Identify White Collar Criminals
Identify the dissimilarities and associations between Madoff and the executives of Enron.
Madoff used a Ponzi scheme to defraud his victims, while Enron executives used “market-to-market accounting.” Madoff was setting up portfolios to appear as if he matched the S&P 500 returns. This approach made him pay less to the existing investors at the same time while making his purported holdings appealing to new investors (Kennedy, 2012). His operations went on successfully while keeping his scheme low-key. His targets were an exclusive elite group of investors he managed to stay close and the SEC away. He also made sure to update his paperwork. By doing this, he trod water with limited returns keeping the scam going for years. On the other hand, Enron executives relied on dubious accounting practices and the market-to-market accounting technique to hide their troubles. This technique enabled Enron to record false future gains from several business contracts into the current income statements, giving an illusion of recent high returns.
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How the two schemes were discovered and charged
After more than ten years of duping his investors and the SEC, Madoff’s Ponzi scheme started losing yesteryear in 2008 (Forbes, 2013). It could not keep up with the investors’ demand to liquidate their assets while the market was deteriorating. Soon, he could not keep up with the pressure and decided to confess to his partners in that company. They later turned in to the FBI. In 2009 he pleaded guilty and was sentenced to one hundred and fifty in prison. In Enron, the situation’s severity became apparent in 2001 as several analysts started digging into the company’s details of the financial statements. An internal investigation took place, and SEC investigated the company’s transactions. On the 2nd December 2001, Enron was declared bankrupt, and many of its executives were indicted on various charges and were later imprisoned for ten years.
Differences in Losses
Those who invested in Bernard L. Madoff Investment Securities Llosting billions of dollars in the Ponzi scheme (Kennedy, 2012). The amount of money that went missing from clients’ accountants, over seventy percent that was fabricated gains, was approximately sixty-five billion dollars. The destruction caused by Madoff affected all the people he worked with. Some former associates and employees were also arrested, and at least three took their own lives, including Mark Madoff, his eldest son. The amount lost in the Enron scandal was approximately seventy-four billion dollars, while hundreds of investors and employees lost their retirement accounts and thousands lost their jobs.
Explain the factors that motivated Madoff and the executives of Enron to commit such c.rimes
In the analysis of the elements of the fraud triangle regarding the Ponzi scheme of Bernie Madoff, it is evident that there of opportunity because he was the corporation’s head (Spiekermann, 2009). Even though others suspected, nobody questioned him seriously, allowing him to go on with the scheme for many years. The main factor that motivated the fraud made the corporation look successful in enabling him to gain additional clients to keep up his growing personal income. Enron’s motivation to defraud arose from the fact they promised their investors returns from the sale of electricity and gas, which was not the case. Like most corporations in a similar position, it decided to hide what was happening to the public and borrow much more money to fill the gap.
Relate the strategies applied in the Madoff and Enron scams.
The ECorporationation started to deteriorate from increasing debts and financial losses in year 2Toer to hide those shortcomings, Enron committed a range of complex crises to appear as if they were financially stable (Kennedy, 2012). For instance, fraud was admitted by the company by transferring some liabilities from Enron to other corporations and not noting the losses on the accounting books. Additionally, the company deceived the pull as the employees by significantly overstating the corporation’s value causing the shareholders and the employees to lose their cash and go bankrupt. The CEO of Enron also intentionally misinterpreted the auditors’ accuracy of the financial statements; subsequently, the company was portrayed as being in a better position, but it painted a false financial picture to the financial institutions and the public.
The scheme Madoff entailed asking their clients to open access to trading with a promise of high returns and limited risks. The clients trusted Madoff since he paid off what he promised. Unknown to them, that money came from the funds of future investors to hide the fraud, Madoff developed an unreal portfolio for the clients and filed false statements to the Securities and Exchange Commission (SEC).
Identify the victims in each case and then explain how they d.iffer
Some of the victims in the Ponzi scheme of Madoff were Elie Weisel, famous for Holocaust survival and going ahead to win the Nobel Peace Prize. Another one is Steven Spielberg, the famous director of Hollywood and former Governor of New York, Eliot Spitzer; his real estate business was also involved. To the victims’ dismay, Madoff did not acknowledge the destruction caused by his actions even though he pleaded guilty and took responsibility; he diverted his focus on the big banks and failure to expose that scheme when they had the chance instead of expressing any sympathy or personal regret.
