White-collar Crimes: The Bernie Madoff Ponzi Scheme

Subject: Law
Pages: 4
Words: 1205
Reading time:
5 min
Study level: College

White-collar cases or crimes have provided challenges, especially in the economic sector. Berghoff and Spiekermann (2018) state that nowadays, not a single day goes by without reports about corporate crimes and professional misconduct. This shows clearly how white-collar crimes have been rampant in modern society. As a result, several legal approaches have been taken to try and curb such crimes.

Research also reveals that white-collar crimes are characterized by breach of trust, a systemic character that is non-violent in nature, financial gain motivation, diffuse victimization, and preponderance of middle and upper-class delinquents errant (Berghoff & Spiekermann, 2018). For instance, the Bernie Madoff Ponzi Scheme is considered a historical white-collar crime. This paper discusses how the Bernie Madoff Ponzi Scheme took place and the theories that explain the causes of white-collar crimes. It is important to note that any act of crime is punishable by law.

Detailed Description of the Crime

Bernie Madoff, also known as Bernard Lawrence Madoff, was a renowned Wall Street advisor who operated one of the world’s largest Ponzi schemes. In 2008, the Federal Bureau of Investigation (FBI) and the United States Security and Exchange Commission (SEC) unearthed a major scandal orchestrated by Bernie Madoff. As a chairman of the National Association of Security Dealers Automated Quotation (NASDAQ), Madoff gained trust from his fellow investors, who contributed large amounts of funds, which enabled him to fund redemptions by enticing investors. However, his fraudulent scheme became unsuccessful during the economic downturn that took place in 2008 (Quisenberry, 2017).

Since the unfavorable economic turn was not part of his plan, Bernie Madoff was unable to meet the excessive demands from investors who requested to withdraw their funds. Consequently, due to the overwhelming pressure from the investors’ demands, Madoff was forced to confess to his sons that the whole investment he was involved in was just but a Ponzi Scheme, which resulted in him owing investors over $50 billion (Henriques, 2018). His confession caused his sons to take action and report to the authorities about what their father had himself involved in.

Once the reports reached the authorities, investigations began, which led to the arrest of Bernie Madoff in 2008, and in 2009, he pleaded guilty to several white-collar crimes including, money laundering, perjury, mail frauds, and security frauds, among many more. Despite his plea, Madoff was penalized to spend one-hundred and fifty years in prison, and his property worth $170 billion was frozen by the courts. To date, Bernie Madoff’s Ponzi Scheme remains to be one of the world’s known fraudulent investment schemes in the history of the United States. Indeed, from the case, it is clear that Bernie Madoff engaged in the fraudulent investment scheme because of motivation for financial gain.

Theory to Explain the Reasons for the Crime

While crime cannot be justified to be legal, there are several theories that have tried to explain the reasons why people engage in criminal activities. For this reason, psychological and sociological theories have been developed to understand why people engage in crime. The sociological theories involve a vast range of theoretical concepts, which perceive crime as a phenomenon that is influenced by social and cultural aspects of criminal behavior. In addition, other sociological theories also explain the relationship between criminal behavior and social structures, including criminal behavior, class and ethnicity, and language.

Social theories can also be linked with organizational behavior aspects, such as social-economic environment, which contribute to white-collar crimes. Taştan (2019) asserts that the environmental approaches in industries are major influencers of white-collar crimes. This can be explained that in most financial industries, stiff competition ad desire for huge financial gains can influence people to engage in unethical practices and criminal acts.

On the other hand, the institutional Aomie Theory also states that most white-collar crimes are committed due to a desire for material gain. As such, sociological theories have been chosen to provide a theoretical understanding of white-collar crimes, as they suggest that individuals, in this case, Bernie Madoff, could have engaged in the crime because he was motivated by achieving the highest possible status in the stock market and in the society.

Similarly, psychological theories can also be used to explain why people engage in crimes. Thus, psychological theories try to explain the relationship between individual personality and crime as well as other factors, such as cognition and development and cognitive factors. Theories, such as learning theory, situational opportunity theory, social interactional theory, and personality theory, all try to explain that individuals engage in crime as a result of self-based demands and their environment (Taştan, 2019). Therefore, psychological theories have been selected because they illustrate how individuals are influenced by personal desires to engage in crimes, such as investment fraud that was committed by Bernie Madoff.

Policy Implications

Subsequently, several policies have been developed to address white-collar crimes. As a result, the established policies have had several implications as far as the legal environment is concerned. This follows that policies have resulted in the conviction of crime perpetrators and the compensation of victims. The United States Congress has constantly been introducing new policy legislation aimed at curbing the rate of white-collar crimes.

Thus policies, such as the Small Business Deposits Relief Act of 2013, have been helpful in ensuring the protection of small business investors. The Small Business Deposits Relief Act of 2013 aims at protecting the interests of small businesses from the provision of forfeiture ad criminal acts. In addition, the act also limits the forfeiture amount that would be imposed on a business in case it goes against federal law. It is important to note that these policies have been successful in ensuring the continuity of businesses even after undergoing court proceedings.

Effects of White-collar Crimes in Society

Though white-collar crimes may not seem to be as violent as street crimes, they have also significantly affected society, especially when it comes to economic matters. The impact of white-collar crime has affected many people in society as most of the victims have lost their savings, which has also resulted in the disintegration of families. Consequently, white-collar crimes have also resulted in increased cases of suicide among people who cannot bear the overwhelming stress and depression after losing their property and sinking into poverty. Additionally, white-collar crimes can also result in the bankruptcy of companies involved in such cases, which might lead to rates of unemployment. These effects may portray an unclear economic future of society because of the loss of financial stability among companies and individuals.

In conclusion, white-collar crimes have been prevalent the modern society. For instance, the Bernie Madoff Ponzi Scheme has been mentioned as one of the most recognized white-collar crimes that took place in 2008. The crime led to the arrest and persecution of Madoff after being reported to the authorities by his sons. However, the criminal law systems and United States Congress have tried to establish policies to address such crimes. It is important to address white-collar crimes because they have adverse impacts on society. One of the effects of white-collar crimes in society is the deterioration of financial stability for individuals and companies. This has contributed to increased stress and depression among society members, which has influenced suicide among victims of white-collar crimes.


Berghoff, H., & Spiekermann, U. (2018). Shady business: On the history of white-collar crime. Web.

Henriques, D.B. (2018). A case study of a Con Man: Bernie Madoff and the timeless lessons of history’s biggest Ponzi Scheme. Social Research: An International Quarterly 85(4), 745-766. Web.

Quisenberry, W. L. (2017). Ponzi of all Ponzis: Critical analysis of the Bernie Madoff scheme. International Journal of Econometrics and Financial Management, 5(1), 1-6. Web.

Taştan, S. (2019). White-Collar criminals and organizational criminology: Theoretical perspectives. In Ethics in research practice and innovation (pp. 296-322). IGI Global. Web.