Case Analysis

Madoff was known as an experienced investor. He was able to lure clients to invest in his
scheme using his charisma, wits and reputation. Madoff manipulated the stream of cash
flow to make it look like his company is more valuable than it actually was. Second, his
company’s financial reports were never made public during the time of the scheme.The
fraudulent investment scheme occurred because of the lack of regulation and inadequate
oversight of certain financial intermediaries and opportunistic behavior

Madoff started off small. He gathered money from local establishments like country clubs
and charity events. Investors would be present at these gatherings and they would
question Madoff for advice, as he was already a well-known “investor” who was able to
make seemingly magic returns. From there, these investors would entrust him with his
savings, which only fueled the principal that Madoff needed to make his Ponzi scheme
continue to work.
By 1992, the Untied States Securities and Exchange Commission caught up with one of
the companies Madoff was using to feed his massive Ponzi empire, Avellino & Bienes.
Since 1962, the firm, which had formerly been known as Alpern, Avellino and Bienes,

This. they found that he was in violation of doing business as an asset manager while he was registered as an investment adviser. The interesting part comes at the point when the allegations of SEC shut down the firm. This time. there were reportedly no fraudulent practices in Madoff's business. It wasn't until 2007 when the Financial Industry Regulatory Authority reported that parts of Madoff's business didn't add up. the SEC investigated Madoff's company several times. he was forced to register as an asset manager. In 2004.” Unfortunately for the investors involved. This makes the Bernie Madoff scandal the largest case of international fraud yet. In the first two investigations performed by the SEC in 1999 and 2000.8 billion and that it affected over 4. Between 1999 and 2006. Madoff's company was investigated as being an alleged Ponzi scheme. The SEC ruled that they found no evidence and no legal action was taken. along with the fact that investors were moving to begin withdrawing their funds from Madoff's care. caused parts of Madoff's scheme to collapse. Instead of liquidating all the assets related to Avellino & Bienes. a company owned by Madoff.funneled funds to Madoff by recommending that clients invest in a highly success but anonymous man who was able to generate high returns. The problem was that parts of Madoff's firm had no customers. Originally. the SEC investigated Madoff's business again. It seemed like Madoff had everything set in his favor until 2006 rolled around. While no serious fines were brought up against Madoff. . Madoff stated that his company had liabilities that topped out at US$50 billion.800 of Madoff's clients. which is what finally caused the SEC to arrest Madoff. they were transferred to Bernard L. In 2005. One article went so far as to say that Madoff's hedge fund was the “biggest fraud in the world. The chief reason that this happened was because Madoff claimed he had no knowledge that the firm was operating illegally and that Madoff had a reportedly legitimate investment returns portfolio for the prior 10 years. this was dead on. In 2005. stated that the size of his scheme's fraud was around $64. The amount of principal that was being introduced to Madoff's Ponzi scheme wasn't enough to cover the returns previous investors were promised. Madoff Securities LLC. articles began to appear in popular business journals alleging that Madoff's business was a fraud. Prosecutors of his case. The rest of the SEC's findings were kept secret. however.

which he didn’t report as income.Madoff Key Officials 1. U. Friehling was charged on March 18.Chief Compliance Officer. worked with his brother Bernie for more than 40 years. with securities fraud. Peter Madoff admitted to improperly avoiding taxes by having the firm pay many of his expenses. Shana Madoff Swanson. Referring to Madoff's reported statement that he was a "dumb auditor. Madoff . his daughter. In May 2015. Friehling apologized to Madoff's victims. 2009. He also said he filed false reports with regulators that helped conceal the fraud. investment advisor fraud. mail fraud. David G. Marion. After learning of the Ponzi scheme. Frank DiPascali . 2012. including cash. Addressing the court at the hearing. Peter Madoff said he helped his brother parcel out $300 million remaining in the firm to select friends and family members. homes. 3. and four counts of filing false audit reports with the Securities and Exchange Commission. pleaded guilty on August 11. and other family members. perjury. and ran the daily operations for the past 20 years. securities fraud. while still awaiting sentencing.On December 20. wire fraud. District Judge Laura Taylor Swain sentenced Friehling to one year of home detention and one year of supervised release.S. aiding and abetting investment adviser fraud. 2009. 2. DiPascali died of lung cancer. On May 7. to 10 counts:[83]conspiracy." Friehling said: "I would rather be regarded as dumb than crooked. income tax evasion. A forfeiture order requires Peter to surrender all of his assets to the government. Friehling – Madoff’s listed accountant. international money laundering. Friehling avoided prison because he cooperated extensively with federal prosecutors and because he had been unaware of the extent of Madoff's crimes.director of options trading and as well as chief financial officer at Madoff Securities. falsifying books and records of a broker-dealer and an investment advisor. cars and a Rolex watch. Peter B. he was sentenced to 10 years in prison for his involvement in the Ponzi scheme. 2015. I did not question what I . A settlement reached with his family requires the forfeiture of assets held by his wife.

