Unethical_Conduct

Unethical Conduct Daniel C. Ushman Rasmussen College Author Note This research is being on July 14, 2010 for Professor Ulysses Weakley’s B234/BUL2241 Section 06 Business Law course by Daniel C. Ushman. Unethical Conduct Unethical business practices are as old as the business world itself. Deception, stealing and fraud are some of the most common forms of unethical business conduct. The American public relies on the government to create laws to protect them from scams and schemes. People are not perfect and can become victims of professional swindlers, before they realize what has happened. Get rich quick schemes spread as the desire for wealth continues to flourish. Investors can be blinded by their own greed. Unethical business entities have been around since people began trading livestock and crops for goods and services. Over time, business owners have taken financial advantage of investors, suppliers, employees, and customers too numerous to mention. Some of these unscrupulous individuals have made the history books. In 1920, Charles Ponzi, an Italian immigrant, began advertising that he could make a 50% return for investors in only 45 days. Incredibly, Ponzi began taking in money from all over New England and New Jersey. By July of 1920, he was making millions as people mortgaged their homes and invested their life savings. As with all frauds, he was discovered to have a jail record and was indicted on 86 counts of fraud. Some tens of millions of dollars were invested with him (Lenzer, 2008). The term Ponzi scheme was coined and remains a serious violation in the business community. It is defined as “an investment fraud that involves the payment of purported returns to existing investors from funds contributed by new investors” ("What Is a Ponzi," n.d.). This particular scam differs from a Pyramid scheme where participants actively recruit new members in order to make a profit. The Ponzi requires no effort on the part of the investor. Having available funds to invest is the only prerequisite. Bernard Madoff had friends with funds. He had many friends with lots of funds. He was a popular fixture in the world of business commerce. Nasdaq appointed him chairman and the SEC made him part of industry panels (Bandler & Varchaver, 2009). He was trusted and well-respected for financial savvy in the investment community. His investors were making decent but, not extraordinary, profits. What was revealed was quite astonishing. On a December day in 2008, Madoff was charged and arrested with one count of securities fraud in what could potentially amount to more than $50 billion (Barr & Orol, 2008). According to Barr and Orol, federal prosecutors said he had confessed earlier in the week to employees that it was all a sham (2008). Financial entities were shocked. There was not a need for an extended trial at public or private expense. Bernard Madoff pleaded guilty in March 2009, three months later, to orchestrating the largest investment fraud in Wall Street history and was jailed to await sentencing (McCool & Graybow, 2009). An unbelievable and staggering breach of trust was broken and news coverage was extensive. Today, losses continue to mount as more victims come forward. U.S. District Judge Denny Chin cited the unprecedented nature of the multibillion-dollar fraud and sentenced the investor to the maximum of 150 years in prison, a term comparable only to those given in the past to terrorists, traitors and the most violent criminals (Hays & Neumeister, 2009). Madoff had gotten the book thrown at him after 20 years of undetected fraud. I believe it is important to send a message to these types of business thieves. I do not feel the sentence was extensive in any way. People need to feel protected from areas where they are not necessarily experts. This prison term may prevent others from taking advantage of honest people. References Bandler, J., & Varchaver, N. (2009, April 24). A business dynasty. In How Bernie did it (para. 1). Retrieved July 14, 2010, from Cable News Network website: http://money.cnn.com/2009/04/24/news/newsmakers/madoff.fortune/ Barr, A., & Orol, R. D. (2008, December 11). Madoff arrested in alleged ponzi scheme. Retrieved July 14, 2010, from MarketWatch website: http://www.marketwatch.com/story/madoff-arrested-charged-may-be-facing-50-bln-in-losses-fbi Hays, T., & Neumeister, L. (2009, June 29). Madoff sentenced to 150 years in prison. Retrieved July 14, 2010, from The Huffington Post website: http://www.huffingtonpost.com/2009/06/29/ madoff-sentencing-today_n_222110.html Lenzer, R. (2008, December 12). Bernie Madoff's $50 billion ponzi scheme. Retrieved July 14, 2008, from Forbes.com website: http://www.forbes.com/2008/12/12/ madoff-ponzi-hedge-pf-ii-in_rl_1212croesus_inl.html McCool, G., & Graybow, M. (2009, March 12). Madoff pleads guilty, is jailed for $65 billion fraud. Retrieved July 14, 2010, from Reuters website: http://www.reuters.com/article/ idUSTRE52A5JK20090312 What is a ponzi scheme. (n.d.). Ponzi schemes – frequently asked questions. Retrieved July 14, 2010, from U.S. Securities and Exchange Commission website: http://www.sec.gov/answers/ponzi.htm