Presented By:

 Muhammad Tanveer Ishaq

 Mubarez Khattak
The Case of Bernard
Madoff
CONTENT
 History
 Ponzi Scheme
 Introduction

 The story line

 The Madoff Fraud

 Investigation and Charges

 Conclusion
 History
 The fraud perpetrated by Bernard Madoff that was
discovered in December 2008.
 It is known as Ponzi scheme.
 Madoff took money from new investors to pay earning
for existing customers without ever actually investing
the money.
 People trusted Ponzi because he created an image of
power, trust, and responsibility.
Ponzi Scheme
 A Ponzi Scheme is a fraud investment operation that pays
returns to investors from their own money or money paid from
other investors, rather than from actual profit earned.

 They don’t invest the money, but pay the promised returns with the
investors own money.

 The money of new investors is being used to pay the old investors.
Step in Ponzi Scheme
 Convince a few investors to place money into the
investment.
 After the specified time, return the investment money to
the investors plus the specified interest rate or return.
 Pointing to the historical success of the investment,
convince more investors to place their money into the
system.
Protection from Ponzi Scheme
 Investors should be suspicious if their investments
constantly outperform competitors or offer returns above
the legal rate or market rate.
 Investors should not accept vague explanations from
advisors.
 Promises of high returns are a red flag for any investment.
 Avoiding investments you don’t understand or for which
you can’t get complete information.
Who was Madoff
 Founder of Bernard L Madoff Investment Securities
(BLMIS).
 Former two-time chairman of the NASDAQ (National
Association of Securities Dealers Automated Quotations).
 Considered for the post of Treasury Secretary in the 1990s .
 Sat on the board of directors of the Securities Industry
Association.
Who was Madoff Cont…
 Madoff was not just a criminal. He was also a highly
successful, legitimate businessperson.
 Madoff started a legal, investment business in 1960s by
buying and selling over the counter stocks. He basically
acted as a wholesaler between institutional investors. In
the 1990s, Madoff started doing his illegal activity causing
several investors millions of dollars. Madoff began hiring
several family members to help his business grow.
The Scam
 Madoff was the chairman of the Bernard L Madoff
Securities LLC( limited liability company)
 Starting in the early 1990’s, Madoff told family and friends
that if they invested money in him, he would add 10%
interest to their account each year.
 Investors believed the 10% was put into their account and
spread the word that Madoff was reliable, and he became
more and more popular each year.
The Scam
 Since people believed the 10% was being added each year, they
had no reason to take their money out.

 If they did take the money out, Madoff would pay them with
other peoples money.

 Madoff made every client feel like he or she was his only client.

 Madoff continued doing this until October of 2008.

 Madoff was arrested
 Bernard Madoff was
arrested on December
11, 2008.
 His sons found out and
informed authorities.
Magnitude of Scam
 Madoff committed the
biggest scam by a human
being, scamming close to
65 billion dollars.
 Afffected thousands of
investors.
Legal System
 Madoff plead guilty to
charges of fraud .
 Remains in jail until
June.
 Faces 150 years in
charges.
Investigation and Charges
 Investigators in this case included the SEC, FBI, and
the Financial Industry Regulatory Authority.
 Madoff business was not registered with the SEC until
2006.
 Madoff has been charged with criminal securities
fraud.
Conclusion
 Bernard Madoff is accused of creating a Ponzi scheme that
destroyed $65 billion in investments.Many people are
trying to understand how so many experienced investors,
including Banks, Insurance companies, and nonprofits
foundations lost billions of dollars to an individual who
was able to deceive them.
 He was an educated and experienced individual in a
position of power, trust, respectability, and responsibility
who abused his trust for personal gain.