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Group 5 - Case 11 (Frauds of the Century)

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Hanna Khan

on 25 February 2016

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Transcript of Group 5 - Case 11 (Frauds of the Century)

Question 1
Question 2
Question 3
Group 5 - Case 11 (Frauds of the Century)
Hanna Khan
Jessica Frederick

How do Ponzi schemes and pyramid schemes differ? How are they similar?
Why are white-collar criminals such as Madoff able to carry out their schemes for so long when similar types of fraud often collapse at an early stage?
What should be done to ensure large-scale fraud such as Ponzi schemes and pyramid schemes do not happen in the future?
The difference is that the perpetrator of the Ponzi scheme asks individuals to invest in in something with an above average return.
Pyramid Schemes typically collapse faster due to the requirement of exponential increase in participants to sustain it.
Ponzi Schemes can survive simply by persuading most existing participants to reinvest their money, with small number of new participants.
Both schemes are similar due to the fact that they are both criminal activities that have the same basic structure.
Both also promise unrealistic returns on investment capital.
Last longer due to the depth of their Ponzi Schemes.
Have more connections to more sources of money which allows such criminals as Madoff to to branch out.
The longer the Ponzi scheme can fuel its reserves, then it will last longer.
An individual's good reputation can only help themselves.
No possible way to stop fraud situations from happening within the business world today.
Future investors need to be conscious and fully informed of their research before entering into a business deal or partnership with another company.
Have every individual involved in the area of investing be fully knowledgeable of each aspect to prevent a scheme from happening.

Business Ethics: Ethical Decision making and Cases. O.C. Ferrell
Frauds and schemes within the world of business has been common within the finance industries for many years
Through several schemes that have evolved many investors have suffered many losses as well as, lacking trust within consumers.
Several well known business individuals involved in such schemes like Bernard L Madoff, Tom Petters, and Allen Stanford
The frauds and schemes of the century have defined what is ethically wrong within business of the past and of today.
There are several schemes that may hold out for a long period of times, however, all schemes and frauds eventually come to an end.
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