Bernard Madoff - $50 Billion Scam

[basilio]

$50 billion in assets under management : Do we have another contender for the Madoff award?

Had a read of The Eagle which is Stanfords creative puff piece. Looks impressive, says all the right things with just the right tone. Even includes a story on how the very wealthy should educate their heirs to handle money. (We are talking serious wealth here..) I can see how and where they scored their $50 billion.
Salient points

1) This is a privately owned company with one shareholder Alan Stamford
2) Quote from fine print in The Eagle.

The Stanford Financial group is not a legal entity. It is an international network of independent affiliated companies located throughout North America, Europe, Latin America and the Caribbeans.

There will be some very poor billionaires today.

 

[Aussiejeff]

There will be some very poor billionaires today.

Yes. Going from 50 Billion to only a few Billion would be enough to make anyone suicidal, wouldn't it?

 

[GumbyLearner]

Oh well at least the powers that be in Langley and the Madeoff mobsters must feel safe with the pissweak-fluff novelty stories like this one.

Aussie's smashing Madoff toy makes waves in US

http://www.abc.net.au/news/stories/2009/02/19/2496076.htm

Dominating the press

Mr Warring is referring to the New York Toy Fair, which is the largest in the western hemisphere and attended by all the major international toy companies.

"There's thousands of exhibitors and it's spread over several levels of this enormous convention area that makes anything that we've got in Australia look like a garden shed," Mr Warring said.

"What's bizarre about the whole thing is you've got these massive companies like Mattel and Hasbro and all these other ones that are big, publicly listed companies that go to this toy show and they've got booths the size of Afghanistan.

"And here's this idiot from Australia sitting there in the corner with this little Smash-Me Bernie thing, and it's dominating the press - it's just unbelievable."

 

[noirua]

90-year-old forced back to work: http://news.bbc.co.uk/1/hi/world/americas/7901625.stm

 

[GumbyLearner]

Ruth Madoff Says Her $62 Million ‘Unrelated’ to Fraud

http://www.bloomberg.com/apps/news?pid=20601087&sid=aWVQJMrRh7Qc&refer=home

March 2 (Bloomberg) -- Ruth Madoff, the wife of accused fraudster Bernard Madoff, said she owns a Manhattan apartment, $45 million in bonds, and $17 million in cash that are “unrelated” to her husband’s alleged Ponzi scheme.

Looks like Madeoff's missus, Ruthless Madeoff, has been on the blower to
Ray William's (former HIH dodge-merchant) missus, Rita Williams, educating her about how to keep the stolen cash!

http://www.crikey.com.au/Business/20080115-Ray-Williams-cops-a-monstrous-media-mauling.html

 

[GumbyLearner]

Markopolos videos addressing the politicians

Markopolos: I gift wrapped and delivered the largest Ponzi scheme in history to the SEC


Markopolos to Organized Crime: "I'm The Good Guy Here!"


I wonder if BO will award Mr. Markopolos a medal of Freedom?

 

[basilio]

Markopolos videos addressing the politicians

Great, great presentation re Madoff scam and the refusal of SEC to investigate it over 9 years. Great point at the end regarding the effective failure of all the investment banks under the watch of the SEC. And effectively it is our financial system that has been bankrupted and we, personally, will inevitably pay the price.

Thanks for the post Gumby..

 

[GumbyLearner]

Great, great presentation re Madoff scam and the refusal of SEC to investigate it over 9 years. Great point at the end regarding the effective failure of all the investment banks under the watch of the SEC. And effectively it is our financial system that has been bankrupted and we, personally, will inevitably pay the price.

Thanks for the post Gumby..

That is the clear and present danger to the banking system. Banks not taking appropriate care as to investigate the capacity of borrowers to repay or investigate the instruments/vehicles/schemes/arrangements/structures/scams as to where to place their investments.
Whether they were CDOs, SIVs, CDSs etc.. or just plain old Ponzi with no SEC oversight to protect themselves or their clients.

Anyway, back to the character of the Big Kahuna!
I wonder what kind of wardrobe he possessed. It would be great to findout in retrospect.

Made-off was a 'cold-hearted control freak'
http://business.timesonline.co.uk/t...ectors/banking_and_finance/article5844381.ece

Bernard Madoff was a cold-hearted control freak who ripped off friends’ widows weeks after their funerals and ruled his family with fear, according to a revealing new report published today.

