As Bernard Madoff awaits sentencing after pleading guilty to 11 felony counts, including fraud, money laundering and theft, last Thursday, finance experts agreed the United States Securities and Exchange Commission will have to reevaluate its investigation methods after failing to discover what some call the largest fraud in America’s history.
Bernard Madoff, who swindled nearly $65 billion from investors in an elaborate Ponzi scheme, pleaded guilty to all charges March 12 and awaits his jail sentence after his $10 million bail was revoked. The Elie Wiesel Foundation for Humanity, the charity of Boston University professor and Holocaust survivor Elie Wiesel, lost $15.2 million because of Madoff.
Madoff’s lawyers have appealed a judge’s decision to revoke bail and await his sentence in jail, according to the Associated Press.’
Chuck Gallagher, a professional business ethics and fraud prevention motivational speaker, said Madoff has ‘set the standard in terms of the dollar value of fraud.’
School of Management finance and economics professor Rui Albuquerque said after the Madoff Ponzi scheme that the SEC should intensify future investigations.’
‘I think the critical step of what the SEC needs changed is for its regulatory body to work with diligence and to make sure that these things do not happen again in the future,’ Albuquerque said.’
An individual running a Ponzi scheme promises high investment returns to investors, but instead of investing the money, keeps it and pays back old investors using money from new investors.’
SMG Department of Finance and Economics Chairman Jack Aber disagreed with the SEC’s claim that its failure to discover Madoff earlier was due to a shortage of resources necessary for regulation.
‘This is a failure of regulation, and it is hard for me to conclude that it was a shortage of resources,’ Aber said.’ ‘It might have been a misplacement of priorities, a matter of what [the SEC] puts importance on.’
Gallagher and Aber both agreed that even though the enormity of Madoff’s fraud earns the majority of the blame, investors are to be held responsible as well.’
Madoff’s investment statements had all the earmarks of suspicious reporting, Aber said.’ The statements did not appear to be professionally prepared, and were difficult to decipher.
‘I think [Madoff’s] statements were so amateurish in the way they were presented that people should have picked up on their inadequacy,’ Aber said.’ ‘No one is above being questioned.’
Gallagher said investors should have paid more attention to the faulty statements and should not have invested all of their money in one person.
‘As a victim of Madoff, you have to think to yourself, ‘Bernie did wrong, but I didn’t do right,” Gallagher said.
But the trust Madoff created between himself and his victims was one reason he succeeded, Gallagher said.
‘You had to be a kind of member of the club to be close to Bernie so he could scam you,’ Gallagher said. ‘And that’s part of the slippery slope that his investors fell into.’
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