Bernie Madoff Case Summary - University Essay Example

ExchangeCommissionBernard L - Bernie Madoff Case Summary introduction. Madoff Investment Securities LLC operates as a securities broker/dealer in the United States and internationally. It provides executions for broker-dealers, banks, and financial institutions. The company was founded in 1960 and is headquartered in New York, New York. As of December 15, 2008, Bernard L. Madoff Investment Securities LLC is in liquidation. Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 Bernard Madoff was born on April 29, 1938, in Queens, New York. He used $5,000 earned from a lifeguarding job to found his investment company.

Madoff’s firm offered reliable returns and his client list included celebrities like Steven Spielberg - enrica cotellessa pitz. Madoff’s son reported him for securities fraud and Madoff pleaded guilty to 11 felony counts. In 2009, the 71-year-old was sentenced to 150 years in prison. Bernard Lawrence Madoff was born on April 29, 1938, in Queens, New York, to parents Ralph and Sylvia Madoff. Ralph, the child of Polish immigrants, worked for many years as a plumber. His wife, Sylvia, was a housewife and the daughter of Romanian and Austrian immigrants. Ralph and Sylvia married in 1932, at the height of the Great Depression.

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After struggling financially for many years, in the early 1950s, they became involved in finance. Records of his Madoff’s financial dealings show they were less than successful with the trade. His mother registered as a broker-dealer in the 1960s, listing the Madoffs’ home address in Queens as the office for a company called Gibraltar Securities. The SEC forced the closure of the business for failing to report their financial condition. The couple’s house also had a more than $13,000 tax lien which went unpaid from 1956 until 1965.

Many suggest that the company and the loans were all a front for Ralph’s backhanded dealings. But the young Madoff showed no interest in finance during this time; he was far more focused on girlfriend Ruth Alpern, who he met in junior high. The couple continued to date while they attended Far Rockaway High School in 1952. Madoff’s other interest was the school swim team. When he wasn’t competing in meets, his swim coach hired Bernie as a lifeguard at the Silver Point Beach Club in Atlantic Beach, Long Island. Madoff began saving the money he made on the job for a later investment.

Madoff Securities After graduating from high school in 1956, Madoff headed to University of Alabama, where he stayed for one year before transferring to Hofstra University. In 1959, he married high school sweetheart Ruth, who was attending Queens College with a focus on finance. The next year, Madoff earned his bachelor’s degree in political science from Hofstra. Ruth also graduated, and landed a job on the stock market in Manhattan. Bernard began to study law at Brooklyn Law School, but quit later that year to began his own investment firm.

Using the $5,000 he earned from his summer lifeguarding job and a side gig installing sprinkler systems, Madoff and his wife founded Bernard L. Madoff Investment Securities, LLC. With the help of Madoff’s father-in-law, a retired C. P. A. , the business attracted investors through word-of-mouth and amassed an impressive client list including stars such as Steven Spielberg, Kevin Bacon and Kyra Sedgewick. Madoff Investment Securities grew famous for its reliable annual returns of 10 percent or more and, by the 1980s, his firm handled up to 5 percent of the trading on the New York Stock Exchange.

As Madoff’s fame as a successful investor grew, Madoff Securities began using computer technology to develop stock quotes. The program that the firm tested and helped to develop became the National Association of Securities Dealers Automated Quotations, or NASDAQ. Madoff later served as president of the board of directors for the NASDAQ stock exchange. As the business expanded, Madoff began employing more and more of his family members to help with the company. His brother Peter joined him in the business in 1970 as the firm’s chief compliance officer.

Later, Madoff’s sons Andrew and Mark also worked for the company as traders. Peter’s daughter, Shana, became a rules-compliance lawyer for the trading division of her uncle’s firm, and his son, Roger, joined the firm before his death in 2006. Arrest But Madoff became famous for a very different reason on December 10, 2008. After the investor informed his sons that he planned to give out several million dollars in bonuses two months earlier than scheduled, they demanded to know where the money was coming from. Madoff then admitted that a branch

of his firm was actually an elaborate Ponzi scheme. Madoff’s sons reported their father to federal authorities, and the next day Madoff was arrested and charged with securities fraud. Madoff reportedly admitted to investigators that he had lost $50 billion of his investors’ money, and pled guilty to 11 felony counts—securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the United States Securities and Exchange Commission (SEC), and theft from an employee benefit plan—on March 12, 2009.

