Ponzi Scheme of Bernard Madoff Case Study Example | Topics and Well Written Essays - 1000 words

Ponzi Scheme of Bernard Madoff - Case Study Example The SEC embarked on an investigation in 2006 but concluded it in 2007 based on the finding that there were no proofs of fraud found. Nevertheless, Madoff was arrested on December 2008 and on March 2009 he officially confessed taking part in various crimes. He was sentenced to a 150-year imprisonment. The ethical issues in the Madoff case obviously concern fraud, defined as â€Å"any purposeful communication that deceives, manipulates, or conceals facts in order to create a false impression.† Apparently, Madoff offered false hopes to potential investors and gave fabricated investment reports or financial statements. He encouraged large investors to put money in his investment machine by using his established image as a reliable, esteemed, and successful businessman. Madoff is, particularly, guilty of consumer fraud, marketing fraud, and accounting fraud. He deceived potential investors for personal gain or, according to the investigators, to sustain the lavish lifestyle of his family, which is suggestive of consumer fraud. He committed marketing fraud by exaggerating possible returns on investment, which can also be called ‘puffery’, or implied falsity since he told potential investors that his investment machine will generate a steady source of profit but in fact, the returns come from the money of new investors which was risky. Lastly, he committed an accounting fraud by manipulating the financial statements of his company to avoid any detection of his wrongdoings. Madoff implicated educational, nonprofit, and charitable organizations by giving a contribution to them. Several of these organizations put money into the company of Madoff as a return of favor. His fraud forced a number of these organizations to shut down. The scandal also negatively influenced the public’s perception of investment companies.