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; …show more content…
He served as an advisor to the Securities Exchange Commission (SEC) and pushed for more transparency and accountability in the over the counter market (The Rise and Fall of Bernard L. Madoff). He was a philanthropic giver who supported and managed the finances of multiple foundations and charities. He was also a prominent and generous member of his native city’s Jewish community.
5. Bernard Madoff knew exactly what he was doing and intentionally followed through with the fraud until he was caught. He knew that he was deceiving his investors and that his business was illegal.
6. He had established trusted relationships with the SEC and regulators, which allowed him to go unchecked for many years.
The underlying ethical issue can best be expressed in the form of a question: “Is a Ponzi scheme wrong?” In a Ponzi scheme, investors are attracted by “promises of unusually high returns” (Margolick, 2011). These returns are repaid for a while but not from profits; they are paid out of the principal of new investors. This can only last as long as new investors keep pouring in cash and “old investors do not try to withdraw too much of their money at once” (Margolick, 2011). Ponzi schemes are also known as pyramid schemes: “its ever-growing layers of new recruits are needed to provide gains to the smaller, earlier cohorts (Margolick, 2011).” Bernard Maydoff’s $65 billion Ponzi scheme has been called the biggest con in history; “it lasted