Bernie Madoff Sentenced to 150 Years in Prison

Bernie Madoff’s actions are the symptoms of a disease. The current economic crisis blew the lid off several of these Ponzie schemes, including that of R. Allen Stanford, who is currently in jail awaiting trial for allegedly conducting a Ponzie scheme himself. It is difficult to believe that the economic crisis had a “bright side” but this was it. When the economic crisis hit, clients under financial pressure began requesting their money, and in Madoff’s case he could not find the cash to pay them because instead of investing their money, he was purchasing homes, a penthouse, yacht etc., not anticipating that the crisis would occur.

The crime behind the Ponzie Scheme, is that the later deposits into the scheme are used to pay earlier investors, and this worked for Bernie Madoff for years, until his luck ran out. He like the others who have been found accused, or found guilty of these schemes recently, have not kept up with their history lessons, because the original creator of this scheme, Charles Ponzie, after whom it was named, in the 1920’s, was arrested and charged with grand larcency, spending three and half years in prison.

The laws such as Sarbanes-Oxley were passed by Congress to deter these crimes, but at the very least, to find the people who are engaging in it. The Bernie Madoff’s case is a typical example, when laws are only as good as the people responsible to enforce them. The Securities Exchange Commission whose responsibility it is to enforce these laws, was reportedly alerted several times by two different sources to investigate Bernie Madoff, but as history as shown, this was never done extensively, and Madoff was able to stay under the radar defrauding unsuspecting investors for several more years. It is amazing that the powers that be at the SEC were not held accountable for the crimes they committed by not doing their jobs.

Did investors learn anything from these cases? or will the SEC become proactive rather than reactive? only time will tell. The only thing is certain, is that Bernie Madoff will have all the time in the world to discover the meaning of the word “greed” like many others before him. Investors also wait for the other “shoe to drop” because Bernie was not involved in this alone, despite his assurances.