He is also being sued by the SEC for falsifying records. Queens.6 million were seized from Bongiornos' accounts (out of an estimated $14 million personal take). but suggested that Friehling be forced to pay part of the overall $130 million forfeiture arising from the fraud.6 million personal recognizance bond secured by eight co-signers Her trial is to open on October 7. Bongiorno recruited small investors from Howard Beach. with a combined assessment of $3. Florida. conspiracy.S. 2014. Their money was held in accounts called "RuAnn" (named after Annette and her husband Rudy). Bongiorno was arrested in November 2010 and charged with conspiracy. securities fraud and tax evasion. Semone Anderson and Winnie Jackson. She then faced up to 75 years in jail After a brief incarceration in late 2010 and after $7. On those initial charges he may be sentenced to a maximum of 77 years in prison if convicted. 6. securities fraud. where she grew up next door to Frank DiPascali. 2013 In December 2014. In Dec 2012 Bonventre's request for access to his seized funds for legal defence purposes was turned down by U. 2013. Bonventre was sentenced to 10 years in prison after being convicted on securities fraud and tax-evasion charges for his involvement in Madoff's $17. to generate fictitious trading tickets for customer accounts. District Court. Bongiorno was sentenced to a 6-year prison term for her involvement in the Madoff ponzi scheme. Daniel Bonventre .On December 8. 5.5 billion fraud. He was arrested in 2010 and charged with allegedly having created false and fraudulent books and records. Annette Bongiorno is a long time personal secretary and aide to Madoff. Joann Crupi is a former investment advisor to Madoff. Her trial was to open on Oct 7. should have questioned. Bongiorno allegedly withdrew $14million from investment accounts . She is accused of directing two assistants.worked as company director of operations and as an accountant for Madoff since the 1960s. and tax-related charges. Swain accepted the plea terms. 4. Long Island residence on a $3.[95] His trial is to open on October 7. She owns homes inManhasset.85 million. Bongiorno was released to house arrest with ankle monitor at her Manhasset. Madoff paid for her honeymoon airfare. New York and Boca Raton. During the 1980s. In March 2013 a three-judge appeals court granted a hearing in a lower court on his seized funds access request. 2013 .

1 billion Elie Wiesel Foundation: Zsa Zsa Gabor: $10 million $15. and on December 10. A jury found her guilty.3 billion million million Banco Santander: $2. experienced and respectable mastermind who takes advantage of the trust and desire of people to gain more profit. 2014 Perez was sentenced to 2 1/2 years in prison for their role in the scam His trial was to open on Oct 7.2 million Ascot Partners: $1.9 Jewish Community Richard Spring: $11 million billion Foundation of Los Angeles: $18 million Bank Medici: $ a former computer programmer of Madoff. George Perez and Jerome O'Hara . and on December 15.Crupi received payments of over $2.000 during that time period. between 1975 and 2008. 2014 Crupi was sentenced to 6 years in prison for her role in the scam.7million from Madoff directly out of the company's investor funds account. The incident could . prosecutors said. he was sentenced to 2 1/2 years in prison for his role in the scam. Largest Financial Losers Feeder Funds Non-Profit Organizations Individuals Feeder Funds Non-Profit Organizations Individuals Fairfi eld Greenwich Hadassah: $90 million Carl Shapiro: $500 million Advisors: $7. despite only investing $920. A jury found them guilty.5 Ira Roth: $1 million million Conclusion : In conclusion. 2014. 2013.5 billion Tremont Group Holdings: New York University: $24 Phyllis Molchatsky: $17 $3. 7.On December 9.8 billion Yeshiva University: $14. the case of Bernard Madoff is another example of a white collar crime which is orchestrated by an educated.

Effective audits. Sources : more transparency and better understanding of the true nature of operations of the Madoff business was where everyone fell short largest-ponzi-scheme#sthash. The errors and ignorance at the SEC is still the only variable proven to enable the Madoff fraud to continue over a . the most immediate actions to prevent similar events from occurring must take place internally in the https://en.edgewood.have been prevented if only there was enough internal controls and compliance standards that detected this misconduct.pdf https://prezi. However.dpuf http://dcollins. There were probably more factors that mattered like corruption and loopholes therein.wikipedia.