Sociology Assignment: Comparing Ethics, Law, and the Madoff Case

This sociology assignment explores the distinctions between ethics and law, differentiating between unethical and illegal actions. The assignment uses the case of Bernard Madoff and his Ponzi scheme to illustrate these concepts. It examines how Madoff's fraudulent activities, though illegal, also represent unethical behavior, including dishonesty and exploitation of clients. The assignment also delves into instances where actions might be legal but unethical, such as Madoff's sons reporting his fraud. Furthermore, it analyzes the case through the lens of social justice, highlighting how Madoff's actions violated principles of fairness and equal opportunity. The document provides a detailed analysis of the ethical and legal dimensions of Madoff's actions, supported by relevant references.

RUNNING HEAD: SOCIOLOGY 1
Sociology
Option no 2, topic 2
Laws and ethical values differ from one another. Ethics are moral values and principles. Law are
unwritten. However, if somebody acts unethically, he may not necessarily be punished. Laws
and regulations on the other side are the written code of conduct they must be followed by all. In
case they are not followed or violated, the state or the responsible agencies or institutions grand
respective punishments for the violation there are many instances when people are unethical but
not necessarily illegal. Telling a lie, gossiping, spreading fake news or lack of empathy, represent
some unethical practices. These practices are not punished by the court of law. However, if one
does it, he or she might be disliked by others. Illegal practices and acts are related to criminal
practices. Stealing, breaking traffic laws or abduction, are examples of some illegal acts. All
these acts are punishable in the eyes of law. Thus there is a wide difference between the
unethical and illegal practices. But most unethical practices are not necessarily punishable by the
court of law. There are also many examples when certain acts are ethical however they are illegal
too. For instance, if a hungry person steals food, his act is ethical since he is hungry and he
searched for food. But stealing on the other side is illegal and punishable (Ahtesham, 2015).
Bernard Madoff is an America financial analysist and a market maker. He is currently serving in
the prison due to his fraudulent scheme. He was accused of being the director of the biggest ever
Ponzi scheme. He conducted a huge fraud of about sixty-four billion US dollar. He had been a
non-executive chairman serving at NASDAQ. His investment scandal is among the biggest
frauds conducted in the SEC, in the history of the United States (Yang, 2014).

RUNNING HEAD: SOCIOLOGY 2
The Ponzi scheme represents one of the biggest fraud scandals in the history of the United States.
Bernard Madoff, the person behind the investment fraud invited clients to invest in his schemes.
He deposited the money of all his clients at the single bank account. When customers demanded
their money back, he would instantly pay them due to excess availability of cash. The rapid and
quick redemption policies and procedures attracted other clients to the investment scheme. Later
his sons were the ones who turned their father to the respective authorities where he was
accountable for the fraud he had committed by reaping away the funds of the clients and
misrepresenting the investment schemes as profitable and attractive ones. His sons initially, were
not aware of the moves of their father. Once their father told them about his schemes, his sons,
on the very next day reported to the law institutions. In 2008, when the market started to slow
down, the motives of Madoff started ripping off. He was unable to pay back the cash back to his
clients, He finally, found himself in trouble (Larson, 2018). The reason behind his motive to
conduct fraud was greed and dishonesty. Madoff wanted to make money through fraudulent
ways, he used an aggressive selling strategy to gain benefits (Courtney Howell, 2017).
The case of Bernard Madoff represents various facts about unethical and illegal behavior. The
concept of social justice can also be analyzed from the case mentioned above.
Illegal acts
Madoff illegally used the money of customers to earn their own profits. He raised money for
himself by stacking up the money of all clients in one bank account.
Unethical:
Madoff was unethical when he took away the money of his clients and promised them to return it
with huge returns. He unethically made the investment scheme look attractive to customers. This

RUNNING HEAD: SOCIOLOGY 3
might be legal but unethical in the same way. By keeping money in the single account, Madoff is
actually exploiting the funds of his clients. Although money can be kept in one account yet it
increases the diversifiable risk for customers. Increasing risk for clients could be unethical too.
Madoff was too clever in raising the risk for his clients without bringing it into the knowledge of
customers. Customers were unaware of the huge risk associated with their investment, customers
were only aware of the redeemable investment options available (Smith, 2019).
A Legal but Unethical Act
Madoff’s sons reported about the fraudulent scheme of their father. Madoff was awarded the
prison of one hundred and fifty years. Although, for sons to send their father to jail was
unethical. Yet it was legal on the other side, buy keeping in view the fraud their father had done
(Kenton, 2019).
Social Justice:
Social justice refers to the provision of equal opportunities, wealth, freedom and facilities to all
individuals living in a particular society. The case of Madoff tends to violate the principles of
social justice too. Madoff illegally misrepresented the investment scheme that took away the
right to gain access to equal opportunities to receive a return.

RUNNING HEAD: SOCIOLOGY 4
References
Ahtesham, M. (2015, November 23). Ethical but not legal and legal but not ethical conducts.
Retrieved from https://www.bbalectures.com/ethical-but-not-legal-and-legal-but-not-
ethical-conducts/
Courtney Howell. (2017, March). Tough life lessons from the Bernie Madoff Ponzi scheme.
Retrieved from https://www.fraud-magazine.com/article.aspx?id=4294997667
Kenton, W. (2019, March 29). Bernie Madoff. Retrieved from
https://www.investopedia.com/terms/b/bernard-madoff.asp
Larson, E. (2018, December 11). The Madoff Players: Where Are They Now? Retrieved from
https://www.bloomberg.com/news/articles/2018-12-11/the-bernie-madoff-ponzi-scheme-
who-s-where-now
Smith, K. (2019). What Is a Ponzi Scheme – Bernie Madoff Ponzi Scheme & Scandal Explained.
Retrieved from https://www.moneycrashers.com/bernie-madoff-ponzi-scheme-explained/
Yang, S. (2014, July 1). 5 Years Ago Bernie Madoff Was Sentenced to 150 Years In Prison –
Here's How His Scheme Worked. Retrieved from https://www.businessinsider.com/how-
bernie-madoffs-ponzi-scheme-worked-2014-7

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