The text describes the Madoff Ponzi scheme, as well as other Ponzi schemes. All of the schemes require elements of both trust and greed. Since Madoff's Ponzi scheme was uncovered, many others have surfaced, including three in Minneapolis; one involving bank loans, another commodities trading, and a third involving investments.

Required

a. What is a Ponzi scheme? Explain how a Ponzi scheme works.

b. How did Madoff carry out his Ponzi scheme?

c. Explain how the elements of the fraud triangle are incorporated into the execution of a Ponzi scheme.

d. Explain how a Ponzi scheme, such as the Madoff scheme, could have been detected by competent auditors.