...beaches of Long Island, Bernard Madoff founded “Bernard L. Madoff Investment Securities,” a “trading power” house that would become one of the largest independent trading operations in the securities industry (Washington, 2012). In the year 2000 his company ranked among the top trading and securities firms in the nation. By age 70, his name had become legendary; he was considered to be one of the most “influential spokesmen” on Wall Street. But on December 11, 2008, Bernard Madoff was arrested and charged “in a 20 year Ponzi scheme, which would come to be known as “the most infamous fraud in Wall Street history (Leonard, 2008; Washington, 2012).” Mr. Madoff pleaded guilty to all federal charges filed against him, which included the following: “11 felony counts, including securities fraud, money laundering and perjury (Washington, 2012).” Judge Denny Chin was in charge of the proceedings, and on June 29, 2009, Bernard Madoff, former chairman of the NASDAQ stock exchange, was sentenced to the maximum penalty of 150 years. This paper will seek to analyze this case in its multiple dimensions in order to identify all ethical issues and propose potential alternatives to the moral choices that Bernard Madoff made. Facts Bernard Lawrence Madoff was born April 29, 1938. He grew up in a small Jewish community in Queens, New York. At age 22, in 1960, he founded his own wealth management business, “Bernard L. Madoff Investment Securities.” He made his business out of “trading lesser-known...
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... * Business and Management Business Ethics Case: Bernard Madoff In: Business and Management Business Ethics Case: Bernard Madoff Introduction In the year 1960, with money he earned installing sprinkler systems and as a lifeguard on the beaches of Long Island, Bernard Madoff founded “Bernard L. Madoff Investment Securities,” a “trading power” house that would become one of the largest independent trading operations in the securities industry (Washington, 2012). In the year 2000 his company ranked among the top trading and securities firms in the nation. By age 70, his name had become legendary; he was considered to be one of the most “influential spokesmen” on Wall Street. But on December 11, 2008, Bernard Madoff was arrested and charged “in a 20 year Ponzi scheme, which would come to be known as “the most infamous fraud in Wall Street history (Leonard, 2008; Washington, 2012).” Mr. Madoff pleaded guilty to all federal charges filed against him, which included the following: “11 felony counts, including securities fraud, money laundering and perjury (Washington, 2012).” Judge Denny Chin was in charge of the proceedings, and on June 29, 2009, Bernard Madoff, former chairman of the NASDAQ stock exchange, was sentenced to the maximum penalty of 150 years. This paper will seek to analyze this case in its multiple dimensions in order to identify all ethical issues and propose potential alternatives to the moral choices that Bernard Madoff made. Facts Bernard Lawrence Madoff was born...
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...Russell Bettinger BUS-340 – Ethical and Legal Issues in Business 26 October 2014 Esther Lahargoue Analyzing Ethical Behavior Bernard Madoff was a renowned stockbroker, financial adviser, and served as the chairman of NASDAQ. Bernie Madoff is also solely responsible for the largest accounting fraud in all of American history. In December 2008, Madoff admitted to the federal authorities that the wealth management branch of his business, Ascott Partners, was a full on and elaborate Ponzi scheme. A Ponzi scheme is an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors. Over the course of nearly two decades, Madoff took an estimated 65 billion dollars from his investor’s fortunes. What made Bernie Madoff successful in his fraudulent ways was the façade put up by the general public of being highly respected, well established, and an esteemed financial extraordinaire. The U.S. Securities and Exchange Commission caught a lot of heat for failing to investigate Madoff extensively and thoroughly. Madoff ended up being found guilty of eleven federal crimes and sentenced to 150 years in prison with restitution costs at around seventeen billion. The fallout from his master scheme went far deeper than anyone would have expected, as some of the businesses he had invested in and vice versa, were forced to close down temporarily. Enron was an energy company based in Houston, Texas. The scandal that happened within...
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...Ethics are the principles and values an individual uses to govern his daily activities and decision making. The ethical philosophy an organization displays in conducting business has effect on the productivity as well as the reputation of that business. In an organization, a code of ethics is a set of principles that guide the organization in its programs, policies and decisions for the business. The ethics that organization leaders use to manage employees do have an effect on the morale and loyalty of workers. It is the code of ethics leaders abide by that determines discipline procedures and generally acceptable behaviors for all workers in that organization. There is a retroactive effect when leaders possess high ethical standards as it encourages workers in the organization to meet that same level. In the financial market and within communities, ethical leadership enhances the company’s reputation. A way to improve the company’s business is to portray a solid reputation for ethics and integrity in the community. A major reason as to why ethical behavior among employees is important within an organization is to ensure workers complete their work with integrity and all honesty. Those employees who practices ethics to guide their behavior adhere to policies and rules while working towards meeting the goals of the organization. Quality in employees work is dependent on their ethical behavior. This can enhance the company’s reputation for quality products and service. A healthy...
