White Collar Crime: Bernard Madoff's Ponzi Scheme

White Collar Crime: Bernard Madoff’s Ponzi Scheme We have all heard of a Ponzi scheme and may know of someone who has fallen victim to this type of fraud but we may not all be familiar with the definition of a Ponzi scheme. A Ponzi scheme is an investment fraud in which funds from a new investor are taken to pay an existing investor an alleged return on their investments. New investors are recruited by being guaranteed high return rates with little to no risk for loss. The organizer of the Ponzi scheme is responsible for bringing in additional money from new recruits in order to make the promised payouts to previous investors. The money must keep revolving in such a manner to allow clients to believe the profits are coming from a legitimate …show more content…
In the Madoff firm the assets were not being verified and the transparency of the investments for the clients was lacking at best. Financial institutions such as JPMorgan Chase were being heavily scrutinized for their involvement in the Madoff scandal as the bank served as Madoff’s primary banker even as evidence surmounted to Madoff running an elaborate fraud operation. The Madoff scandal opened a revolving door of scrutiny for all financial institutions as well as investment firms for the lack of trust to their clients as well as the greed being held behind closed doors. Bernard Madoff committed an economic crime which is viewed as a white collar crime. In most cases white collar criminals are “often highly educated, socially accepted people who hold high-level positions of trust within the company” (Orthman & Hess, 2013). Since white collar crimes are typically committed by top ranking executives the crimes go unreported to authorities as to not disrupt the company’s reputation or show any signs of weakness within the organization which could lead to more financial trouble. Most white collar criminals are never arrested and very few are convicted sue to the fact that the organizations who have been violated want to keep the matter out of the public’s attention and deal with the matter internally. Very few organizations involve the authorities. Since white collar crimes are infrequently reported to the proper authorities, law enforcement officers have little to no experience investigating economic crimes. Very few law enforcement agencies have the personnel and equipment necessary to investigate a financial crime which is why contracted private investigators are usually referred for this type of investigation. Although most white collar crimes are never investigated by law enforcement Bernard Madoff’s scandal was. Madoff was the founder of his