ipl-logo

Ponzi Scheme Research Paper

1301 Words6 Pages

Introduction
‘Ponzi scheme’ is an expression to describe any sort of scam or con game. Its routes go back to Charles Ponzi, who pulled off the most successful example of this type of fraud in the 1920’s. This paper will discuss what a Ponzi scheme is and review a real life example and its effects on investors. Detail on how a Ponzi scheme’s strategies are in conflict with the CFA Institute Code of Ethics and Standards of Professional Conduct will conclude why investors must be aware of such double-dealing schemes.
The Definition of a Ponzi Scheme
A Ponzi scheme is a scam where the returns are given to early investors, paid for by later investors. There is never any actual business or profit generation. The return to investors consists solely of the money obtained from new investors minus a cut for the criminal running the scam. Ponzi operators resemble legitimate investment management operations but often claim to use obscure or secret trading strategies. Ponzi schemes attract investors by promising incredible returns that investors can’t find in …show more content…

To believe a 70-year-old industry expert who knew exactly what he was doing was easy. When the economy is doing well then no one complains and therefore regulation isn’t taken seriously, making it easy for Ponzi schemes to exist.
Investors such as Steven Spielberg’s charity, billionaire publisher Mort Zuckerman and Nobel peace prizewinner Elie Wiesel’s foundation for humanity are some of the victims (Bernard Madoff $50Bn Ponzi Scheme Scam Scandal, 2008). People thought they were lucky to be able to invest with Madoff because they were promised high returns between 10%-12% (Bernard Madoff $50Bn Ponzi Scheme Scam Scandal,

Show More
Related

Describe The Rationalizations Used By Mr Pavlo

425 Words | 2 Pages

He also rationalized his fraudulent activities by hiding the customer’s late payment in order to be benefitted himself, but said that he was helping people more than he was helping himself. 2. Given that Mr. Pavlo’s fraud was restricted to an accounts receivable embezzlement scheme, what symptoms might auditors observe?

Read More

Mickey Monus

742 Words | 3 Pages

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.

Read More

The Theme of Hustling in 'Gang Leader for a Day'

1564 Words | 7 Pages

For example, Sudhir is a hustler because he will do anything to get what he wants. In this particular case, he wants information. In many instances he hustled people for stories, data, interviews, and facts. He said he did this to make his research more interesting.

Read More

Great Depression Dbq

426 Words | 2 Pages

The Great Depression occurred after the stock market crash in 1929, but lasted for years after, until 1940. One reason the crash occurred was because banks were failing. Banks were lending out money to anyone even if those people did not have good credit. Another reason was that productivity of products were high, but the demand for those products decreased. Since people were not buying, companies were losing money, which led to lay-offs.

Read More

Great Depression Dbq

632 Words | 3 Pages

The Great Depression was a difficult time in American history. Many families and businesses suffered due to the stock market crash. Despite the stock market crash being a contributor to the Great Depression, the Depression did not happen because of it. There were causes that led up to the crash such as the get rich quick mentality, the Smoot Hawley Tariff, and the bank failures that led to the stock market crash and contributed to the Great Depression. Wall Street was seen as a “money trust” and “a place where insiders fleeced small investors” (Give Me Liberty, Eric Foner, pg 786).

Read More

Jay Gould As A Captain Of Industry Essay

651 Words | 3 Pages

The late 19th century is referred to as the “Gilded Age”. Although everything seemed fine on the surface, it was corrupt underneath. From the end of Reconstruction in 1877 to the Panic of 1893, the economy in America nearly doubled in size. At the time, the government was very pro-business and looked favorably upon the growth. The wealthy were given the title of either a captain of industry, a businessman whose means of acquiring a fortune contributed positively to the country, or a robber baron, a businessman who used immoral methods to get rich.

Read More

The Pros And Cons Of Robber Barons

638 Words | 3 Pages

After the Civil War, Americans converged to build a nation with optimism. This saw a new wave of industrialism steered by a few entrepreneurs who set up firms to amass wealth and create employment to Americans. The success of these industrialists led historians and other scholars to refer to them as captains of industry or robber barons. By referring to them as captains of industry, historians implied that they applied their ingenuity and inventiveness to transform the economy, and impact the lives of the people through philanthropy. They were also castigated for exploiting the American workers through poor working conditions and low wages for their own selfish gain.

Read More

Pros And Cons Of Nfl Players

1244 Words | 5 Pages

another big money taker from these players is divorce and paying child support. There a numerous cases of players getting divorced or having a child. With divorce she gets half of your money for the most part. As well as child support there are cases where players have 9 children with 5 or 6 different women and have to pay child support to each and everyone of those women. Also players when they first come into money they feel the need to start being generous and there is a difference between generous and over generous.

Read More

Court Case Brief-US V. Martha Stewart And Peter Bacanovic

991 Words | 4 Pages

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.

Read More

White Collar Crime Rational Choice Theory

1831 Words | 8 Pages

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.

Read More

Income Smoothing Case Study

1491 Words | 6 Pages

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.

Read More

Lehman Brothers: Financial Fraud In 2008

2178 Words | 9 Pages

Executive Summary Lehman Brothers were an investment bank involved in transactions worth billions of dollars and one of the most powerful investment banks in the world. Lehman Brothers collapsed in 2008 following bad investment in the sub-prime mortgage market and used bad accounting practices called Repo 105 transactions to try and cover up the bad assets. This report sets out the use of the fraud triangle when describing the actions which led to the collapse. The pressure applied on the bank, the opportunity due to the lack of regulation to carry out the actions and the ability of the bank to rationalise their decision making.

Read More

The Worldcom Fraud Case

2107 Words | 9 Pages

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).

Read More

The Big Short Movie Analysis

1221 Words | 5 Pages

There are many types of investment such as bonds, stocks, investment funds, annuities etc. The sole aim of an investment is for your asset or financial input to grow into more therefore gaining you profit and the higher the risk the higher the reward generally is. Application to Movie In The Big Short Scoin Capital used growth investment strategies.

Read More

White Collar Crime Essay

830 Words | 4 Pages

The most famous type of white-collar crime is the Ponzi scheme. Ponzi schemes are run by a central operator, who uses the money from new, incoming investors to pay off the promised returns to older ones. This makes the operation seem profitable and legitimate, even though no actual profit is being made. Meanwhile, the person behind the scheme pockets the extra money or uses it to expand the operation. Ponzi schemes aren't usually very sustainable.

Read More

More about Ponzi Scheme Research Paper

Related Topics

Open Document