Question Details

[answered] 12/10/2016 Ponzi Scheme KHALED NATHAN SANDEEP TING WAI PHL

I need to write around 3 to 4 pages on the different theories such as Utilitarianism vs.?Individualism vs.?Kantianism vs. Vertue Theory and relating it to the ethics of Ponzi Schemes. I have attached my group paper to show you what my project topic is about.?

12/10/2016 Ponzi Scheme KHALED








WAI PHL 2100 90293 Business Ethics


Kevin V. Daley, Esq. Ponzi Scheme




People think about the Wall street as financial companies and hedge


funds that will give you a returned investment. People are told that


the Wall Street will offer low risks and high investment returns, so


they trust in investing in companies. This is not true because many


clients fall victim into investing in a Ponzi Scheme, where they lost


all their money. Ponzi schemes are investment frauds that offer high


returns for investors without them knowing that other investors fund


the returns. These schemes are run by a central operator that uses


the money from investors to pay off the returns of the older


investors. These types of unethical frauds are the reason people


suffer through loss of their money and this causes a burden in the


investor?s lives. In this essay, we will be explaining the difference


between a person that believes in Individualism and a person that


believes in Utilitarianism would have reacted in a Ponzi scheme


situation as the culprit. We will also be explaining different


examples of times when Ponzi Schemes were used in our world. Individualism


Individualism focuses on the individual himself, so it


depends on the individual?s goals and beliefs. This type of thinking


promotes the individual?s self-interests and does not listen to any


other people or groups. As an individualist, the culprit would have


thought that he was doing the right thing as he is trying to


maximize his profits to help his own business to grow and become a


success. Friedman defines individualism to have an obligation to


maximize profits for the owner or the stockholders of a business. We


could argue that in a Ponzi scheme, the owner is trying to cheat the


stockholders of their money so they are losing money and their


profits are not being maximized. Ponzi schemes will also bring the


owner to gain millions from their investors so, on the other hand,


the owner is maximizing his own profits. An individualist would have


thought that he was doing the right thing by using a Ponzi scheme


because they are putting themselves as a priority and maximizing their own profits.




Utilitarianism is to think in a moral way, to make sure that your actions are morally right and benefiting all the people involved. They


would put the happiness of everyone involved to be their top priority. In a


Ponzi scheme, the culprit is not thinking to benefit anyone that is involved


but himself so we can say that he is against utilitarianism. The culprit only


wants the money of his investors and does not care if they benefit from the process so he is the only one happy at the end. By not thinking the


utilitarianism way, the culprits end up being caught and sent to jail for


thinking only for his oneself. William Miller


The first Ponzi scheme can be dated back to 1899, when the Franklin


Syndicate was Established. This Syndicate was led by William Miller, a 21year-old low level Wall street worker who was not successful at making


money in the stock market. William ?520 percent? Miller, as he soon became


known as, began taking investments from his Sunday school friends and


promising a high rate of return (10% weekly), assuring them that he had an


?inside pull? on Wall Street. Eventually Miller, after his ploy began to take on


momentum, took on two partners and started and advertising in Newspapers


around the country. People became so infatuated with the idea of becoming


rich fast that by the end of 1899 Miller and his two partners had 12,000


investors and $60,000 worth of investments coming in daily. They later


thought of another scheme to destroy incriminating evidence against Miller.


Because William Miller's name was on all the receipts, The Franklin Syndicate


wanted to take those out of circulation so they promised investors an even


better opportunity where in exchange for every dollar invested along with


the receipt clients were to receive stock certificates in Millers Corporation


with an even higher promised rate or return. Later in the 1920?s a similar scam was pulled by Charles Ponzi and this type of scam became named after


him. Bernard Madoff Largest Accounting Fraud in History


Through his business started in 1960, Bernard L. Madoff Investment Securities LLC hedge fund, he operated the largest Ponzi scheme that has


ever been uncovered. In 2008, that scheme finally caught up with him.


Depending on the source, the scheme has been estimated to be ripping


investors off for approximately 40 years. Madoff convinced investors that


they were investing in fund that promised high returns with low risk involved.


In the end, Madoff had dug himself too big of a hole and couldn?t climb his


way out.


In 2008, financial crisis struck the US which had investors becoming


more conservative. Madoff could no longer support his ?One big lie?. In order


for his scheme to continue to function, the system needs a continuous flow


of new investors to support the previous investors and provide them with


?gains?. ?Redemption requests for $7 billion, by investors looking to pull


back from turbulent stock markets, forced Mr. Madoff to admit that his


coffers were empty?bearing out Warren Buffett's adage that only when the


tide goes out is it clear who was swimming naked.? (The Economist 2008)


Madoff allegedly cheated about 8,000 investors in his scheme of somewhere


between $15 billion and $65 billion. The exact figure varies with the source.


He operated over a span of 40 years, paying off those who sought to cash


out with funds secured from new clients, and he sent regular statements to


investors detailing their holdings and their illusory high level of profits. (Geis




There were many red flags whom which Harry Markopoulos made


obvious to the SEC. Although, the red flags were true and apparently obvious


the SEC continued to ignore Harry?s claims for several years. Some of the red


flags Markopoulos identifies include; Split-Strike Conversion, Market Timing,


Cheaper to Borrow, Giving Up Profits, Secrecy and Performance Line Had a


45-Degree Angle. These red flags should have been enough for the attention


of the SEC to investigate Bernie Madoff?s wealth management business. How was the fraud perpetrated?


