Distress with distress: financial health of higher education institutions affects demand

Bernie Madoff After Ten Years; Recent Ponzi Scheme Cases, and the Uniform Fraudulent Transactions Act

PurposeThe purpose of this study is to estimate the profits to JPMorgan Chase from the Madoff Ponzi scheme’s checking account deposits at the bank based on the data in Harbeck (2011). The Madoff Ponzi scheme was sitting on a cash hoard in excess of a US$1bn by the 1990s. Most of that money came into and stayed in the 703 account at JPMorgan Chase or it was transferred to one of the 11 other bank accounts. The author uses previously unanalyzed data from the Security Investor Protection Corporation (SIPC) to estimate JPMorgan Chase’s earnings from the accounts.Design/methodology/approachThe author estimates the checking account balances of the Madoff Ponzi scheme with JPMorgan Chase and its ancestor corporation, Chemical Bank. He estimates the earnings from those large checking accounts and reinvests them in the stock price from 1986 to 2011. He uses data on the Madoff checking accounts released by Harbeck (2011) to estimate that JPMorgan Chase earned over US$900m from those large and suspicious checking deposits.FindingsThe US$907m in estimated profits from the Madoff Ponzi scheme bank accounts are much smaller than the US$2.6bn fine that JPMorgan Chase paid in 2014 to limit its liability for its dealings with Bernard L. Madoff. Any failure of anti-money laundering compliance in this case was very costly for the bank.Originality/valueThis is only study to analyze the Harbeck (2011) data to estimate JPMorgan Chase’s profits from the Madoff Ponzi scheme’s checking deposits. As JPMorgan Chase paid a US$2.6bn fine in this matter, it is relevant to look at how big the fine was relative to the profits the corporation may have earned from doing business with Bernie Madoff.

PurposeThe purpose of this paper is to educate investors on the red flags of Ponzi and other fraud schemes and due diligence measures.Design/methodology/approachThe paper examines ways in which fraud is executed in Ponzi schemes and then highlights practical precautions every investor should take to prevent being a victim.FindingsThe research outlines specific red flags that the investors in the Madoff Ponzi scheme and other fraud schemes might have recognized and others in the future should recognize to prevent being the next victim. These red flags are consistent in most Ponzi schemes and investors should institute due diligence in examining their investment firm or manager.Practical implicationsInvestors should be wary of their investment manager and pay attention to the warning signs that they could be involved in a Ponzi scheme. They should insist on seeing detailed audit information and not hesitate to ask questions.Originality/valueThe paper will be of interest to a wide range of individual and institutional players in the investment community who in light of recent events are concerned about being investment fraud victims.

White-collar crime has long remained an underexplored yet devastating category of criminality, often concealed behind positions of power, legitimacy, and respectability. Unlike conventional street crime, it does not provoke public outrage or immediate fear but instead inflicts long-term and far-reaching economic, political, and social harm. Its hidden nature, coupled with the involvement of elites, renders detection and prosecution particularly complex. This article seeks to unmask the “silent offender” by analysing white-collar crime through the dual lenses of forensic science and forensic psychology, with special attention to the Pakistani context and comparative insights from international jurisdictions. Forensic science has now become an unavoidable commodity in the detection of fraud, whereby forensic accounting, digital forensics and cyber evidence have helped in converting the abstract financial manipulations to effective admissible legal evidence. Other techniques, for instance, tracing shell companies, recovering deleted data, and money trail analysis can be used to uncover conduct that would otherwise go undisclosed. Forensic document examination and financial forensics can be indispensable in cases where a forged contract detail is at issue, forged revenue, and laundering schemes, as often the matter comes down to technical details which financial forensics and forensic document examination can prove in a court of law. Forensic psychology augments the other scientific instruments by providing reasons as to why individuals of privilege and social respectability can commit such improper acts. Cressey has suggested the use of the so-called postulates of the fraud triangle, and the analysis will focus on how pressure, opportunity, and rationalisation are combined to help engage in wrongdoing. Narcissism, entitlement, manipulativeness, resistance to oversight, and others are often found among offenders, whereas criminological theories, strain, differential association, and control theory demonstrate how the organisational culture of a company legitimises immoral actions and how the softened institutions destroy the moral bounds. The theoretical discussion is supported by the case law. White-collar crime is a scar on governance and can be seen in one of the most well-known cases in Pakistan, the Hudaibiya Paper Mills case, the Modaraba scandal, and the Axact fake degree scandal. Cross-border, high-profile cases such as Enron, Bernie Madoff's Ponzi scheme, and Wirecard exhibit the same patterns of manipulation, deception and structural malfunction. Finally, the paper discusses that white-collar crime must be combated through skills other than technical investigations. Successful prevention as well as deterrence is contingent upon structural reforms, external control, whistle-blowing, cultural transformation of the corporate as well as political ethics, and international coordination. In the absence of such efforts, white-collar crime will remain a moribund but insidious element which eats away at institutions, economies and confidence in the challenging of justice.

