The two or more persons to commit an

The two or more persons to commit an

The Bernard Madoff Ponzi Scheme Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior, explain how the behavior is illegal or unethical in the conduct of business. Three illegal business behaviors by Madoff were conspiracy, securities fraud, money laundering, and perjury. Conspiracy is “Agreement between two or more persons to commit an unlawful act or to accomplish a lawful end by unlawful means” (Merriam-Webster Dictionary, 2011).Although Madoff originally stated that he was the sole mastermind behind the Ponzi scheme, others have come forward and plead guilty to assisting Madoff with covering the scheme. Madoff violated the Securities and Exchange Commission with securities fraud; Madoff manipulated many companies, foundations, and banks by purchasing stock without having adequate funds to purchase stock. He actually never even purchased any stock but merely placed money into a personal bank account and paid out money with money he received from new investors.

He also was accused of money laundering, in which he placed money into shell companies and offshore trusts and pretended to purchase and trade stock with other countries. Madoff also was accused of perjury. Perjury is “an act by a person who takes an oath to tell the truth yet willingly and contrary to such oath states a material matter that he or she does not believe to be true” (Bagley & Savage, 2010, pg. 626), which is simply lying under oath. Bernard Madoff is a former American stockbroker, investment advisor, and non-executive chairman of the NASDA.

In 2009 he plead guilty to the accusations against him and was sentenced to 150 years in prison for conspiring one of the largest Ponzi schemes ever which lasted for almost 20 years. Name three types of parties who were impacted by the actions of Mr. Madoff and describe how they were impacted.

Three types of parties who were impacted by the actions of Mr. Madoff were the banks, foundations, and the SEC. They were impacted in the following ways. Loss of assets, loss of funds to operate, and many foundations had to close their doors permanently; and others were so financial well off they suffered no financial hardships at all.This cause a ripple affect and caused other foundation to have to cease operations due to the funds they received to operate came from foundations that conducted business with and was overseen by Madoff.

The “Jewish Federation of Greater Washington had 10 million invested in Madoff Securities, but because it only invested 8% of its endowment they notified their donors that they would be working very hard to recover the funds. Some companies like North-Shore-Long Island Jewish Health Systems reported it had 5. million exposed to Madoff Securities but the donor who originally gave them the funds recommended they place the funds into the securities company agreed to reimburse the health system for any financial losses they incurred (Strom, 2008, para #15). Therefore all companies did not lose everything they had but those who had pension funds were in pretty bad condition due to most of them lost their life savings. The SEC was under fire for not investing Madoff Securities after being informed many times of the suspected financial fraud. According to Harry Markopolos,” he had repeatedly sounded alarms about Mr.

Madoff firm and no one would listen to what he was saying. He had gone to an aide of Eliot L. Spitzer and to an attorney general of New York but neither followed up on the leads he provided” (Dealbook, 2010, para#5). Harry also stated that when he approached Grant Ward the New England regional director of the SEC, he was not prepared and did not have enough training to handle the situation at hand. In my opinion this seems to be the norm for governmental agencies and corporations as well. There are too may job being given to family and friends and not enough jobs being given out to well deserving people that can handle the aspects of the job.

This is an ongoing problem the US has and will continue to be a problem until government officials and corporations executives put some type of stipulations in place to cease the family /friend operations of hiring in government and corporation agencies. Describe three business safeguards (risk management) that may have prevented the harm caused by Mr. Madoff. Policies for corporate accountability have been created by having corporations implement internal controls. An internal control is an “organizational plan that measures a company policy to safeguard assets.

This can be conducted by a encouraging employees to follow company policy, promote operational efficiency, and ensure accurate and reliable accounting records” (Hoerngrn, Harrison, & Oliver, 2010, p. 406). According to the article, SOX Sarbanes-Essential, “the Oxley act requires all financial reports to include an internal control report” (2003-2006, para. 4). The internal control report is a report that shows that the company’s financial data is accurate and that the company has adequate controls in place to safeguard company assets.Companies safeguard their assets by hiring competent, reliable and ethical personnel. Once personnel is hired they should assign responsibilities making sure to separate duties so that a format with checks and balances is in place.

All documents should be ordered pre-numbered so that checks, invoices and other document can be accounted for. And last audits should be conducted on a regular basis with signing officers reviewing all reports making sure the reports do not include any untrue information and has not omitted any material before signing off on any documents.Describe three ways private investors might have better protected themselves from risk. Three ways private investors might have better protected themselves from risk were by requesting copies of opening documents and reviewing monthly statements each month, completing an extensive background check on the investment management company they choose to oversee their finances, and also by completing internal audits on their own investments as well. Internal audits should begin at the front line.

Many banks and insurers have come a long way in their projects to strengthen risk capabilities, and have come to the conclusion that for instilling a greater awareness of risk principles it will have to start in the front office- the so-called first line of defense” (Rebuilding Trust, 2010, para. 5). According to the SAS Institute Inc.

this is going to be one of the harder task to accomplish due to the gaps in risk expertise. Also there is going to be a need for focus on compliance. Around the world, regulators have stepped up their scrutiny of financial institutions, but few would argue against a tougher regulatory regime for financial institutions and financial investors surveyed that due to the uncertainty over future regulations are concerned about putting processes into place” (2010, para. 9). Once companies start hiring the correct personnel to conduct business in a professional way it will be easier for them to invest into proper training and the regulations should ot be a problem for those who are conducting business in an ethical way. Describe three legal actions that possibly may be brought against Mr. Madoff under criminal or civil law.

Three legal actions that may be brought against Mr. Madoff are criminal charges and civil charges. Reference Bagley, C. & Savage, D. (2010). Mangers and The Legal Environment.

:Strategies for the 21st century: Selected chapters:2010 custom edition (6th ed. ) Manson, OH: South-Western Cengage Learning.Conspiracy. (2011). In Merriam-Webster Online Dictionary.

Retrieved from http://www. merriam-webster. com/concise/conspiracy Dealbook. (2010). Madoff Whistle-Blowers Slams S.

E. C. in New Book. Nytimes. com.

Retrieved from:http://dealbook. nytimes. com/2010/02/26/madoff-whistle-blower-slams-s-e-c-in-new-book/? scp=8&sq=parties%20impacted%20by%20madoff%20ponzi%20scheme&st=cse Horngren, C. T. , Harrison, W. T.

, & Oliver, M. S. (2009).Accounting: Chapters 1-8 2010 custom Edition (8th Ed.

). Upper Saddle River, NJ: Pearson. Rebuilding Trust: Next Steps for Risk Management in Financial Services. (2010). Sas. com.

Retrieved from http://www. sas. com/resources/asset/erm-survey-2010. pdf Strom, S. (2008). Wall St. Fraud Leaves Charities Reeling.

Nytimes. com Retrieved from:http://www. nytimes. com/2008/12/16/business/16charity. html? scp=1&sq=Companies+impacted+by+madoff&st=nyt