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Whenever I hear of Bernard Madoff and his arrest, the term is still attached to his name: the Ponzi scheme. Who or what in the world is there? But before that, he is Bernard Madoff?

Bernard Madoff Lawrence is an American businessman and former chairman of the NASDAQ Stock Exchange. He founded the firm Wall Street Bernard L. Madoff Investment Securities LLC in 1960. His company is one of the largest companies in the market on Wall Street. In fact, is the sixth most large in 2008. Madoff has also been a leading philanthropist serving on several nonprofit organizations and research funding of research specifically on lymphoma (plus youngest son was diagnosed with lymphoma).

Madoff was arrested after investigators said he had confessed to his son who had cheated investors in a Ponzi scheme where early investors are mammoth paid with funds collected to new investors. The scheme collapses when there is no money to pay past investors. Madoff would have been 50 billion dollars worth of investors' money.

So now, back to my original question, what is a Ponzi scheme?

According to the Securities and Exchange Commission of the United States, a Ponzi scheme is a type of pyramid scheme that has been illegally paid returns to investors their own money or money paid by subsequent investors, rather than profit. Usually offers abnormally high short-term returns to attract new investors. A Ponzi scheme usually has the "Rob Peter to pay Paul principle, money from new investors is used to pay earlier investors until the whole scheme collapses.

The plan was named after Charles Ponzi, who became notorious in the 1920s as one of the biggest crooks of American history. He was able to make money rapidly due to a whim of the postal system. In those days it was common for letters abroad to include a reply coupon International – a coupon that can be exchanged for a minimum return shipping of the country where the letter was sent.

As explained on cnn.com, Ponzi began buying and selling of postal reply coupons using agents in his native Italy. Ponzi Unfortunately, it was very greedy began recruiting investors in their system with the promise of 50 percent returns in a few days. The investors pay their money, and, indeed, would be getting the Ponzi promised return.

Everyone was satisfied, and the word began to spread over this financial wizard Italian. In two years, had employees around the country to recruit new consumers in the investment strategy foolproof and pocket millions Ponzi was bathed $ 250,000 per day. He became an investor a celebrity, almost like Warren Buffett of his time.

Soon, when the head of Clarence Barron looked at his financial affairs and realized it was all a fraud, companies began collapsing Ponzi. Although many do not believe the report in Barron's, Ponzi finally went to trial, pleaded guilty and was jail time. After his release, Ponzi was deported to Italy, country of birth and spent the rest of his life in poverty. He died in Rio de Janeiro in 1949.

Since Bernard Madoff why he did what he did … is a question that many people would respond. Many lives have been affected (and perhaps ruined) by the 21st century Ponzi scheme. Madoff But whatever the reason is, their victims (if proven guilty), deserve Justice happens to them.

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