Compositon - The Madoff Fraud

Few cases are so representative about how economy depens on truth than Madoff's fraud. Bernard Madoff took profit of a vey deep and closed community which he is a member, as it can be the jewish.


One fact could be incredible or not depending on who is involved in it, and it was what happened with the Ponzi Scheme founded by this person. He offered very good returns to investors, theoretically without any risk and guaranteed during so many time. It must be an attractive option for the last years, when stock markets and the whole economy didn't show any interesting chance to invest. But nobody suspected against him or his method to assure that returns, people who trust their money to this person just believe in his reputation and that his returns were effectively paid each month.


In my opinion, this fraud was worst than Enron's or than the subprime loans due to two facts. Firstly because it was started as it was, a fraud; Madoff created that business based on a lie, instead, Enron's and subprime's cases, people who act dishonestly, just take profit of the structure or system they found running. Secondly, he abused of the confidence of his own people, not only jewish members of his own community, but also friends and far relatieves. In the last phases of his busniess, he even robbed money from charity organizations.


However, I see a same point of coincidence in all that cases: short therm view. In all cases, people involved didn't think about how to get out the business before they were caught within it. They prefered to continue robbing and making the lie, and the structutre, bigger. What's worst for me with Madoff fraud is that, as all Ponzi Scheme, he should have known that it must be really well controlled in order to don't grow too much. As it was, increase in this business needs to obtain more money in order to pay the new returns, and be sure to avoid crashes of liquidity, like important withdraws made by customers or by himself.

At the end, he got caught by his own false life, he wasn't able to plan an exit from his fraud because he became too big and important to fled without noise. He just realized that his monster was hungrier every day and he felt he just couldn't fed it forever. Finally, he probably have lived a rich life thanks to that fact, and even have hidden the major part of the money he got throught decades. But at the end, he will die in jail, and what's more important, he has lost drammatically one of his sons due to this whole history. In my opinion, it doesn't worth all the money you can enojy.