Outline: Case Study Bernie Madoff Essay

Management 3200 Bernie Madoff DETAILED Outline
Due at the Beginning of Your Regular Week 6 Lecture on September 24 or 26 (200 points) For the Bernie Madoff DETAILED Outline, you will need to identify the five tragic truisms that best explain how or why the Bernie Madoff scandal and fraud occurred. In particular, your goals are (a) to use five (5) tragic truisms to explain how or why the scandal occurred and (b) to provide the best-available evidence to prove the five (5) tragic truisms specifically apply to and explain this case. You must use at least one tragic truism about people, one about managers and managing, one about organizations, and one about oversight and accountability.

The fifth truism may be from any category of your choice. Not all of the tragic truisms apply to this scandal. Thus, you will want to use the articles posted on Blackboard to determine which truisms best explain how/why the scandal happened. In other words, use direct quotes and paraphrases from the articles to prove which five (5) tragic truisms best explain this case. Use at least 10 of the 19 articles posted on Blackboard to support your analysis. You are welcome to use additional articles as long as you cite them appropriately in text and on the Works Cited page. Deductions

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More Essay Examples on Bernard Madoff Rubric

Late penalty of 15 percent/30 points per calendar day. Printed copy is due at the BEGINNING of the Week 6 lecture, which is when the late-penalty clock begins. Failure to include a cover page with your name, your TA’s name, and your section (up to 6-point deduction). Failure to include one Tragic Truism from each of the four categories (up to 10-point deduction). Failure to use distinct truisms and evidence; failure to minimize repetition of information and/or overuse of articles (up to 30-point deduction). Failure to include a correctly formatted MLA Works Cited page that lists all sources used (up to 15-point deduction). Failure to effectively use at least 10 sources (up to 30-point deduction). TOTAL Before Deductions

/ 200 points
Deductions

TOTAL After Deductions
/ 200 points

USE THE FOLLOWING OUTLINE TEMPLATE for your DETAILED Outline Each Tragic Truism and its respective analysis is worth 40 points.

Tragic Truism about People (40 points)
Grading Criteria
Points Awarded
Copy and paste your Tragic Truism about People; cite with (Crews). “Most people in the U.S. want to do the right thing, and they want others to do the right thing. Thus, reputation and trust are important to pretty much everyone—individuals and organizations. However, individuals do have different values, attributes, and priorities that guide their decisions and behavior. Taken to an extreme, almost any personal value, attribute, or priority can “cause” an ethical breach (e.g. risk taking, love of money or status, winning, flexibility, etc.)” (Crews). Word-for-word tragic truism quote with quotation marks and correct citation.

/ 1 point
Copy and paste the applicable subpoint(s); cite with (Crews). “Don’t assume others are like you. Trust but check” (Crews).

Enter and cite direct quote 1 from an article as evidence to support your analysis. Roderick Kramer presents a “thesis that human beings are naturally predisposed to trust –it’s in our genes and our childhood learning – and by and large it’s a survival mechanism that has served our species well” (70). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. It is in people’s nature to “do the right thing”. However, external influences and selfish motivations can alter this natural instinct. It is likely that most all with trust others. Therefore, it is important to always verify information to ensure that what appears to be true is true Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? He understood that people are naturally trusting. Madoff identified a close circle of friends that trusted him, he then used those individuals to connect with their colleeagues and trusted friends to expand his group of investors. Trust was a key component to expand Bernie Madoff’s investment group. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 2 from an article as evidence to support your analysis. Psychologists refer to confirmation bias when individuals “pay more attention to, and overweight in importance, evidence supporting our hypotheses about the world while downplaying or discounting discrepancies or evidence to the contrary” (Kramer 71). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. Simply stated that people will see only what they want to see. Individuals often project their own values onto others creating a blindside in relationships (Kramer 71). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? People look at the expanding investment portfolio of their friends and colleagues and used that as evidence to ensure they were making correct investments that were on target. Student must effectively connect the dots
between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 3 from an article as evidence to support your analysis. “He reserves special contempt…Their over-the-top greed, he [Madoff] suggests, blinded them to obvious signs of fraud – and, therefore, they deserved their fates” (Henriques 2). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. Madoff believes some of his victims deserve their “fates” due to being consumed in greed ( Henriques 2). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? It is important to recognize that both parties, Bernie and his investors, are both at fault for allowing this ponzi scheme to go on for so long. Greed can easily consume people’s desires. Becoming a personal priority and this can create an ethical breach (Crews). Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
SUBTOTAL / 40 points Tragic Truism about Managers and Managing (40 points)

Grading Criteria
Points Awarded
Copy and paste your Tragic Truism about Managers and Managing; cite with (Crews).

Word-for-word tragic truism quote with quotation marks and correct citation.

/ 1 point
Copy and paste the applicable subpoint(s); cite with (Crews).

Enter and cite direct quote 1 from an article as evidence to support your analysis.

Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation.

Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred?

Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 2 from an article as evidence to support your analysis.

“And every star employees knew that they could rise only so high” (Bandler et al 4). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation.

Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred?

Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 3 from an article as evidence to support your analysis.

Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation.

Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred?

Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
SUBTOTAL / 40 points Tragic Truism about Organizations (40 points)

Grading Criteria
Points Awarded
Copy and paste your Tragic Truism about Organiza-tions; cite with (Crews). “Some organizations are simply more ethical than other organizations” (Crews). Word-for-word tragic truism quote with quotation marks and correct citation.

/ 1 point
Copy and paste the applicable subpoint(s); cite with (Crews). An organization’s culture, strategy, and resource allocation strongly impact managers’ and employees’ behavior. 1. Culture
a. Leaders
a.i. Ethical
a.ii. Unethical
a.iii. Hypocritical
a.iv. Silent
b. Formal mechanisms
b.i. Orientation and training
b.ii. Performance management systems
b.iii. Organizational authority structure
b.iv. Selection systems
b.v. Values and missions statements
b.vi. Policies and codes
b.vii. Decision-making processes
c. Informal mechanisms
c.i. Role models and heroes
c.ii. Norms
c.iii. Rituals
c.iv. Myths and stories
c.v. Language
d. Alignment versus misalignment
2. Strategy
3. Resource allocation
(Crews)
“Organizations should choose their business partners and contractors carefully. People and organizations are known by the company they keep.
Trust but check.” (Crews).

Enter and cite direct quote 1 from an article as evidence to support your analysis. “Then along came Bernie. There was ‘something about this person, pedigree, and reputation that inspired trust…Madoff possessed all the bonafides – the record, the resume, the expertise, and the social conncetions” (Kramer 69)

Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. Madoff conveyed confidence. He had a rich resume of experience and was well educated, all of these factors positioned him to the public as someone you could trust (Kramer 69). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? Madoff used his background and experiences as confirmation that he was a shrued investor. All of this information was used to build a resume of an attractive, elite individual financial firm. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 2 from an article as evidence to support your analysis. “Leadership experts James O’Toole and Warren Bennis caution that trust requires more than honest behaviors from leaders. Rather it takes cultures that reward honesty and punish dishonesty.” (Galagan 26). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote
in your own words; insert correct citation. In order to be a successful leader, actions alone are not enough a manager must reward practice of good ethics. (Galagan 26). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? After the news broke about Madoff committing one of the largest ponzi schemes, people could not understand how the employees did not know that their boss was a fraud. Whether BMIS employees knew the true operations of Madoff’s business will forever be debated. Madoff Investment Securities’ operating structure created a complacent work culture and lacked the formal mechanisms of a business. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 3 from an article as evidence to support your analysis. “Madoff purportedly executed a ‘split strike conversion’ strategy…In basic terms, it’s a ‘collar,’ putting a floor and a ceiling on returns. A floor on potential losses is created by purchasing a put on a stock. The sale of a call then puts ceiling on the returns.” (Dodge 18-19). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. By placing a ceiling and floor on return Madoff created a false sense of security for people’s investment. Investors felt that while there may be a limit on the upside of the return there would not be significant downside (Dodge 18-19). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? Closely looking at Bernie Madoff organization structure and strategy. You see the “29 Red Flags” Markopolos discussed in his memo (Rhee 367). If Madoff’s business strategy was thoroughly analyzed one would notice that the numbers really never matched. However, it was difficult for an investor or outside source to gain additional knowledge on Madoff’s investment strategy due to his secrecy. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
SUBTOTAL / 40 points Tragic Truism about Oversight and Accountability (40 points) Grading Criteria

Points Awarded
Copy and paste your Tragic Truism about Oversight and Accountability; cite with (Crews). Stakeholders, including boards of directors, consumers, investors, whistleblowers, auditors, lawyers, and regulatory agencies, are supposed to hold managers and businesses accountable for their decisions and actions. In reality, legal, auditing, and/or regulatory weaknesses often contribute to ethics scandals. Word-for-word tragic truism quote with quotation marks and correct citation.

/ 1 point
Copy and paste the applicable subpoint(s); cite with (Crews). “Legal and regulatory penalties must have “teeth” to deter unethical behavior. In other words, harsher legal penalties (or the fear of harsh penalties) are more likely to deter bad behavior” (Crews). “Whistleblowers are not treated well by their companies. Companies frequently punish employees who publicize illegal or unethical behavior” (Crews).

Enter and cite direct quote 1 from an article as evidence to support your analysis. “Harry Markopolos and his ad hoc team of sleuths spent eight years trying to expose Bernie Madoff as a fraud – but the SEC turned a deaf ear” (Markopolos 2). Selected quote must directly relate to and effectively
support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. Markopolos spoke to Madoff’s fraudulent business multiple times but no one seemed to listen (Markopolos 2). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? The securities exchange commission walked away from their obligations to regulate and fell victim to Bernie Madoff. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 2 from an article as evidence to support your analysis. Ronnie Ambrosino speaks to the performance of the SEC, “I believe that the SEC is totally at Fault. It was as if [Madoff] was given the red carpet to rob you and the government gave [Madoff] the gun. If I did my job the way the SEC did theirs, I would not have a job.” (Dodge 20). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. After the Madoff scandal people had lost confidence in the SEC and this has had major reprecussions (Dodge 20). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? The SEC gave the public a sense of security when it came to their investments.
However after the Madoff scandal people lack the confidence of who to entrust their confidence in their financial portfolio. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 3 from an article as evidence to support your analysis. “After all, the Securities and Exchange Commission had given Madoff a clean bill of health on several occasions since 1992 by not digging deeply into his operations or just plain neglect.” (“The Technology Behind the Scan” 22) Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. On several occasions BMIS was questioned about its business operations but continued to pass the SEC’s standards (“The Technology Behind the Scan” 22). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? The Bernie Madoff scandal was overlooked by individuals who are suppose to be very knowledgable in the financial field, regulatory agencies. Creating doubt in the American financial market. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
SUBTOTAL / 40 points Tragic Truism about ??? (Your Choice) (40 points)

