Madoff Investment Scandal

By Ashton Leyens, David Lerman, and Jordan Cohen

Bernard Lawrence "Bernie" Madoff

• Born April 29, 1938 • Grew up in New York

City• Graduated from

Hofstra• Wife and two children

Start of Career

• Founded Bernard L. Madoff Investment Securities where he was chairman

• Worked as lifeguard and sprinkler installer on the side until business picked up

Government Ties• Gained access to the

leading securties industry trade group– Securities Industry

and Financial Markets Association

– Madoff’s brother and niece both were active in this group

Charles Ponzi

• Came to America from Italy. His scheme in 1903 involved postage stamps.

• Invented the Ponzi Scheme

Ponzi Scheme• A Ponzi Scheme is a fraud investment operation that pays returns to investors from their own money or money paid from other investors, rather than from actual profit earned

The Scam• Madoff was the chairman of the Bernard L

Madoff Securities LLC( limited liability company)

• Starting in the early 1990’s, Madoff told family and friends that if they invested money in him, he would add 10% interest to their account each year.

• Investors believed the 10% was put into their account and spread the word that Madoff was reliable, and he became more and more popular each year.

The Scam Cont.• Since people believed the 10% was being

added each year, they had no reason to take their money out.

• If they did take the money out, Madoff would pay them with other peoples money

• Madoff continued doing this until October of 2008

The Catch• Due to the economy, everyone started taking their

money out and Madoff could not pay them back.• His sons found out and informed authorities

Magnitude of Scam• Madoff committed

the biggest scam by a human being, scamming close to 65 billion dollars

• Afffected thousands of investors

Legal System

• Madoff plead guilty to charges of fraud

• Remains in jail until June hearing

• Faces 150 years in charges

Notable Quotes• "Your Honor, for many years up until my arrest on

December 11, 2008, I operated a Ponzi scheme." -- Bernard Madoff

• "When I began my Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients from the scheme." -- Madoff

• “His greed has torn apart livelihoods, and further eroded the public's trust. It is appropriate that he is no longer relaxing comfortably in his luxury Upper East Side home, and will be in jail, where he belongs." -- U.S. Republican Rep. Spencer Bachus, of the House Financial Services Committee

Sources

• http://www.reuters.com/

• http://www.nytimes.com/2009/01/25/business/25bernie.html

• http://s.wsj.net/public/resources/documents/st_madoff_victims_20081215.html

• http://www.forbes.com/2008/12/12/madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl.html