Vanity Fair also fleshes out claims that Mr Madoff attempted to set up a new $500 million investment fund a few weeks before his December 11 arrest for allegedly running a $50 billion Ponzi scheme.

To research the article in this month's Vanity Fair, Mark Seal, who had himself attempted to invest with Mr Madoff, travelled to Aspen and Palm Beach to interview the social sets of wealthy Jewish investors ripped off by the former fund manager.

Some investors had remortgaged their houses to place more money in Bernard L Madoff Investment Securities, leaving them now without any money or home.

 

[Glen48]

Made Off is a genius one of a kind with a brilliant mind just like all the other great people out there only trouble his mind didn't help the goodies.

 

[Macquack]

Made Off is a genius one of a kind with a brilliant mind just like all the other great people out there only trouble his mind didn't help the goodies.

Madoff is not a genius, he is a thief.

His greatest attribute was he had no conscious, which comes in handy when you are shafting someone.

 

[GumbyLearner]

Sorkin: The Ponzi Saver? That's "regulation" for ya, made in America!

http://bankimplode.com/viewnews/2009-03-09_SorkinThePonziSaver.html

It is clear to us that this Sorkin fellow has a specialty: keeping semi-official-looting Ponzi schemes from ever being truly "busted" open by regulators.

And now he's about to do it (again) for Madoff.

You really gotta give them some credit for the sheer gall:

In 1992, the SEC filed a suit against Avellino & Bienes charging them with selling $440 million of unregistered securities to 3200 investors. Although the SEC knew the money had gone to Madoff, their complaint referred only to an unnamed broker. The SEC said at the time they felt they were looking at a Ponzi scheme.

Then in steps Ira Sorkin, still at Squadron Ellenoff, and in the precise move made in the Towers Financial matter, offers to return all the money. Except the money wasn’t all returned. Behind the scenes, clients were simply allowed to sign agreements directly with Madoff and continue receiving those steady, stellar returns of 13 to 20 per cent according to lawyers representing defrauded clients. The SEC was somehow persuaded to drop the case in exchange for an agreement that Avellino & Bienes would shut down their firm and pay a fine.

That's right -- when the SEC figured it was a Ponzi scheme (to the benefit of Madoff), they allowed a settlement to be implemented that resulted in Madoff keeping the capital... and paying returns out from the Ponzi scheme.

In other words, the SEC (at Sorkin's direction) abetted the continuance of the Ponzi scheme, by buying off the clients with *guaranteed* returns from the same Ponzi scheme.

That's "regulation" for ya, made in America!

 

[GumbyLearner]

A History of Family Secrets, Madoff-Style

How did Bernie Madoff fool his kin? Ask Genghis Khan and Jesse James.

http://online.barrons.com/article/SB123639108676259171.html?mod=googlenews_barrons

HOW WOULD IT HAVE BEEN POSSIBLE FOR Bernie Madoff's wife, and sons and nieces and colleagues and senior employees, not to know that he was running a $50 billion Ponzi scheme for so many years, as he reportedly has admitted doing? This question has been broached many times recently, as the media casts reckless aspersions on anyone unlucky enough to be related to or in the employ of the apparent scoundrel.

As usual, the mean and biased media is being unfair.

A look at history shows some famous figures, including a couple who would make a Ponzi scammer look like Mother Theresa, went about their business without disclosing what that business was to those closest to them. No, their loved ones or confidantes weren't stupid, gullible or willfully ignorant. The stratagems worked because these guys were so clever that no one could have hacked through their tapestries of deception.

CONSIDER GENGHIS KHAN. "He always said he was a precision-tools salesman," is how Ogadai Khan explained his ignorance of the atrocities inflicted on civilizations stretching from southern China to western Hungary by his father. Indeed, not until the Great Khan died in 1227 did his children learn that he had killed more people and put more cities to the sword and did more pillaging than anyone who had ever lived. (He also found time for what passed for romance among his crew; some geneticists believe that at least one half of one percent of all males now living carry a gene passed down by this very potent warrior.)

"He was always on the road, and when he came home he would just go on and on about how much it cost to stable his yak or rent a yurt for the night in Samarkand," continued Ogadai, his successor. "We just naturally assumed that he was in retail."

A similar situation was apparent in the post-Civil War American West, where Jesse James kept his family in the dark about the real source of his income.