Grading Criteria
Points Awarded
Copy and paste your Tragic Truism about ???; cite with (Crews). “Talk is cheap; ethics is mostly about behavior. Typically, people are what they do not what they say.” (Crews). Word-for-word tragic truism quote with quotation marks and correct citation.

/ 1 point
Copy and paste the applicable truism subpoint(s); cite with (Crews). Decision-making biases also contribute to unethical decisions. 1. Personal preferences about gender, age, race, ethnicity, religion, sexual orientation, etc. 2. Halo effect

3. Optimism versus realism
4. Emotions versus facts
5. Sunk costs
6. Bounded rationality
7. Rationalization

Enter and cite direct quote 1 from an article as evidence to support your analysis. “Madoff was prominent and respected in the financial community, and the Wall Street Journal reported that family members also had leadership roles in the very groups that police the financial industry and lobby for favorable regulations, Personal, social relationships play a role, too, in claiming any investors’ suspicions” (“Madoff’s Jenga” 19). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. Madoff used to seem his leadership role and external roles as additional testimony to his vast experiences. Several of these roles appeared to allow him some monitor any oversight that any external organizations could have on his investment firm (“Madoff’s Jenga” 19). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? Investors of Bernie Madoff lost the capability to be financially objective. Madoff’s leadership roles in external roles further clouded investors ability to see the truth. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 2 from an article as evidence to support your analysis. “The role of emotion in financial decision-making: ‘We like to think of ourselves as objectively analyzing the data under the cool light of reason, but far more often than not our emotions are running the show’”(Madoff’s Jenga 18). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. People need to be sure to analyze the facts. Emotion should not play a role in financial decision making (Madoff’s Jenga 18). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? Individual did neglected to ask the deeper financial questions. Their emotional connection to an expanding financial portfolio clouded their judgement. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
Enter and cite direct quote 3 from an article as evidence to support your analysis. “The truism that actions speak louder than words: Madoff’s company website included a statement that he himself ‘has a personal interest in maintaining the unblemished record of value, fair-dealing, and
high ethical standards that always been the firm’s halmark’.” (Madoff’s Jenga 24). Selected quote must directly relate to and effectively support the selected truism.

/ 3 points
Paraphrase or summarize the most important information from the above quote in your own words; insert correct citation. Madoff embellishes his pristine reputation and his ethical investment firm (Madoff’s Jenga 24). Wording must accurately reflect the the most important information from the above direct quote and be the student’s own words; correct citation inserted.

/ 5 points
How does the above evidence explain how/why the Madoff scandal occurred? Time would tell that Bernie Madoff was a hypocrite among the Wall Street. His investments, business, and social relationships were all a ruse. Student must effectively connect the dots between the article’s information and the tragic truism.

/ 5 points
SUBTOTAL / 40 points Works Cited Page (Use at least 10 sources.)

WORKS CITED
Bandler, James, and Nicholas Varchaver, Doris Burke, Mina Kimes. “How Bernie Did It.” Fortune 11 May 2009. 12 Sept. 2013. http://bblearn.missouri.edu/bbcswebdav Dodge, John. “How Bernie Made Basket Cases of His Customers’ Accounts.” Security Industry News, 02 Nov. 2009. Http://securitiesindustry.com Dodge, John. “The Technology Behind the Scan.” Investment Dealers’ Digest 06 Nov. 2009. 18 Sept. 2013. Galagan, Pat. “Trust Falls.” Trends. Nov. 2009. T+D. 11 Sept. 2013. Web. Henriques, Diana. “Letters From a Sociopath.” Forbes Asia 8.5 (2012): 44-48. Business Source Premier. Web 23 Aug. 2013. Kramer, Roderick M. “Rethinking Trust.” Harvard Business Review, June 2009. 15 Sept. 2013. Http://hbr.org “Madoff’s Jenga-Like Con-Struct Falls hard on Insurers.” Insurance Advocate, 26 Jan.
2009. 09 Sept. 2013. Web Markopolos, Harry. “How I Got The Goods On Madoff, And Why No One Would Listen.” BusinessWeek 22 March 2010. 12 Sept. 2013. Web. Rhee, Robert. “The Madoff Scandal, Market Regulatory Failure and the Business Education of Lawyers.” The Journal of Corporation Law 35:2 (2009)

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