In the case of Enron, hundreds of employees got affected since they were encouraged by Ken Lay to make investments in the company’s stock (Spiekermann, 2009). The company’s executives were well aware that the company was sinking into debt. Still, they continued encouraging the employees to invest their hard-earned income, knowing they were selling the company’s shares. The employees trusted the company’s executives and depended on their decisions, hurting them. As well as the employees, investors were also a significant part of the corporation, and as a result of the false financial data, they lost millions of dollars. Thousands of unsuspecting individuals solicited into investing in a sure sand tock were also wiped out without warning.
Use the Enron and Madoff cases to determine obstacles for law enforcement in identifying an investigative-collar bar .crime
Oftwhite-collar bar crimes involve complicated evidence, and conceMostty prosecutors find it hard to understand the complex financial scenarios of many white-collar crimes (Forbes, 2013). The attorneys involved in the prosecution often experience complex cult tasks turning the financial records’ hundreds of pages, procedures of account, noting, and much more complicated evidence into details that the jury can understand. They tend to face additional challenges; the jury is generunfamiliararr white-collar crimes, anddefensefence often upstands the community members.
The law’s challenge while dealing with white-collar crimes tends to start long before the beginning of the statement opening. In various cases, it begins with an overburdened enforcement agencies’ local law (FITZPATRICK, 2018). The new budget cuts era implies that law enforcement officers should allocate resources carefully to concentrate on the most pressing issues. White-collar crimes take more money and time than other cases in a complicated case that drains resources. Internet and computer fraud, embezzlement allegations, and laundering of funds require the prosecution to know various concepts compared to volumes and property crimes seen by the local police more often.
In such cases, the most challenging determination is to find sufficient evidence, like electronic communication hints dating the concepts going through the defendant’s mind. Circulating the elements up by defense based on one of the law’s ignorance limits the punishment to those who flout the law. However, that change might significantly put corporate executives’ prosecution off-l, at least when they are not directly involved in the transaction or decision.
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FITZPATRICK, J. C. (2018). White Collar Crimes—3 Reasons Why They Take Years to Prosecute. Retrieved from http://callonfitz.com/white-collar-crimes-3-reasons-why-they-take-years-to-prosecute/
Forbes, W. (2013, DecemberBernieied Madoff: the creation and subversion of regulatory authority. Retrieved from https://www.researchgate.net/publication/260420056_Bernied_Madoff_the_creation_and_subversion_of_regulatory_authority
Kennedy, K. A. (2012). An Analysis of Fraud: Causes, Prevention, and Notable Cases. Retrieved from unh.edu: https://scholars.unh.edu/cgi/viewcontent.cgi?article=1099&context=honors
Spiekermann, H. B. (2009). Shady business: On the history of white-collar crime. Journal of Business History, 289-304.
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Week 2 – Assignment: Identify White Collar Criminals
In the last decade, Bernie Madoff and the executives of Enron committed the most devastating white-collar crimes in the United States. The employees of Enron lost their life savings and retirement, and the invest believed Madoff never saw the promised profits and lost their investment. These two cases demonstrate how this type of white-collar crime complicates challenging to detect. The Security Exchange Commission (continuously monitorsoring suspicious business transactto report to law enforcement fur further investigations potentiallytions.
Assume you have been asked to speak to undergraduate college students studying fraud and other corporate white-collar crime. You decide to use the Enase the Madcasescase as the foundation for your informational presentation. Develop a PowerPoint presentation that addresses the following:
- Identify the dissimilarities and associations between Madoff and the executives of Enron.
- Explain the factors that motivated Madoff and the executives of Enron to commit such crimes.
- Relate the strategies applied in the Madoff and Enron’s’ scams.
- Identify the victims in each cae, and then explain how they differ.
- Use the Enron and Madoff cases to determine obstacles for law enforcement in identifying and investigatiwhite-collarlar crime.
Incorporate appropriate animations, transitionsd graphi, andas speaker notes for each slide. The speaker notes may be comprised of brief paragraphs or bulleted lists.
Support your presentation with at least three scholarly resources. In addition to these specified resources, other appropriate academic resources may be included.
Length: 12-15 slides (with a separate reference slide)
Notes Length: 100-150 words for each slide
Be sure to include citations for quotations and paraphrases with references in APA format and style where appropriate. Save the file as PPT with the correct course code information.