5 million.4