Criminological Research Paper
This research paper evaluates Bernard Madoff, a renowned American fraudster who perpetrated the world’s largest Ponzi scheme; an evaluation that will be carried out with the help of Anomie theory. The essay will attempt to explain why Madoff became a fraudster. The first part starts by evaluating Anomie theory. The second part evaluates Madoff while the third part attempts to explain why Madoff started the Ponzi scheme.
To begin with, Anomie theory is a sociological theory that theorizes that the breakdown between people’s aspirations and legitimate means of achieving those aspirations normally result to a breakdown of both individual and societal values. The term Anomie was first coined by Durkheim to explicate social norms. Later on, Robert Merton used the term to develop the Anomie theory. He argued that the strain between societal goals and legitimate means for achieving those goals resulted to crimes in USA and in other parts of the world (Bjerregaard& Cochran, 2008). He coined this theory for the first time in 1938.
Doctrinally, culturally defined goals can only be achieved through socially approved avenues that are said to be available to all people. However, in reality, the socially approved avenues for achieving the desired goals are not readily available to all people. Consequently, some people opt for illegal means to achieve the goals (Murphy & Robinson, 2008). In terms of applicability, the theory has been used to show the manner in which the socially approved means of licensing a brokerage firm was not readily available to Madoff. Consequently, Madoff resulted to running an illegal brokerage firm so that he could achieve economic success propagated by American culture.
Bernard Madoff who currently serves a hundred and fifty years in jail is an American citizen. His parents Sylvia and Ralph were immigrants from Eastern Europe. They too like Madoff owned a brokerage firm, but theirs was shut in 1963 for violating investment practices.Madoff decided that he wanted to be rich when he was only twenty-two years in 1959. At this time, he was pursing his career in political science at Hofstra College (Smith, 2010). Following this decision, he married Ruth, and registered a brokerage firm. His father in law helped him to establish the business legitimacy that he had by offering him office space in his accounting firm.At the time of collapse of his business, Madoff had two sons, Mark and Andrew, who assisted him in running the business.
Before Madoff ventured into the Ponzi scheme, he owned a brokerage firm that specialized in trading stocks over-the-counter. However, as soon as he married his wife, he decided that he wanted to be rich and own properties in line with the American dream of economic success. This dream was so real in USA that everybody wants to succeed in life, own a home, travel around the world, retire easefully and have a good work. In line with these dreams, Madoff resorted to Ponzi scheme. He offered to pay his father in law a commission for every client that he recruited for him. This deal followed the successful trades that Madoff transacted for the clients that his father in law introduced to his stockbrokerage firm. He also offered to pay his first clients commission for the new clients they introduced to his business (Rhee, 2009). Due to the commission impetus, Madoff’s first clients together with his father in law introduced new clients. As soon as this happened, Madoff exceeded the limit of fifteen clients that he was allowed to serve without licensing his business. However, because Madoff was unwilling to incur the licensing expense and other expenses that came with his expanded business, he resorted to illegal unlicensed business.Therefore, he covered his illegal business practices by collecting money from different clients and investing it into one account (Smith, 2010). This duped the licensing body into believing that Madoff had fewer clients thereby he did not need to license his brokerage firm.
In 1963, Madoff could have registered his business, but he feared losing his business and failing to achieve his American dream of economic success. Accordingly, he did not register his business. Instead, he continued to operate an illegal business. At this point, he used clients’ money to pay his investors the commission he promised to them. He also used clients’ money to expand his business and buy personal properties (Rhee, 2009). The strain of registering his business together with filing annual returns forced Madoff into operating an illegal business. Madoff feared that if he would register his business and file annual returns, he would not be able to pay his investors the commission and the 20 percent that he promised to them. As a result, he resulted to operating an illegal business so that he could continue with his business and achieve his American dream of economic success (Cullen, Wright, & Blevins, 2007). Nonetheless, this dream was crashed during the 2008 economic crisis that saw majority of investors request to withdraw their money from the scheme. Madoff did not have the money the investors requested because his business was unscrupulous thereby his business collapsed. He was finally jailed and prosecuted for running an unscrupulous business. Currently, he serves a prolonged jail term.
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Cullen, F., Wright, J., & Blevins, K. (2007). Taking stock: The status of criminological theory. New Brunswick: Transaction publishers.
Murphy, D., && Robinson, M. (2008). The maximizer: Clarifying Merton’s theories of anomie and strain. Theoretical criminology, 12(4).
Rhee, R. (2009). The Madoff scandal, market regulatory failure and the business education of lawyers. The journal of corporation law, 35(2), 363-392.
Smith, F. (2010). Madoff Ponzi scheme exposes the myth of the sophisticated investor. Baltimore law review, 40, 215-284.