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...study is chronology of the largest Ponzi scheme in history. Bernie Madoff began his brokerage firm in 1960 and grew it into one of the largest on Wall Street, New York, USA .While doing so; he began investing money as a favor to family and friends, though he was not licensed to do so. Over a period of fifty years, these side investments became an investment fund that mushroomed into a $50 billion Ponzi scheme. Bernie pled guilty without a trial on March 12, 2009, and was sentenced to 150 years in prison. Thousands of wealthy clients, philanthropic organizations and middle class people whose pension funds found their way into Bernie’s investment fund lost their life savings. Background In December 2008, the highly respected American businessman Bernard Madoff made the headlines when the US authorities accused him of orchestrating a $50 billion Ponzi scheme which is the biggest financial frauds of all time and made of him “The Conman of the Century”. Bernard Madoff also called “Bernie" is a former American businessman, stockbroker, investment advisor, financier and the former non-executive chairman of the NASDAQ stock market and held a seat on the government advisory board on stock market regulation. During his entire long successful financial career Madoff has been considered as a trustworthy, well respected and responsible man. Bernie epitomized the American dream indeed he started a legal investment business in 1960 at the age of 22 years old and became increasingly rich...
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...Bernie Madoff: An Issue of Ethics There are many ethical issues in the world’s news today, some bigger than others, and many that get swept under the rug. One particular ethical issue is at the core of a huge story that has dominated the news for months on end and has lead to more trying times on Wall Street. The story is about Bernie Madoff and the massive effect he and his ponzi scheme had on hundreds of people who trusted him. This paper will discuss the ethical issue underlying the conflict, the damage that resulted from it, and the leadership that acted to counter suit his disaster. Bernie Madoff’s ponzi scheme is sure to go down in history as one of the largest business scandals ever and should make every person stop and make sure there ethics are in check. Bernie Madoff exploited ethical theories much like a hawk swooping down to kill its prey. Bernie’s twisting of moral philosophy, virtue ethics, universalism and business ethics controlled both common and upper classes within predominately Jewish investors, prominent social groups, banks, successful foundations and charities. He wielded his genius in investments and securities tantalizing those who could not spot his cabal. Bernie’s acute cognizance of small investors and the ruling classe’s desire to believe in moral philosophic principles, rules, and values let to the contamination of right and wrong with financial deals earning him 50-65 billion dollars. Bernie literally earned the title of greatest Ponzi schemer...
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...A Windfall Plagued by Poor Decisions BUOL 537: Legal, Ethical and Social Environment ABSTRACT Everyone in both the business and non-business sectors alike have probably heard of a financial ploy called a Ponzi scheme. However, many may not fully understand the details or how to protect themselves from such a financial risk. A Ponzi scheme is a fraudulent investment plan in which the investments of later investors are used to pay earlier investors, giving the appearance that the investments of the initial participants dramatically increase in value in a short amount of time. These types of financial schemes promise investors large interest returns if they provide money as a loan. As more new investors participate, the money that is contributed by later investors is paid to the initial investors, allegedly at the promised interest on their loans. This method works initially, but will then fold as more investors participate and choose to take withdrawals. Though these types of schemes have happened before, the first of this caliber was documented in the 1920’s by its namesake, Charles Ponzi. In 2008, Bernard “Bernie” Madoff was exposed for running the largest Ponzi scheme to date, conning investors out of over $65 billion over thirty years. INTRODUCTION Bernard Madoff was responsible for the largest reported Ponzi scheme in history. How did this happen? Who else knew about it? Why did it take so long for him to be exposed? This paper will endeavor to answer all of those questions...