The scale of the investment Ponzi scheme perpetrated by Bernie Madoff is hard to pinpoint with any accuracy. There are likely many investors


who will never come forward about their losses for a many of reasons. We


are left to estimate the total losses, but $65 billion was the total showing on investor statements at the time the fraud was stopped. However, this


number includes the fake ?gains? that had accumulated on the money. The


$18 billion number is tagged as actual cash input into the Bernie Madoff


Ponzi scheme by investors, and in the end the true total loss. (Coenen 2010) Ponzi Scheme


A ?Ponzi Scheme? is a fraudulent investing scam promising high rates of return with little risk to investors. The Ponzi scheme generates


returns for older investors by acquiring new investors. This scam actually


yields the promised returns to earlier investors, as long as there are more


new investors. These schemes usually collapse on themselves when the new


investments stop. (Investopedia)The Ponzi scam is named after Charles


Ponzi, a clerk in Boston who first became famous for orchestrating such a


scheme in 1919. Although Charles Ponzi wasn?t the first to use the scheme,


he was the first to make it infamous. (Investopedia) Gerald Payne


Gerald Payne, is one of the Greater Ministries International Church


have been sentenced to long prison terms. He took $500 Million from 18,000


Christians investors, who believed god would double their money. He was


sentenced to 27 years for his conviction on 19 counts of fraud, conspiracy,


money-laundering, and related charges. His wife, Betty Payne, was also


involved, received 12 years and 7 months. Gerald Payne ran the Greater Ministries church in Florida and


throughout the 1990?s. He ran an investment scheme under the guise of a


gifting program that used religious text to support its claims. Investors were


told they would double their money in less than 18 months from investments


the church had in gold, silver, and debts. However, the investments never


made any profits and most failed completely. To keep the scheme going, they


paid previous investors from the new investors. Those running the scheme


inside the church received large monthly commissions. Payne was cashing


hundreds of checks for just under the $10,000 reporting limit, which caught


the eye of the IRS. When investigators traced their way to the checking


account he shared with his wife, Betty, it has nearly $20 Million.


In march 2001 five Greater Ministry leaders, including Gerald Payne


and his wife Betty Payne, were arrested. When the Payne was prosecuted,


Gerald said that the money has been gifted, not invested. The couple later


claimed that their First Amendment Rights as a church were being violated.


When they were found guilty of felonies, Gerald received 27 years in prison


and Betty twelve and a half. Allen Stanford


Allen Stanford is a former prominent financier, a chairman of Stanford


Financial Group of Companies and the sponsor of professional sports. Allen Stanford is convicted of 13 out of 14 counts of fraud that his investment


company was massive Ponzi Scheme that lasted more than two decades


involving more than $7 billion in investments.


In 1980?s he started a bank naming it ?Stanford International Bank in


Antigua?. Later he was accused of defrauding nearly 30,000 investors


involving $7 billion from around 113 countries in Ponzi Scheme in fraudulent


high-interest certificates of deposit at his bank ?Stanford Intl Bank?. Stanford


was imprisoned in 2009 however, a series of lawyers delayed the case by


arguing that he couldn?t stand for the trial as a result of prison beating. After


surgery and while still in Federal Custody, Stanford became addicted to


prescription drugs therefore, allowed him to undergo drug treatment.


However, his attorneys claimed that he was suffering from amnesia and


could remember nothing before the 2009 assault. Finally, on the January 23rd


the trails were began over the defense?s objections. The jury found Stanford


guilty on thirteen counts including mail and wire fraud, obstructing the


Securities and Exchange Commission investigation, soliciting funds under


false pretenses, misappropriating funds for personal use including




The Stanford?s fraud is the second biggest Ponzi Scheme in American History


compared to Bernie Madoff?s $65-billion scam. However, Stanford?s fraud is


considered to be the biggest as it involved 30,000 investors and spent


million dollars on himself financing helicopters, private jets, cricket


tournaments, gambling trips to Vegas and a lavish lifestyle of Yachts. Bibliography,28804,2104982_2104983_2105004




Solution details:

This question was answered on: Sep 18, 2020

PRICE: $15 (25.37 KB)

Buy this answer for only: $15

This attachment is locked

We have a ready expert answer for this paper which you can use for in-depth understanding, research editing or paraphrasing. You can buy it or order for a fresh, original and plagiarism-free copy from our tutoring website (Deadline assured. Flexible pricing. TurnItIn Report provided)

Pay using PayPal (No PayPal account Required) or your credit card . All your purchases are securely protected by .

About this Question






Sep 18, 2020





We have top-notch tutors who can do your essay/homework for you at a reasonable cost and then you can simply use that essay as a template to build your own arguments.

You can also use these solutions:

  • As a reference for in-depth understanding of the subject.
  • As a source of ideas / reasoning for your own research (if properly referenced)
  • For editing and paraphrasing (check your institution's definition of plagiarism and recommended paraphrase).
This we believe is a better way of understanding a problem and makes use of the efficiency of time of the student.


Order New Solution. Quick Turnaround

Click on the button below in order to Order for a New, Original and High-Quality Essay Solutions. New orders are original solutions and precise to your writing instruction requirements. Place a New Order using the button below.


Order Now