PurposeThe purpose of this paper is to explore dynamic issues relating to Ponzi and other fraudulent investment schemes to demonstrate how scammers convince victims of investment opportunities that turn out to be nothing but fraudulent. Specifically, it explores the nature of Ponzi, Pyramid, Advance fees scams and the mechanisms used to defraud unsuspecting victims of their money. The risks associated with Ponzi schemes can be gleaned in the fraud case of Bernie Madoff (1998) who had been running a Ponzi scheme in the USA for 20 years and reaping investors of their returns without ever discovering it until the business collapsed. The other notorious investment scams include “the Nigerian letter frauds” which combine the threat of impersonation fraud with a variation of an advance fee scheme in which a letter is mailed to offer recipients the “opportunity” to share in a percentage of millions of dollars that the author – a self-proclaimed government official – is trying to transfer out of his country. This article assesses the possibility of using anti-money laundering regulatory tools such as a “risk based approach” and “Know Your Customer” to protect victims of fraudulent investment schemes.Design/methodology/approachThe paper was written by analysis of primary and secondary data and by utilising newspaper reports on different types of fraudulent investment schemes and the context in which they normally happen in practice. It has also utilized case studies and relevant examples to demonstrate different typologies of fraudulent schemes and the possibility of using anti-money laundering regulatory tools to regulate them.FindingsThe findings suggest that many people who fall victims of fraudulent investment schemes such as Ponzi and advance fee fraud are not gullible but lack knowledge of their sophistication and how they operate to defraud unsuspecting victims of their savings.Research limitations/implicationsThe paper was largely a library-based research, and there were no interviews carried out to corroborate some of the data used in writing it. This minimises inherent bias in the use of secondary data sources to undertake a study.Practical implicationsThe practical implication of the paper is to highlight the inherent risks in Ponzi and other fictitious investment schemes that are often cleverly conjured to exploit ignorance of the public and defraud them of their savings. It demonstrates that while financial institutions can use their regulatory tools such as KYC to safeguard financial markets from criminal exploitation, people should be vigilant to avoid falling victims of criminal exploitation and lose their savings.Social implicationsWith globalisation, the market is awash with different types of investment opportunities, but people need to keep in mind that it has also created opportunities for criminal exploitation. Some opportunities that are being offered such as advance fee and other schemes are cleverly devised to exploit ignorance of the public. Therefore, this paper highlights the pitfalls which potential investors need to bear in mind when deciding on where to invest and how to invest their money.Originality/valueResearch on Ponzi schemes, advance fee fraud and misuse of letters of credit do not seem to have received proportionate scholarly attention as other forms of financial crimes. This paper, therefore, addresses a need in the market on many issues it relates.

The increasing nature of competition in the higher education sector of Botswana means that universities need to craft strategies to be more competitive. The recipe for competitiveness is primarily hinged on the ability of institutions to be cognisant of the factors that influence prospective learners in selecting a university of choice to study. They also critically need to know the sources of information where prospective learners acquire information to redirect their marketing strategies. To achieve these objectives, the purpose of this study was to investigate the factors influencing the choice of university of study as well as their sources of information in influencing choice decision-making. The study followed a qualitative research approach and data was collected using in-depth interviews. Thematic narrative analysis was used to unpack the underlying influences on decision-making. The findings indicate that prospective students get their information from multiple factors. The most influential sources identified are family and friends, career fairs and exhibitions, social media, and to a lesser extent the mass media and promotional materials. The findings also showed that prospective university students’ choice of university is influenced by a variety of factors. These include university location, availability of accommodation, perceptions of university reputation, quality of academic programs, alignment of lifelong interests and desires, and the perception of employability. There are other factors that are less influential as degree of persuasion, funding issues, costs associated with applications as well as government processes and procedures. These findings have potential to influence university marketing strategies and policies in seeking competitiveness and improvement in enrolment numbers.

PurposeThe purpose of this paper is to explore organized crime on Wall Street and expose the lack of regulatory control thus impacting upon innocent investors in the money market. Organized crime has for many years reaped rewards from unsuspecting investors. This exploration, however, aims to turn away from organized and focus on organizational crime. Specifically, the “highly respected” investor Bernard Madoff.Design/methodology/approachThis paper examines the impact upon innocent investors of the US Securities and Exchange Commission's (SEC) response to repeated efforts by a whistle blower to investigate an “alleged” out‐of‐control “Ponzi” scheme.FindingsBernard Madoff's multi‐billion dollar Ponzi scheme was never uncovered by the SEC. The fact is that the economic recession did the SEC's work. The SEC appeared to be willfully blind. Without the economic recession, some suggest that the Madoff Ponzi scheme might have involved close to 100 billion dollars.Originality/valueThe SEC's regulatory effectiveness in regulating the financial industry was found wanting for over ten years. No regulatory agency ever determined Madoff to be in serious violation of any laws, hence others within the financial industry continued to engage in similar illicit organizational activity. The question remains whether regulatory agencies have learned a lesson from the Madoff episode or is the organizational Ponzi scheme alive and well?

