Berni Madoff Ponzi Scheme


One of the key repercussions of the Ponzi Scheme was the destruction of property around the world. It is worth noting that the Ponzi Scheme led to the write down of billions of dollars around the globe. Additionally, weaker and smaller banks around the world faced high levels of bankruptcies and could not continue with their operations because of the lack of finances.  Apparently, most of these banks had invested their money in the Berni Madoff Ponzi Scheme with the hope that they were going to earn higher returns and ended up in shock after the collapse of the scheme. They had invested large sums of money and could not bear the large sums hence running bankrupt. Pensioners, hospitals, and universities were also extremely devastated under the Ponzi Scheme.

Another repercussion is that the Modoff  Ponzi Scheme led to hedge funds limiting their withdrawals. It was difficult for most investors to withdraw the large amounts of cash they had invested in the scheme as the withdrawals had gone beyond the required limit. This meant loss of revenue among such investors hence making it difficult for their businesses and other operations to continue effectively.

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Parts of the government regulatory agencies were exposed to complicity and corruption. Notably, there was immense deregulation on the part of the financial elite into partners and facilitators of financial skullduggery. This is an indication that the government faced instances of being exposed to corruption as some of its members were forced to take part in the Scheme. Therefore, the government found it difficult to protect its own citizens from the scheme as some of its parts were facing the exposure to complicity and corruption.

Impact on Investors

It is vital to note that investors lost an approximate sum of $18 billion. This is an excessive sum of money to lose in an investment, as the required rate of return cannot be achieved. The $100 investment in Berni Madoff in 2008 had dropped in value to $79 hence leading to such losses. The payout also ranges from $1700 to 520 millions, but after the effects of the Scheme, they payout stands at an average of about 2million. All these indicate the enormous losses that investors had to face because of the Madoff Ponzi Scheme.

Shockingly, some investors gained from the scheme. They were able to recover the returns on their investments hence gaining favorably from the scheme. On overall, most investors lost large sums of their investments in the scheme. This led to the loss of trust among investors, as they perceived the entire scheme unproductive.

His Family

Mark Madoff, the son of Madoff hang himself in his New York apartment in December 2010. This emanated from the weight of the entire matter. It was difficult for him to bear what had occurred and the subsequent happenings that would arise in relation to his father’s Ponzi Scheme. It was a difficult situation and the only shortcut to evade the issue was to commit suicide and rest safely.

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In a letter to Mark’s wife (Stephanie), Bernie asserted, “Prison is safer for him that walking on the streets of New York and brags about the respect admiration extended to him by his fellow inmates. This is indicative of how he found it difficult to continue living in New York after the occurrence of the loss. According to Bernie, prison offered a safer environment for him and it could ensure he stays safe from the millions of people who had been affected by the scheme. He accessed security while in prison compared to when he could be living in New York.

Ethical Issue

The Madoff Ponzi Scheme is a clear indication of the lack of moral responsibility on the part of its promoters. Berni Madoff does not uphold the required level of moral responsibility required of financiers. The Scheme promises high returns to different investors, but does not fulfill the promise because of the high level of fraud. The lack of moral responsibility is highlighted in the manner Madoff defrauds most investors through his scheme hence leading to suffering on their part. Most of them had invested huge sums of money with the hope that they were going to earn favorable returns from their investments. The absence of moral responsibility on the part of Madoff led to the loss of these funds hence leading to massive losses among investors. Additionally, Madoff exhibits a lower level of moral responsibility through the assertion that the prison is a safer place for him. He does not care about the interests of the people who had incurred immense losses through the flawed scheme. The large amounts of losses that had been witnessed all over the world did not bother Berni Madoff hence indicating the absence of moral responsibility on his side. He did not uphold the required moral responsibility of proving the required return to investors who had dedicated large amounts of their money toward the scheme.

Kantian rights that assert that an action is only good if performed out of duty were also not upheld by Madoff. Ethics asserts that individuals must be ready to take all actions as a duty on their side. They should not take duties as a burden, but should ensure beneficiaries get their right through moral performance of such duties. Madoff did not take care of the large amounts of funds brought in by investors hence indicating a failure in his moral duties. The start of the Scheme was aimed at benefitting different people by ensuring they derive high as high returns as possible. Fraud and greed are indicative of the ethical issues emanating from the lack of duty on the part of Madoff. He did not take into consideration the interests of investors and hence provide for their needs as required. This contributed to the suffering of world economies and even the government finding itself in a dilemma as some of its parts were being exposed to corruption gradually.

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Utilitarianism holds that a proper course of action is the one aimed at maximizing utility. It is supposed to increase the level of happiness among individuals and reduce the level of suffering. Madoff increased the level of suffering among investors and other individuals around the globe. He did not put into consideration their interests and returns that could make them happy by ensuring they access the required level of benefits. This is an indication of the failure in the ethical standards relating to Berni Madoff Ponzi Scheme. There was no provision for the interests and the happiness of investors and the world. The world was left counting losses because of the destruction of high amounts of financial resources in the name of investing and securing a better future for individuals. The high levels of fraud and the driving greed for money drove the scheme toward a floppy direction hence leading to losses among most individuals around the globe. Effective care was not taken to ensure investors and other individuals around the globe gain effectively from the scheme. It was driven toward defrauding individuals and leaving them in devastation and despair. Most investors lost trust in the scheme because of the unbelievable events that had happened to their enormous amounts of cash in the form of investments for better returns.

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