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CH 6] Business 101 6-13

from productive investments. When asked how he was able to make these kinds of
returns he responded with things like “split level returns” or “investments from
London,” all of which were deceit. He did not want to explain how his system was
actually funding the returns. Though there were those who were suspicious of his
activities, even they did not want to ‘kill the goose that was delivering the golden
eggs’. As investment advisor Susan Murphy once said: “It was a great con.” “The
best cons are when you keep the pigeons happy, right?” “And the pigeons were
happy because they were getting good returns” from other people’s money.
Madoff did not have to advertise his fund because the word had been spread far
and wide of his success and people were coming to him to give him their money.
Madoff’s charm was that he outfoxed the foxes; he out scammed the scammers. In
the history of high stakes gambling, Madoff out did them all, like Robin Hood of old,
with Alzheimer’s, if only he had remembered to give to the poor, everybody would
have liked him.
Bernie Madoff was arrested, pleaded guilty to 11 Federal crimes and in June of
2009 was sentenced to 150 years in prison. Once worth millions, Madoff lived in the
North Carolina Federal Prison until his death in April of 2021, and according to a
court report, he ate pizza cooked by a child molester, slept in the lower bunk of a cell
that he shared with a drug addict, spent his time with a former Columbo family crime
boss and a spy.
Eighty years prior to Madoff’s crimes, Charles Ponzi held the record of
America’s greatest swindler in history. The term “Ponzi Scheme” is widely known as
the description of any scheme that pays investors early from the investments made
by later investors. Ponzi’s scheme first began shortly after the first world war and the
start of the “roaring twenties”. Ponzi promised his clients a 50% profit on their A good name is more
desirable than great riches; to
investment within 45 days and a 100% return within 90 days of their investment. In be esteemed is better than
the end Ponzi was charged with 88 counts of mail fraud; he spent three and one-half silver or gold.
years in a Federal Prison before being deported to his native Italy in 1934. Charles — Proverbs 22:1
Ponzi died in 1949 in Rio de Janeiro, Brazil, in a charity hospital.
Madoff and Ponzi presented themselves as individual investors, only to defraud
people. Does this happen in legitimate corporations? Remember that a corporation is
a person, but the caveat is that people run corporations and individuals who may act 6
dishonestly, though they are high up in the corporate structure, will hide behind the
good name and shield of their corporate employer. Their actions bring disrepute on
the corporation.

ENRON
Companies are neither ethical or unethical, it is the people in the organization
who choose the course of ethics that are actually responsible. Their decisions affect
the firm, the stockholders, and the employees.

Enron Corporation was an American energy, commodities, and services
company founded in 1985 by Kenneth Lay and based in Houston, Texas. Enron was
formed as a merger between Lay's Houston Natural Gas and InterNorth, both
relatively small regional companies. Before declaring bankruptcy in 2001, Enron
employed approximately 29,000 staff and was a major electricity, natural gas,
communications, paper and pulp company, with claimed revenues of nearly
$101 billion during 2000. Fortune Magazine named Enron “America's Most
Innovative Company” for six consecutive years.
It was revealed that Enron’s reported financial condition was sustained by an
institutionalized, systemic and creatively planned accounting fraud, which has
become known as the Enron scandal. Enron has since become a well-known example
of willful corporate fraud and corruption. Remember that a corporation is actually a
fictitious person and is amoral; a corporation is run by people who may or may not
be ethical and are not amoral. The Enron scandal also brought into question the
accounting practices and activities of many corporations. This scandal also affected
the greater business world and caused the dissolution of the Arthur Andersen
accounting firm, which had been Enron's main auditor for years.
Enron’s top executives were tried for fraud in its several forms, after it was
revealed in November 2001 that the company’s earnings had been overstated by

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