Presented By:Muhammad Tanveer IshaqMubarez Khattak

THE FRAUD OF THE CENTURY

The Case of Bernard Madoff

CONTENTHistory Ponzi Scheme IntroductionThe story lineThe Madoff Fraud Investigation and ChargesConclusion

HistoryThe 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 SchemeConvince 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 SchemeInvestors 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 MadoffFounder 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 ScamMadoff 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 arrestedBernard Madoff was

arrested on December 11, 2008.

His sons found out and informed authorities.

Magnitude of ScamMadoff committed

the biggest scam by a human being, scamming close to 65 billion dollars.

Afffected thousands of investors.

Legal SystemMadoff plead guilty

to charges of fraud .

Remains in jail until June.

Faces 150 years in charges.

Investigation and ChargesInvestigators 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.

ConclusionBernard 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.

QUESTIONS???