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BERNIE MADOOF SCANDAL Presented By: Mica S. Alnooh Company BackgroundBernard L. Madoff Investment Securities LLC.founded by Bernard Lawrence"Bernie"Madoff in 1960.The firm headquartered in New York, New York.It operates as a securities broker/ dealer in the United States and internationally. The firm was the sixth largest market maker on Wall Street the year Madoffs arrest in 2008.

What happened?Tricked investors with The method of a classic Ponzi scheme.The investors were tricked for $64.8 billion.

Main playersBernard Lawrence"Bernie"Madoff- He was the master main of the scam chairman until his arrest on December 11, 2008.He is the former non-executive chairman of theNASDAQ.

Main playersDavid G. Friehling:Madoff's "listed" accountant.He signed off on audits on Bernard L. Madoff Investment Securities LLC's books.Friehling falsely represented to investors and the Securities and Exchange Commission that he and the firm had conducted audits, and the Madoff firm was financially sound.

Main playersFrank DiPascali:"Director ofoptions trading" and as "chief financial officer" at Madoff Securities for 33 years. He admitted to the Court that he learned in the late 1980s or early 1990s that no trading was occurring in Mr. Madoff's investment-advisory client accounts.

How did they do itAccording to Bernie Madoff it started as perfectly legitimate business but he confessed that the return given since approximately 1995 were fabricated.When a customer made an investment, he simply put the money into a bank account and when asked for a withdrawal he took the money piled up in that account.Withdrawals were simply covered by new investmentHow did they do itAt the end of each month Madoff sold all stocks and financial instruments so that the hedge fund only reported the amount of cash to the authorities. How they got caught?When financial analystHarry Markopolos informed the SEC that he believed it was legally and mathematically impossible to achieve the gains Madoff claimed to deliver but he was ignored by the Boston SEC in 2000 and 2001 as well as by Meaghan Cheung at the New York SEC in 2005 and 2007 when he presented further evidence.

How they got caught?On December 10, 2008, Madoff's sons told authorities that their father had confessed to them that theasset management unit of his firm was a massive Ponzi scheme, and quoted him as describing it as "one big lie".

PenaltiesBernard Lawrence"Bernie"Madoff: sentenced to serve 150 years in prison with restitution of $17 billion..David G. Friehling: sentence of 20 years. As of June 2012, he awaits sentencing.

PenaltiesFrank DiPascali: He faces a maximum of 125 years in prison

Fun factMadoff fraud was revealed just months after the 2008 U.S financial collapseMadoff's personal and business asset freeze created a chain reaction throughout the world's business and philanthropic community.

Conclusion and RecommendationAs a conclusion, Since the internal auditor reports to board of directors and the chairman of the board and its members are members of Madoffs relative and friends the internal auditor was forced by Madoff to cover up the fraud by falsifying audit reports to the Securities and Exchange Commission.

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