CRIMINOLOGY THEORY ASSESSMENT The present study aims to explore the embezzlements and financial fraudulent activities made by renowned Wall Street business tycoon Bernard L. Madoff during the last two decades and so in order to capture the attention of the investors for the acceleration of his business volume and pecuniary gains as well…
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Before embarking upon the topic under analysis, it would be quite advisable to discuss the criminal activities observed by Bernard Madoff. Madoff belongs to a Jewish family of the USA, who laid the foundation of a penny stock under the title Bernard L. Madoff Investment Securities LLC in 1960 and got it registered at Wall Street as a small trading firm. The firm made huge business during the course of time, and hundreds of businessmen invested their money from its platform at stock exchange. The main reason behind its popularity was its secret attractive profit offers, as the company offered extra percentage in profit than its competitors. From the 1970s right on through to 2008, Bernie Madoff was certainly responsible for making some of his clients’ money. However, as will become apparent later on in this discussion, that money was not made honestly. (madoffscandal.com) Consequently, he earned respectable name and fame as a young energetic Wall Street businessman within few years of his entry into the stock market. By the early 1980s his firm was one of the largest independent trading operations in the securities industry. (NYT, 2009) Being a very social person by nature, Madoff entered into business contracts with the big investors during his visits at clubs, restaurants and ceremonies with the promise of extra profit generated for them by his company. Initially, he tapped local money pulled in from country clubs and charity dinners, where investors sought him out to casually plead with him to manage their savings so they could start reaping the steady, solid returns their envied friends were getting. (Henriques, 2008) The investors appeared to be satisfied with the lucrative and steady profit transactions made by Madoff Securities, and did not express even slightest signs of doubts regarding fraud or misrepresentation at the company’s end. Hence, the number of investors observed significant increase at the company. However, the nature and methodology, adopted by the company, regarding offering profit to the investors appeared to be dubious and shocking for the competitor firms, which were already suspicious about the secret activities of the Madoff Securities. Consequently, it was discovered that Madoff had adopted the largest Ponzi scheme by exercising dishonesty with the investments made by the clients of his company. Madoff confessed of committing fraud with estimated investor losses of about $50 billion by inflicting the Ponzi scheme upon them. A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors. (Honan & Wilchins, 2008) The court announced 150 years imprisonment sentence to Madoff for his crime. Though Madoff pleaded guilty of committing dishonesty and fraud with his investors, he also blames banks and financial institutions for their criminal negligence of performing blindness to his activities. Since these financial institutions were well aware of all the transactions being made, they could have brought it to the limelight in order to stop Madoff from sticking to the same Ponzi scheme. Here appears the Social Control Theory: Articulated by Travis Hirschi in 1969, social control theory states that social control depends upon people anticipating the consequences of their behavior. (Macionis, 2007: 231) In other words, crime rate can witness imperative decreases in the society provided the criminals foresee the outcome of their
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