Charlie Ponzi is the most famous banker in American history, immortalized in the term ‘Ponzi scheme’. Ponzi owned a small firm that sold its own IOUs, sometimes called deposits, in one of the Boston suburbs in the early 1920s; he promised to pay the buyers of his IOUs 45 percent interest a year at a time when the traditional banks were paying two or three percent. Ponzi’s operation was straightforward — he used the money that he received from the sale of deposits on Wednesday to pay the interest to those who had bought the deposits on Monday. The interest rate that Ponzi paid was so high that most of those who bought the deposits on Monday were happy to keep their money with Ponzi, so they could earn ‘interest on the interest’.

Research suggests that anticipating having a part-time job while at university could impact students’ university choice. The specific mechanisms through which this effect occurs are underexplored, which is why we examine whether anticipatory social (e.g., the percentage of employed students at university), economic (i.e., anticipated money struggles), and academic (i.e., anticipated academic struggles) considerations related to part-time employment can influence prospective students’ first choice of UK university. The results of our cross-sectional study (N = 293) indicated that the percentage of employed students at university was positively associated with the league table position of prospective students’ university choice, even after accounting for their academic achievement and their parents’ levels of education. Anticipated money and academic struggles were not significantly associated with university choice. These results build on previous literature by suggesting that the percentage of employed students at university can act as an important motivating factor for applying to prestigious universities and that this choice can be unconstrained by related social, economic, and academic considerations. In the context of increased student labor force participation – and supplemented with additional robust evidence – our results can support universities’ wider participation activities to help enable students who consider part-time employment to apply to prestigious UK universities.

The 2008 financial crisis exposed severe vulnerabilities in the global financial system, characterized by widespread fraud, mismanagement, and deceptive financial practices. Forensic accounting played a critical role in uncovering these fraudulent activities by tracing financial irregularities, detecting false reporting, and providing legal evidence necessary for prosecution. This paper explores the pivotal role forensic accounting played during the crisis, focusing on key case studies such as Lehman Brothers, the Madoff Ponzi scheme, and other notable corporate frauds. Additionally, the paper examines the post-crisis reforms, including the Dodd-Frank Act, Basel III, and the Sarbanes-Oxley Act, which strengthened financial transparency and fraud detection mechanisms. The paper also compares global forensic accounting practices across different regions, highlighting the challenges and advancements in fraud detection. Technological innovations like blockchain and artificial intelligence are identified as key drivers in the future of forensic accounting, enhancing the ability to detect and prevent financial fraud in increasingly complex financial systems. Keywords: Forensic accounting, financial fraud, 2008 financial crisis, Lehman Brothers, Madoff Ponzi scheme, regulatory reforms, Dodd-Frank Act, Basel III, Sarbanes-Oxley Act, global practices, fraud detection, blockchain, artificial intelligence.

Universities are facing increasingly complex trends and challenges in attracting and retaining the best students. This has coaxed university marketers to embrace marketing practices and ideas in order to acquire and retain these students. The study aims at understanding potential students’ decision-making with respect to what and who influences them when choosing a university. The research design is descriptive and self-administered questionnaires were fielded to first-year students at a comprehensive university early in the academic year. A total of 1 290 useable responses were realised. The study uncovered that brochures and the students’ parents are most influential in their choice. Significant differences were uncovered based upon demographics of respondents and key information sources that influence university choice. The findings imply that university marketers should segment the prospective student market by taking into account that prospective students differ with regard to the extent of who and what influence their university choice. Key words: South African Higher Education, South African university, prospective student, university choice, key information sources, decision-making process.

Hearing from the Forgotten Victims: A Content Analysis of the Consequences of Bernard L. Madoff's Ponzi Scheme

The aim of this study was to ascertain the university brand model that characterizes postgraduate student choice of ZCAS University. The brand model comprises brand attributes that attract postgraduate students to the university, the information sources they consult, who influences their decisions and what makes the university unique. The study was qualitative in design, while sampling of research participants was done purposively. Three focus group discussions involving seventeen first years part time and open distance e-learning postgraduate students, and five semi-structured interviews with marketing and recruitment staff at ZCAS University were used to collect data on the brand model. Thematic analysis and content analysis were then used as the primary data analysis techniques. Results of the study revealed that reputation, teaching quality, student support, fees and facilities were the top five ZCAS University brand traits that underpin postgraduate students’ choice of the university. With respect to competitive advantage, facilities, teaching quality reputation and accreditations are perceived to be the university’s primary unique characteristics. The study further identified friends, self, workmate and family as the greatest influencers of postgraduate student choice of the university; while websites, social media, print media and television are believed to be the most consulted information sources by prospective postgraduate students.