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...Ethics and Accounting In the professional field of accounting there are vast opportunities that accountants are faced with every day in regards to ethics. Accountants are given the position to maintain the financial status of businesses as well as individuals. Businesses hire accountants to keep accurate financial records so that the business has the opportunity to provide goods and services to consumer. These financial records are important to promote healthy business decisions. If a company is not able to maintain proper financial records of income and expenditures the company has little chance of surviving. This is the purpose behind accounting. Accounting as defined is the system of recording and summarizing business and financial transactions and analyzing, verifying, and reporting the results (Merriam-Webster, 2013). This amount of control opens the door for opportunities of producing financial records that can be fraudulent and unethical. Since the turn of the century, into the 2000’s, there have been numerous scandals that have rocked the finance world. Most notably the Enron scandal has been the most widely publicized accounting scandal. Enron was a multi-billion dollar corporation supplying energy sources in the United States. Fraud, false reporting of revenues, and poor accounting eventually caused the collapse of this powerful corporation and the loss of thousands of jobs (Raver, 2006). The collapse of this energy giant prompted Congress to pass the...
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...Review of Accounting Ethics Ethics is a very important aspect of accounting and should be taken very seriously as accountant. Shareholders, potential shareholders, and other users of the financial statements rely heavily on the yearly financial statements of a company as they can use this information to make an informed decision about investment. The opinions of the accountants who prepared the statements, as well as the auditors that verified it, to present a true and fair view of the company. Knowledge of ethics can help accountants and auditors to overcome ethical dilemmas, allowing for the right choice that, although it may not benefit the company, will benefit the public who relies on the accountant/auditor's reporting. “As part of the largest financial fraud in U.S. history involving mega thief Bernard Madoff, a New York auditor, David Friehling is facing jail time for deceiving investors by signing off on fraudulent financial statements. Mr. Friehling, 49 years old, worked for Mr. Madoff from 1991 to 2008, running his storefront operation out of an ordinary office in New City, a suburb of New York City, N.Y. Mr. Friehling is to convicted of charges including aiding and abetting investment adviser fraud, securities fraud and four counts filing false audit reports to the United States Securities and Exchange Commission. It was also found by the United States Securities and Exchange Commission that Friehling and his family had $14 million invested in the Mr. Madoff‘s...
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...Ethics: Behavior, Sustainability and Social Responsibility 2 August 2013 Abstract Though there are business leaders and philosophers that object to the belief or need of exhausting time, money or resources for the welfare of its people, be it consumers or employees, data indicates that those who do recognize their noblesse oblige will prosper (BP, pg 149). Practicing ethical business operations has been a talked about subject since the eighteenth and nineteenth centuries. Whether it is sustainability or social responsibility, approaches to business ethics have yet to be standardized. At the peak of today’s ethical environmental dilemmas stands Monsanto, the organization that prides itself on the ability to create sustainable agriculture. There are also scandals with regard to scrupulous or fraudulent investors, such as Bernard Madoff, who prosper at the expense of trusting individuals. Lending institutions have also taken advantage of the financially ill-informed consumers who have lost their homes and in some cases their families and lives as a result of subprime lending practices (cite). Toyota, who was once known as one of the world’s fastest growing auto makers (cite) deliberately ignored the safety of its consumers in effort to continue maximizing its profits. Organizations lacking business morals must understand that responsibility does not rest on one source, but rather it should be a collaborative effort between the companies, governments, and individuals...
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...Elizabeth Thomas Business Ethics February 17, 2015 Professor Mari Hadley Summary and Discussion The author provides an overview of the case of Bernard “Bernie” Madoff, a businessman and investment manager who is believed to have stolen as much as $65 billion from his investors (Stanwick & Stanwick, 2014). Bernie Madoff was operating not only the largest Ponzi scheme in history, but is also believed to have perpetrated the largest financial fraud in history. His network of investors included many prominent people from the financial world as well as the social elite. Madoff’s criminal career came to an end in 2008 when the recession developed. His supply of available funds began to diminish, and he was no longer able to pay his investors. Madoff was subsequently arrested, prosecuted, and sentenced to one hundred and fifty years in prison. The authors also discuss the question of how Madoff was able to maintain such a massive criminal operation over a twenty year period (Stanwick & Stanwick, 2014). In particular, the question is examined concerning why the Securities and Exchange Commission was not more thorough in its investigations of Madoff’s activities, especially after Harry Markopoulos had been warning the SEC for the better part of a decade that Madoff’s financial operations were questionable in nature. A discussion is also provided of how various warning signs were available, but how Madoff was able to manipulate potential investigators into failing to...
