What Was Bernie Madoff’s Ponzi Scheme?

While you may have heard the name Bernie Madoff and might associate it with financial crimes of large proportions and extensive jail time, you may not be familiar with what actually happened. Bernie Madoff was sentenced to 150 years in prison due to his role in perpetrating the largest fraudulent financial scheme in the history of the U.S. Madoff was actually a well respected financier, which helped him get away with his crimes for a long time, until he was arrested in December 2008 on 11 counts of fraud, money laundering, perjury, and theft.

Bernie Madoff’s Ponzi Scheme

Bernie Madoff conned many high profile investors out of $65 million by using a Ponzi scheme. He lured the investors in as most Ponzi schemes do, with the promise of consistent, high returns regardless of market conditions. Madoff acted as the central operator of the Ponzi Scheme which used money from new investors to pay off the promised investment returns to the older investors. No actual profit was being realized, but it appeared as though it was because the older investors were receiving returns. The central operator of these schemes pockets the extra money involved in the operation.

Madoff’s scheme was centered around him setting up investor portfolios to look like he was matching the returns of the S&P 500. The returns made investment appealing while not requiring Madoff to pay out too much in returns to existing investors. The scheme was kept low key despite having many high net worth investors. With a quiet, elite group of investors, he stayed under the radar of the SEC. When the SEC did get notices regarding suspicions about Madoff’s scheme, Madoff’s solid reputation as a pillar of the financial community allowed him to get off the hook. Additionally, Madoff made sure to keep all of his paperwork up to date to prevent drawing any further attention.

As you may be able to tell, Ponzi schemes do not usually last for very long just because they are not sustainable. If new investor money stops coming in or investors start asking to cash out of the scheme, then the Ponzi scheme will quickly deteriorate. With Bernie Madoff’s Ponzi scheme, clients requested upwards of $7 billion back in returns. At the time, Madoff only had around $200 to $300 million to give them. He was borrowing money. Investors were anxious to cash out due to continually deteriorating market conditions. When Madoff realized his scheme was coming to an end, he talked to his sons, Mark and Andrew, who were partners in Bernard Madoff Securities. The sons turned Madoff into the FBI. Madoff entered a guilty plea in 2009. He was 70 years old at the time and sentenced to 150 years in prison.

New York White Collar Crime Attorneys

White collar crimes such as Ponzi schemes are not limited to the millionaires and billionaires of the world. After the high profile Madoff case, the federal government became particularly intense about the prosecution of Ponzi schemes and the associated federal crimes. You do not want to go up against the federal government on your own. Get skilled criminal defense representation on your side. CDH Law is here to fight for you. Contact us today.


Embezzlement and its Potential Penalties


Terms like embezzlement and larceny seem to get jumbled together when thinking about criminal law. To clear things up a bit, embezzlement is a form of larceny. Larceny, what many refer to as “theft,” refers to the wrongful taking of property from its rightful owner. A person may commit larceny through embezzlement. Embezzlement falls within New York’s larceny statutes.

Embezzlement and its Potential Penalties

Embezzlement is the taking of property by a person who was entrusted with the property by its rightful owner without permission. For instance, if an officer or director of a corporation steals corporate funds. It is often related to or a part of other criminal schemes in progress. For New York’s larceny statutes, property refers to any thing or substance of value. This means money, personal property, real property, and digital assets, among other things. There is usually either a 2 or 5-year statute of limitations for embezzlement crimes. This means prosecutors have 2 or 5 years to bring charges. Under most circumstances, the statute of limitations is 5 years because embezzlement charges often involve thefts beyond $1,000, which qualifies as grand larceny.

The degree of the criminal charge of larceny by embezzlement and the subsequent severity of the punishment should the charge turn into a conviction, largely depends on the value of the stolen property.

