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Bernard Madoff's Theory Of Social Pressure

970 Words4 Pages

Based on the book Annals of Gullibility, author Greenspan (2009) a psychologist, proposed the four ‘induced-social’ components in his theory of gullibility. The four factors that are in the favor of the achievement of Ponzi scheme are the situation, cognition, personality, and emotion.
For the first factor, Greenspan (2009) suggested that unsuspecting behavior is more probable to exist if the social and other circumstance pressures are strong and the contrary would be less feasible to happen if the social and other situational pressures are poor. Jacobs and Schain (2011) argue for the second component that is the cognition. Jacobs and Schain (2011) also pointed out that the perpetrators represent themselves as a moral and positive person. …show more content…

A study by Nodon (2015) has demonstrated that the fraud triangle consists of three factors: motivation, opportunity, rationalizations. The first element is motivation or pressure, Buchholz (2012) clarified the main reason that pressure people to commit an act is due to financial complication. The incentive for Bernard Madoff was to keep a trend for a successful lifestyle Buchholz (2012). Hurt (2009) elaborated that Madoff was feeling pressurized due to the sum of money he has to repay to existing investors. The second factor of fraud triangle is opportunity, there are high chance fraudsters would not be exposed because of their powers and position and there is a direct relationship between fraud opportunity and weak internal control (Dorminey et al., 2010). In the Madoff case, as a leader of the organization, he had sufficient power to plan the internal control system and corporate governance in such a manner that would only be favorable to him. It was found that the segregation of duties in Madoff scheme was not present (Fuerman 2009). The last element of fraud triangle is rationalizations - it is important to note how the individual is justifying the act committed by him. Day (2010) evaluates that Madoff was practicing this scheme firstly for his own benefit and for the benefit of his family by taking advantage of investors. However, Henriques (2012) argues that for all the banks and funds that Madoff had cheated on, they should be aware there are some issues in the plan as they were monetary

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In this paper I will be analyzing the research on Mickey Monus and his fraud crimes. I will exam the fraud and how it applies to this course, such as where it belongs on the fraud tree. Along with what type of fraud was committed, and how they got away with it for so long. Mickey Monus, the former president of the most successful multi-billion-dollar discount drug chain in American history, is from a town in Ohio called Youngstown.

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This assignment regards contributing factors to murder. Determining factors that contributed to the murderer’s behavior for each specific case might be informative when deciding the most suitable way the offenders should be processed through the criminal justice system. Murderers might decide to kill for very different reasons, including but not limited to passion, anger, and greed. Murderers’ behaviors might be influenced by multiple environmental, psychological, and biological factors. To fulfill the requirements of this assignment, the researcher selected a convicted murderer and then described the case.

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Now that you're mindful of where the expression "Ponzi plan" originates from, you'll show signs of improvement comprehension of Bernie Madoff and his unscrupulous play! Bernard Lawrence Madoff was conceived on April 29, 1938, in Queens, New York, to folks Ralph and Sylvia Madoff. Ralph, the offspring of Polish settlers, worked for a long time as a handyman. His wife, Sylvia, was a housewife and the little girl of Romanian and Austrian migrants.

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A white collar crime is committed to make profits, they are not the acts of madmen or irrational people. They are rational acts that often require planning and careful

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In the civil securities fraud context, the Supreme Court has held that intent indicates that the plaintiff act willfully with a realization that she was acting wrongfully, Ernst & Ernst v. Hochfelder, 425 U.S> 185, 193, 47 L.Ed. 2d 668, 96 S. Ct. 1375 (1976). Or in the criminal securities indictment did the plaintiff have a mental state embracing intent to deceive, manipulate, or defraud, United States v. Dixon, 536 F.2d 1388, 1395 (2d Cir. 1976). The issue is not which definition of intent to apply, but whether, taking into account the heightened standard of proof in criminal cases, is there sufficient evidence of Stewart’s intent to deceive investors.

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There are different types of “white collar crime” that exists inclusive of fraud, embezzlement, insider trading and Ponzi schemes. “White collar crime” affects everyone and the main driving force of the perpetrator of the white collar crime is mainly greed plain and simple. There are different theories associated with “white collar crime”. One of these such theories is the rational choice theory. The rational choice theory indicates that persons have a choice of whether to commit an offence or not.

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The fraud triangle is made up by three distinguished elements. These elements in the fraud triangle consist of pressure, opportunity, and rationalization. The overall representation of the fraud triangle can be seen as the specific model to spot any type of high-risk unethical and fraudulent performances being conducted by a company, in this case Cendant Corporation. Cedant Corporations actions can be analyzed by the fraud triangle by the way that their senior management/top management decisions fell into the three categories of pressure, rationalization, and opportunity. Cendant Corporation had the pressure to comply with their shareholders and to maintain a stable financial status to prove that they were a profitable organization with a bright company image.

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This three element fraud is often referred as a fraud triangle by the researchers (Cohen, Ding, Lesage & Stolowy, 2010, p. 276). On the other hand the theory of planned behavior focuses on the intentions behind the planned behavior. Ajzen (1991, p. 188) explains this as “attitude toward the behavior… refers to the degree to which a person has a favorable or unfavorable evaluation or appraisal of the behavior in question”. Cohen, Ding, Lesage & Stolowy (2010) have combined the fraud triangle and theory of planned behavior to understand that how the two theories can be collectively studied to find out the reasons behind the unethical activities that results in corporate frauds. Cohen, Ding, Lesage & Stolowy (2010) in their work studied various organizations including WorldCom and identified following: • WorldCom’s management had an excessive interest in maintaining the entity’s stock price and earning trends (p. 287).

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Carl Hanratty not only risks more embarrassment for himself and the FBI, but he also risks the potential loss of his job in his pursuit of capturing the wanted fraud criminal, Frank Abagnale. Abagnale also creates risks for himself; as every time he forges a new check he runs the risk of arrest as well as the peril of losing all the money he has previously ‘earned’. Despite the risk factors and dangers, Frank takes these chances in order to further his phony

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“Chasing Madoff”, a documentary released in 2010 portrays the way the whistleblower, Harry Markopolos, uncovered Bernie Madoff’s fraud scheme and his ten-year struggle to get the SEC to investigate. The documentary begins with an introduction to Harry Markopolos and his former coworkers Frank Casey and Neil Chelo. The three men work in finance, with investment portfolios. They were aware that in the finance industry there was much talk about an investment company making their customers high returns. Casey came across some investment information from a client of Madoff and gives the information to Markopolos to look over.

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White-collar crime is a financially motivated nonviolent crime committed by business and government professionals. The term “white-collar crime” was first used by criminologist Edwin Sutherland in 1939 for the various nonviolent crimes usually committed in commercial areas for financial gain. White-collar crimes are classified as fraud, bribery, Ponzi schemes, insider trading, labor racketeering, embezzlement, cybercrime, copyright infringement, money laundering, identity theft, and forgery. Even though these crimes are committed without the use of weapons or threats of physical violence, it does not mean that they don’t create victims as they might destroy a person life or a company’s life cycle.

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