BERNIE MADOFF

Bernie Madoff

Bernie Madoff

1.  Describe three types of illegal business behavior alleged against Mr. Madoff and for each type of behavior; explain how the behavior is illegal or unethical in the conduct of business.

During the sentencing, Madoff was charged with eleven counts of illegal business behavior. In this paper we will look at three of these illegal behaviors. These are; securities fraud, wire fraud and money laundering.

Securities fraud

This is a crime whereby businessmen violate the laws set to protect securities traders and investors. Businesses or businessmen that are mostly culprits of this crime include analysts, stockbrokers, corporations, brokerage firms, private investors and investment banks. An example of such an irregularity can happen where an analyst in a brokerage firm is compelled to give a favorable rating to a stock in order to get a company's investment banking business, while knowing that such a move is not a good for investors. Or a private investor can commit securities fraud if he acts on inside information of a business. It is therefore a practice where investors are coerced into making purchases or sale decisions basing on information that is forged, a practice that in most cases lead to big loses and infringing on the securities laws. It is a practice that dishonors the laws set to protect the securities traders and investors. This is a very serious offense that can carry both criminal and civil punishments whereby investigations can lead in one being imprisoned. The Securities and Exchange Commission (SEC) mostly regulates against the following forms of securities fraud; misrepresentation, insider trading, and accounting fraud. In this case, Madoff's business used investments made by new clients to pay for fictitious profits on the old clients' investments (Katz, 2009).

Wire fraud

This is a business crime which occurs when electronic means like the telephone computer and many others, are used by a person in order to achieve an economic advantage via fraudulent activities. Wire fraud laws are frequently used where emails, text messages or phone calls are used with the aim of defrauding innocent investors through a criminal scheme. Wire fraud crimes are more often charged against individuals alongside other crimes. An individual commits wire fraud when he or she invents or intends to come up with a system to trick a person into investing in false businesses through interstate wire services. Wire fraud charges in this case were filed against Bernard Madoff in relation to his Ponzi scheme. His crimes were based on his use of the phone and mail to swindle money from investors (Henriques, Zachary, 2008).

Money laundering

This is a process where an individual engages in financial dealings to hide the identity, source, and destination of money that has been unlawful gained. It can also be the gaining of material benefit of any form that is entirely or in part proceeds from a felony thereby masking the fact that they are profits as a result of a crime that denies the right beneficiaries from enjoying the ...