While the extent of his fraud is still being uncovered, prosecutors say $170 billion moved through the principal Madoff account over decades, and that before his arrest the firm’s statements showed a total of $65 billion in accounts. Madoff was imprisoned until a sentencing hearing scheduled for June 16th. He was sentenced to 150 years in prison on June 29, 2009—the maximum possible prison sentence for the 71-year-old defendant. Enrica Cotellessa-Pitz, the former controller at Bernard L.

Madoff Investment Securities LLC (BMIS) has pleaded guilty to charges of conspiracy, falsifying books and records and making false statements to the Securities and Exchange Commission. Cotellessa-Pitz, 53, pled guilty before U. S. District Judge Laura Taylor Swain on December 19. Cotellessa-Pitz admitted she helped Madoff’s co-conspirators create false and fraudulent documents that were given to the SEC in connection with its audit of BLMIS. Cotellessa-Pitz also admitted to helping create false and fraudulent documents in connection with tax audits of Madoff.

The SEC earlier charged Cotellessa-Pitz, 53, with falsifying books and records in order to hide Madoff’s fraudulent investment advisory operations from regulators. The SEC alleges that Enrica Cotellessa-Pitz, who worked at Bernard L. Madoff Investment Securities LLC (BMIS) for more than 30 years, assisted in falsifying BMIS’s internal accounting records in order to misclassify hundreds of millions of dollars of income purportedly generated by BMIS’s investment advisory operations. Cotellessa-Pitz also falsified financial statements filed with the SEC and other regulators as well as materials that

were prepared to deceive SEC staff examiners, federal and state tax auditors, and other external reviewers. “To keep his massive fraud alive, Madoff had to hide as many facts about his advisory operations as possible,” says George S. Canellos, Director of the SEC’s New York Regional Office. “Cotellessa-Pitz along with other senior BMIS personnel played a critical role in this effort by creating false documents to deceive federal and state regulators. ” According to the SEC’s complaint against Cotellessa-Pitz filed in U.

S. District Court for the Southern District of New York, she played a central role in falsifying these records as directed by Madoff and Bonventre. Madoff used the false records to artificially improve the firm’s reported revenue and income as well as to deceive regulators who sought to review the firm’s operations and financial results. The SEC alleges that Madoff instructed employees to transfer hundreds of millions of dollars from bank accounts holding investor funds to the firm’s operating bank accounts.

Madoff’s goal was as simple as it was misleading – to use stolen investor funds to hide the significant losses incurred by BMIS’s market-making and proprietary trading operations. Cotellessa-Pitz joined this effort after she was promoted to controller at the firm in 1998, when Madoff and Bonventre instructed her to falsely account for these transfers of investor funds as adjustments to certain securities positions on BMIS’s stock record. According to the SEC’s complaint, Cotellessa-Pitz then used these figures to calculate and overstate the trading income purportedly generated by Madoff’s market-making and proprietary trading operations.

Cotellessa-Pitz included these bogus figures on BMIS financial statements, which she then filed with the SEC and other regulators. Cotellessa-Pitz and other BMIS personnel then falsified documents provided to regulators to obscure the firm’s advisory operations and the transfer of investor funds to the operating bank accounts. Cotellessa-Pitz worked for Madoff from 1978 through December 11, 2008. She started with the firm while she was a college student and became controller in 1998. Beginning in the late 1990s, until the firm collapsed in 2008. She faces up to 50 years in prison.

Background of the company a. What they do? b. How long in business? c. Public or private? d. Name of C-Suite (CEO, CFO and Controller) * Frank DiPascali He referred to himself as “director of options trading” and as “chief financial officer”. * Patrick Schadood CEO Bernie Madoff founded the Wall Street firm Bernard L. Madoff Investment Securities LLC in 1960 and was its Chairman until he was arrested in 2008. Bernard L. Madoff Investment Securities (aka Madoff Securities) was a market maker in US stocks, including all of the S&P 500 and more than 350 NASDAQ stocks.

The firm moved large blocks of stock for institutional clients by splitting up orders or arranging off-exchange transactions between parties. It also performed clearing and settlement services. Clients included brokerages, banks, and other financial institutions. In addition, Madoff Securities managed assets for high-net-worth individuals, hedge funds, and other institutional investors. The firm is being liquidated in the aftermath of a fraud scandal involving founder Bernard Madoff.

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