Madoff graduated in 1960 with a Bachelor of Arts in Political Science from Hofstra University. He then went on to attend Brooklyn Law School, but quickly dropped out after he founded his firm, Bernard L. Madoff Investment Securities (BLMIS).
Madoff started his firm with about $5,000 he earned from working. He went on to seek investment and received it from his father-in-law, Saul Alpern. He used this investment received from Alpern to start his firm. His father-in-law was an accountant, who referred many friends and families to BLMIS.
In order for the firm to keep its existence and grow further they needed to compete with other firms that were also part of the New York Stock Exchange. Madoff did this by using an advanced computer system to broadcast its estimates. After running this system for quit some time, it became the NASDAQ (National Association of Securities Dealers Automated Quotations).
The type of scam that Bernard Madoff exercised was shockingly ingenuous. It was a simple Ponzi scheme. Ponzi scheme received its name from Charles Ponzi, who was one of the utmost cheats, crooks, and frauds, in history, or all together as media would call it, the greatest swindler alive.
A Ponzi scheme is con or scam investment. It is intended to separate stockholders from their investments or capital. Here’s how it works: The company encourages and convinces the public to finance the deceitful investment. Little does the public know of what goes on after they’ve invested their money. A good definition of a Ponzi scheme is: “A phony investment plan in which monies paid by later investors are used to pay artificially high returns to the initial investors, with the goal of attracting more investors.” (Yormark)
Many knew BLMIS as a trading and market-making firm. Since the start of BLMIS in 1960, Madoff ran a secret investment advisory business, where he would pay returns to early investors
Cited: Petsko, Gregory A. "Life Is a Ponzi Scheme." Genome Biology 2009, 27 Jan. 2009. Web. 1 Feb. 2013. "Statements - Counsel." Statements - Counsel. N.p., 7 Nov. 2012. Web. 15 Jan. 2013. Yormark, Kenneth. "Ponzi Schemes - The Basics and Beyond." Navigant. N.p., 2011. Web. 25 Jan. 2013.