  • Grand Larceny Embezzlement in the Fourth Degree: This charge applies in situations where the value of the stolen property exceeded $1,000. It is a Class E felony and carries a potential prison sentence of 4 months to 4 years. If you have a prior felony conviction within the past ten years, you may be sentenced 2 to 4 years in prison.
  • Grand Larceny Embezzlement in the Third Degree: This charge applies in situations where the value of the stolen property was greater than $3,000, but $50,000 or less. It is a Class D Felony and carries a potential prison sentence of 2 years and 4 months up to 7 years.
  • Grand Larceny Embezzlement in the Second Degree: This charge applies in situations where the value of the stolen property was greater than $50,000, but $1,000,000 or less. It is a Class C Felony and carries a potential prison sentence of between 5 and 15 years in prison. This level of embezzlement is where things take a turn for the very serious as the criminal justice system sees this level of theft and above as causing lasting and irreparable harm to a business or individuals. The way this crime is prosecuted, sentences are handed down, and in how bail requests are handled often reflect this.

The most serious embezzlement charge is for situations where the property stolen exceeded $1,000,000 in value. It is a first-degree offense and a class B felony. Those convicted of this offense face a sentence of 8 years and 4 months to 25 years in prison. If the convicted individual has a previous felony conviction in the last ten years, he or she faces the possibility of 12 and a half years to 25 years in state prison.

New York Criminal Defense Attorneys

Embezzlement charges are very serious. The possible prison time is serious. The lasting consequences that hang in the balance are serious as well. The damage an embezzlement conviction will do to your personal and professional life will reach far and wide. The dedicated team of criminal defense counsel at CDH Law is prepared to fight for you as you face these criminal charges. We will work tirelessly to help see that those charges do not turn into a conviction. Contact us today.

What is a White Collar Crime?

White collar crimes are named because they are often related to the realms of white collar workers such as finances, politics, or business. It is not, however, necessarily restricted to these kinds of workers. A white collar crime is considered to be a non-violent criminal act committed with the intention of unlawful financial gain. White collar crimes are typically more sophisticated and require a complex legal analysis. Due to their complex nature, white collar crimes can be difficult to prosecute, but this does not stop prosecutors from attempting to throw everything they’ve got at an alleged offender.

What is a White Collar Crime?

The fact that a white collar crime is defined as a non-violent criminal act that is committed with the intention of unlawful financial gain means that it is a rather broad category including a variety of potential criminal charges. White collar crime is a broad category that includes a long list of specific crimes. Such crimes that are considered to be of the white collar nature include:

  • Embezzlement
  • Identity theft
  • Blackmail
  • Bribery
  • Extortion
  • Forgery
  • Racketeering
  • Insider trading
  • Money laundering
  • Public corruption
  • Grand larceny
  • Tax evasion
  • Piracy (intellectual property theft)

White collar crimes also frequently involve fraud charges such as:

  • Financial fraud
  • Securities fraud
  • Business fraud
  • Medicare fraud
  • Social security fraud
  • Tax fraud
  • Mail fraud
  • Wire fraud
  • Mass marketing fraud

Being convicted of any of these white collar crimes can have a huge impact on your personal and professional life. Your reputation is at risk of being tainted indefinitely. The more specific penalties will, of course, depend on the nature of the crime. White collar crimes range from Class B misdemeanors up to Class C felonies. Each category of crime carries its own potential penalties, such as:

  • Class B misdemeanor: a conviction can result in three months of prison and $500 in fines.
  • Class A misdemeanor: a conviction can result in one year of prison and up to $1,000 in fines.
  • Class E felony: a conviction can result in four years of prison and up to $5,000 in fines.
  • Class D felony: a conviction can result in up to seven years of prison and up to $5,000 in fine
  • Class C felony: a conviction can result in up to 15 years in prison and up to $5,000 in fines.

While there are certain guidelines that the court must observe when assessing penalties for the crime, there is some discretion involved. For instance, a court may opt to assess a fine equal to or double the amount that the defendant gained as a result of the crime in lieu of assessing the maximum penalty for the crime. There may also be mitigating circumstances or remedial factors that would lead the court to take the lower potential penalties prescribed by the sentencing guidelines.

Dedicating Criminal Defense Counsel Fighting White Collar Crime Charges

Facing a white collar crime means that you face severe potential penalties. Prison time and large fines may await you. Additionally, a white collar criminal conviction on your record will follow you the rest of your career. These kinds of crimes tend to have serious negative impacts on the social and financial lives of those who are convicted. The dedicated, experienced white collar crime attorneys at CDH Law will fight to help prevent that white collar criminal charge from turning into a criminal conviction. Contact us today.