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...Professional ethics are a set of rules that concern the rights and wrongs within a given profession. They are known as the professional code of ethics or conduct. Ethics can be both, written and unwritten. The written ethics are basically the morals within a profession. On the other hand, the unwritten ethics are more personal or so obvious that they should not have to be stated. When an individual begins a new profession, they are usually aware of the professional ethics that concern their particular profession. Each individual profession has its own set of written ethics. Some of these professions include accounting, education, legal, and health care amongst many others. If the code of ethics/conduct is violated there are penalties that follow. An accountant’s professional code of conduct from The American Institute of Certified Public Accountants (AICPA) covers a variety of issues. It covers their responsibilities, the public interest, integrity, objectivity and independence, due care and the scope and nature of their services. They have a responsibility to any and all that acquire their services. Accountants also have a responsibility to preserve and strengthen the customs within the profession. As an accountant, they are committed to the well-being of the public (financial community, businesses, investors, employers, governments, creditors, and clients). They are expected to provide them with a quality service that is done with integrity. Their integrity depends upon their...
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...| The Lie of The Century | Analysis of Bernard Madoff's Ponzi Scheme | | ' Introduction As long as the investment financial market existed, only one man was able to etched his name to the investment history as the greatest fraudster, and his name is Bernard Madoff. A brilliant fraudster that able to swindled over $50 billion from thousands of people using a type of investment fraud called "Ponzi Scheme." Using this type of investment frauds and his charming personality, Madoff stolen money from politicians, such as Senator Frank Lautenberg, famous celebrities, such as Kelvin Bacon, hedge fund directors, such as R. Thierry Magon de la Villehuchet, universities, such as Yeshiva University, banking institutions, such as Union Bancaire Privee, and charitable organizations, such as Elie Wiesel Foundation for Humanity. (Deborah & Strober, 2009) In that one day in the 11th of December in 2008, thousands people wake up to know the money that they entrusted to Madoff is nothing more than just a "lie." In other words, numbers that exist without any meaning. Madoff's Biography Born in Queens, New York, Madoff established himself from a humble blue collar workers, who earned his money from lifeguarding and installing sprinkle systems, to a genius international million dollar investor, who stolen billions of dollars from his clients. His investment firm, Bernard L. Madoff Investment Security (BMIS), based in New York, but its clients are as far as from European, South...
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...David Friehling will quite possibly be a future case study in auditing textbooks and courses throughout the United States. Mr. Friehling was the auditor for Bernard Madoff, who was recently convicted of running the largest Ponzi scheme ever uncovered through his business, Bernard L. Madoff Investment Securities, LLC (BMIS). Mr. Madoff claimed to actively oversee more than $65 billion in private investments (it was later revealed that roughly $823 million remained of the more than $170 billion that went through his accounts over the years).(1) Mr. Friehling flagrantly and purposely violated provisions of the American Institute of Certified Public Accountants’ Code of Professional Conduct,(2) Generally Accepted Auditing Standards,(3) promulgations of the Public Company Accounting Oversight Board and Securities and Exchange Commission, and other applicable laws, regulations, rules, and guidelines. Mr. Friehling is a former Certified Public Accountant in New York State; he had a modest office with a total of three employees in suburban New City, NY. Mr. Madoff claimed to manage $65 billion in resources…how could what was essentially a one-person practice audit financial statements of that magnitude? The blatantly obvious answer is that Mr. Friehling could not. After accepting an engagement, the initial task for any CPA firm would be to establish an audit plan, which would plainly show that many auditors would be required for that type of engagement. There were countless...
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...Abstract Bernie Madoff’s investment business began as a side business that he started to manage investments for family and friends. Through word of mouth, he began attraction outside investors and Bernard L. Madoff Investment Securities was formed. However, a few people were not fooled and saw the danger behind the facade. A few people heeded the warning sign that were evident all around Madoff. They filed reports with the SEC on several occasions but they were too inexperienced to look deeper. In the end the story holds us not because of the engrossing details of the scam, but because of its human element. Madoff emerges here not as some master criminal, but as a sad man who sad man of weak character who committed one of the crimes of the century, instead of simply telling the truth. His story is not the story of ridiculous greed but more the picture of our unlimited aptitude for self-delusion. Bernard L. Madoff was arrested in December 2008 for defrauding thousands of individuals and organizations of billions of dollars for over two decades. The part of Madoff’s investment advisory company involved in private-investment or assess-management was where all of his illicit activities were carried out. In fact, most employees had no ideal he was stealing from his clients. Madoff had perpetrated an outsized Ponzi scheme, a Brobdingnagian con game (Lewis, 2012). In March 2009, Madoff pleaded guilty of soliciting funds to buy securities and failing to invest the money...
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