This paper aimed to understand what the academic elites think about the student's university decision process and achieve students' future goals from studying at foreign universities. Because the success of studying abroad is believed to be closely related to the process of selecting university candidates with all the advantages and prestige of each university offered during recruitment promotions, to understand this, we searched for data sources electronically from various international journals and promotional advertisements. We processed this in a phenomenological approach that begins with understanding the problem and the study's hypothesis—the coding system, evaluation, and in-depth interpretation to get the findings' validity and reliability. Our data sources are based on Google Scholar, Microsoft Academic, and other sources from 2010 to 2021. Based on the results of the discussion of the findings data, we can conclude our findings, among others. The decision to study abroad is first beginning with the right subject, course content, sports and societies, student accommodation, and scholarship availability. To get that information, applicants have to research alumni meetings, scholarship tours and promotions, western or eastern countries, and use multiple information sources. Thus, these findings should help prospective students and universities explore prospective international students' advertisements.

Foreword. Introduction. Chapter 1 Recent Hedge Fund Scandals. Palm Beach, Florida. KL Financial, March 2005. Amaranth Advisors, September 2006. Bernie Madoff, December 2008. Lesson # 1: Relationships Do Not Trump Due Diligence. Lesson # 2: Investing in Hedge Funds: Hire Experts. Lesson # 3: Did Not Know What We Were Investing In, Is Not An Excuse. Conclusion: So Called Experts, Fund of Funds, Have Failed. Chapter 2 The Players. Flow of Capital in the Hedge Fund Industry. Chapter 3 Hedge Funds. Incentives and the Disincentives of the Hedge Fund Fee Structure. Education of the Future Hedge Fund Manager. Training Grounds of the Hedge Fund Manager. The Chart Readers. The Quants. The Global Macro Trader. From a Moth to a Butterfly. Andrew Lahde's Goodbye Letter. Chapter 4 Hedge Fund Strategies. Long Short Equity. Event Driven. Global Macro. Fixed Income Arbitrage. Relative Value Arbitrage. Effect of 2008 on these Strategies and Looking Forward. Chapter 5 Hedge Fund Service Providers & Regulators. Building a Business. Chapter 6 Funds of Hedge Funds. Philosophy and Services. Failure of Fiduciary Duties. Statistical Bucketing by Strategy. Due Diligence and the Analyst. What's in a Name. The AIMA Due Diligence Questionnaire. Where are the Experienced Professionals? The (Lack of) Ongoing Due Diligence. Multi-Strategy Hedge Funds. Chapter 7 An Expert Failure. Uselessness of Historical Data Crunching. Quest for Steady Returns-Systematic Destruction of Alpha. Bucketing by Asset Class and Geography - A Flawed Concept. Alpha versus Beta-Trader Generates Alpha, not The Strategy. Specialized Strategies. 10% to 20% Allocation Rule. Managing a Hedge Fund Manager. Bookrunner Versus a Proprietary Trader. So-Called Hedge Fund Experts. Hedge Funds - House of Second or Third Chances? Why Does a Losing Hedge Fund Manager Shut down His Fund? Why Does the Industry Keep Funding a Failed Trader? Conclusion. Chapter 8 Remodeling the Funds of Hedge Funds. Traders Managing Trading Investments. Differentiate Between Alpha and Beta Strategies. Bucketing Based on Trader Methodology. Appropriate Risk Template by Strategy. Manager Stop loss and Linked Redemptions. Not 10% Majority Every Time. On-Going Due Diligence - It is Not Just About Returns. Chapter 9 Correct Risk Due Diligence. Position Concentration? So What. Management of Stop Loss Limits - The Be-All and End-All. Over-Leverage and Illiquidity. Hedging - Will the Market Let You Short? Chapter 10 Interviewing a Hedge Fund Manager. Relationship. Strategy Related Questions. What Qualifies You to Execute This Strategy? Work Experience. Risk Appetite. Thinker, Adapter, Entrepreneur? Discipline and Character. Chapter 11 Hedge Fund Industry's Role in 2008 Market Crisis. Borrowers, Bankers and Investors. Don't Blame the Products, Blame the Users. Failed Due Diligence on Part of Investors. Failure of Fiduciary Responsibilities by Brokers and Lies by Borrowers. No Hedge Fund Has Been Bailed Out. Systemic Risk and Derivative Transactions. Regulating Hedge Funds. Chapter 12 The End. Robert Allen Stanford's Ponzi Scheme. Hedge Fund Industry Offers More Disclosure. Similar Problems with the Pension Funds, Endowments, SWFs. Bibliography. Index.