The Collapse Of Bernard Madoff's Ponzi Scheme

Bernard Madoff is most prominently known by the public as the man responsible for the largest known Ponzi scheme in the United State’s history. Madoff ran his Ponzi scheme through the company he founded, Bernard L. Madoff Investment Securities (BLMIS). Bernard was taking investor’s money spending it for personal gain while simultaneously coaxing new investors and using their investments to pay off the old investors. When Bernard’s scheme was uncovered in 2008 it had reached a total of 50 billion dollars. Ultimately Madoff’s Ponzi scheme was shut down on December 11, 2008 with his arrest and closing of his company; however, the aftermath would be felt for many years to come. As a result of such an enormous fraud case many people’s lives would
After 5 years 9 billion dollars had been recovered and ready to be redistributed to the victims. The main method Irving used to increase the recovered funds was through hundreds clawback lawsuits. Essentially these lawsuits allowed for the recovery of the money from investors that received a false return on their investment. Five billion dollars were regained through one clawback lawsuit involving Jeffrey Picower, a known friend and investor of Madoff. After Picower passed in 2009 it was estimated that his property could return another $5 billion for Irving’s recovery fund. Picard not only filed clawback lawsuits he also filed lawsuits against financial agencies that turned a blind eye to Madoff’s fraud even though there were obvious signs of fraud. The main target of the lawsuits was JP Morgan, which supposedly was the bank in the center of Bernard’s Ponzi scheme. Irving intended to receive $19 billion for JP Morgan’s negligence. Federal district and appellate courts prevented Picard from pushing these claims; however, he appealed to the Supreme Court to overturn this
Many organizations were accused of having multiple instances to catch Madoff’s Ponzi scheme if they took proper actions. After the arrest of Madoff it was vital that these organizations such as the Securities and Exchange Commission reform after such a large-scale fraud case to help prevent fraud cases in the future. Taking actions to reform would also help reduce the amount of criticism they faced. Some of the changes made were as simple as creating better transparency and organization between regional offices, starting a central division in charge of tips, promoting whistleblowing, and ultimately making improvements on their fraud detection procedures. One specific reform the SEC put into effect was requiring brokers in charge of investor assets ever quarter to make reports displaying how investor assets are managed as well as their compliance efforts. By continuously reforming these organizations will be more adequate at preventing future fraud