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Bernie Madoff's $ 50 Billion Ponzi Scheme

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Bernie Madoff's $ 50 Billion Ponzi Scheme
Bernie Madoff’s $50 Billion Ponzi Scheme Named after con man Charles Ponzi, a Ponzi scheme is a fraud of investment, which appeals to investors due to the promise of high returns with little to no risk. Investors believe they are receiving profits however they are merely receiving principal of new investors. In order to be successful, the old investors must not withdraw large sums of money at a given time, and there must constantly be an inflow of money from new investors contributing to the scheme. Top broker, Bernie Madoff, was found guilty of this scheme, which will further be discussed below.

News explaining what happened

1. Background Information

Former Nasdaq Stock Market chairman, Bernard L. Madoff was arrested back in 2008 for conducting the largest Ponzi scheme in history. He was …show more content…
Eventually the money chips away year by year causing there to be less money for redemption. When the economy began to collapse in 2008 many investors requested high redemptions in a short amount of time leading to the pressures of the outflows exceeding the inflows and the failure of the overall scheme.

The outdated IBM computer was a huge red flag that no one took advantage of investigating. As technology is advancing continuously it is important to keep up to date with computer systems, however Madoff did not. He produced everything on this computer in which it was so old that some information needed to be keyed in by hand. The fact that Madoff refused to replace it was questionable. Why wouldn’t someone so involved in the financial industry like a device that was easier to use, unless you were hiding something. The pages of statements that this computer produced showed trades that were never even made.

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