Reference no: EM133295378

Case Study:-  Bernard L. Madoff Investment Securites is responsible for one of the most damaging and long-lasting financial frauds of the 21st century. He defrauded investors of over $60 billion dollars operating what is referred to as a Ponzi scheme and is currently in prison for securities fraud.

1. Research both the Madoff case, and what are Ponzi schemes, and answer the following three questions by devising strategies to address the situation described.

· Evaluate the relationship between the lack of Securities and Exchange Commission oversight and Madoff's ability to maintain the fraudulent actions as long as he did?

· Identifythe purpose of the SEC

· Examine this purpose with Madoff's actions, and provide three recoomendations that the SEC could have done to prevent Madoff from frauding his clients and to ensure accounting laws and regulations were followed.

2. In the Madoff case, many of his clients have been criticized for taking risks with unsecured investments that were clearly, at the time and in hindsight, too good to be true realtive to the market as a whole. He also preyed heavily on friends of his existing clients, using the goodwill within the community to increase their trust in him.

· Explain the legal and ethical red flags to look for when deciding to invest, specifically warning of Ponzi schemes, affinity fraud, and one other common practice used in defrauding investors.

3. Multi-level marketing ("MLM") programs are promoted through Internet advertising, company websites, social media, presentations, group meetings, conference calls, and brochures. In an MLM program, a person typically gets paid for products or services that they and the distributors in a "downline" (i.e., participants they recruit, and their recruits) sell to others. However, some MLM programs are actually pyramid schemes, a type of fraud in which participants profit almost exclusively through recruiting other people to participate in the program (investor.gov, n.d.).

Provide a one paragraph summary of a pyramid scheme, then research one company that has been accused of conducting a pyramid scheme while operating as a multi-level marketing company.

Question 1:- Explain the company's operating model as they explain it, and contrast its stated model with the accusations that it is in fact a pyramid scheme and identify any legal and ethical consequences.

Question 2:- State your opinion of whether the company was guilty of defrauding its participants under a pyramid or other fraudulent scheme or not, including conclusions based on Securities and Exchange Commission regulations or guidance. Justify your opinion.