Madoff Questions By Robby Frost

What is a Ponzi Scheme? A ponzi scheme is a scam that uses investors' investments to pay other investors. Instead of investing the money people invest, the operator would send it to their other investors. They also write out fake financial statements so people think they're investing it and their money is growing.

Bernie Madoff

How did Bernie maintain his scheme for so long? Bernie was able to maintain his scheme mainly because of the economic boom that was occurring during his scheme, and because the investors were receiving 1% in cash every month to make them think it was being invested. Since the economy was good, people were confident in investing and Bernie received new investors. When the stock market crashed in 2008, people stopped investing and Bernie couldn't keep paying his investors.

What are "Ponzi People" like? Most Ponzi Scheme runners are known as nice respectful people that investors can connect with. Bernie Madoff and the creator of the scheme Charles Ponzi were both known as friendly caring people, which appealed to investors.

Charles Ponzi

Why didn't the SEC investigate Madoff after warnings? There were many reasons the SEC didn't investigate Madoff's scheme. One reason was because Madoff himself was apart of the SEC's committee, and he obviously wasn't going to endanger his scheme getting busted. The other main reason was that the SEC has always been underfunded and understaffed. When the SEC didn't find anything suspicious at first, they just moved on to another task.

Why did Madoff do it? I think the main reasons Madoff did the Ponzi scheme is because of his already established insider status in the stock market and he was trusted by investors. He also probably saw the booming economy and decided to take advantage of it.

Created By
Robert Frost


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