"Jesse always told people he was an impresario," is how Robert Ford, who shot the notorious bank robber and murderer in the back of the head, would later recall. "He would tell his wife that he was out on the road booking banjo smackdowns in Deadwood and Dodge City, which gave him an excuse for being away from home so much and for always turning up with suitcases full of cash. Also, he never used the name Jesse James around them. His family thought his name was Snuffy McGillicuddy."

OR CONSIDER A MORE MODERN CASE, involving not a criminal, but rather a respected general: Erwin Rommel, commander of the Panzer divisions that wreaked havoc in North Africa in the early 1940s. Not wishing to let his family know the danger to which he was exposed in battling the Allies, he "deliberately filled the den with stuffed giraffes and photos of King Tut, so we all assumed that he spent so much time in North Africa because he really liked it down there," recalls his trusted accountant, Fritz Adelhoffer, now 98.

"He also said the desert air was good for his sinuses. Not until I got an angry letter from a dry cleaner in El Alamein asking when 'Mister Desert Fox' was going to pick up the 20 leather jackets he left behind in 1943 did I begin to suspect that he might be the head of the Afrika Korps. Gott im Himmel! I always thought he was in import-export."

Perhaps the most famous example of a renowned individual who succeeded in keeping his kin and friends in the dark was Attila the Hun. After his death in the year 453, all 356 of the wives of this unreconstructed enemy of mankind said that they had no idea whatsoever that they had been living with the Scourge of God.

"When we would ask him why he was always disappearing into the steppes with 150,000 horsemen armed to the teeth, he would tell us that he belonged to a re-enactors' club and they were going off to the Urals to simulate the Siege of Troy," explained his favorite wife, Barbetta, a former Thracian courtesan. "The truth is, those guys drank so much we were happy to see them go. It was the only way you could get any peace around here."

THE KEY QUESTION IS WHETHER THOSE closest to Attila, Genghis Khan, Erwin Rommel and Jesse James deliberately looked the other way and pretended not to see the obvious.

"Let's put it this way," said Kublai Khan, who was only an infant when his grandfather Genghis breathed his last. "When Gramps would come back to Ulan Bator with a couple of dozen decapitated heads impaled on spears, I think some in the family started to suspect he might not be your average traveling salesman. But Genghis would always say, 'I won those skulls in a craps game. You got a problem with that?' That shut them up in a hurry."

Perhaps the most amazing story involves Charles Ponzi, who, after serving five years in prison for his original postal-reply coupon scam, set up another scheme involving overvalued Florida real estate. It was unwittingly bankrolled by his third wife, a Florida woman who forked over her life's savings. "I thought it was a different Charles Ponzi," she later lamented. "He led me to believe he worked for the SEC."

 

[Aussiejeff]

*clink*

 

[Solly]

Here's big Bernie's statement he read in the federal court as he pleaded guilty to orchestrating a massive Ponzi scheme.....

Thanks to TSG.....


http://www.thesmokinggun.com/archive/years/2009/0312091madoff1.html

 

[sassa]

Madoff is the sacrificial lamb. Madoff's jail cell is supposed to say to you "Look, fraud will not be tolerated! See what happens!". It makes for great TV, but right now as Mr. Madoff sits in his cell:
-Mark to market accounting is about to be suspended; I argue a new accounting trick with full endorsement of the FED/Treasury/SEC will also be unveiled
-The investigations stop now. No more going after the fraudsters that brought you mortgage backed securities based on zero value loans, no checking on Merrill book cooking, no more asking why AIG thought writing CDS insurance nobody could ever cover was done

All the players are coordinated on this big "confidence" push. Now in hindsight the "we made money" statements made by the bank CEO's fit into context. Mr. Madoff walks to jail, banks are making money hand over fist, and all is well if you would just watch American Idol and stop asking questions.

Markets are up 12% plus in a few days. One guy is going to jail. Balance sheets are about to improve through mere smoke and mirrors. Will the sleight of hand work out? Probably, for a while. The first show bought about 8 years of inattention and sequels usually do not do as well as the original. The curtain goes up on Monday. Paying attention?

http://www.economicdisconnect.blogspot.com/

 

[Glen48]

When Bernie get out the recession should have bottomed.
I heard G W is trying to get money into Made Off schemes.

 

[GumbyLearner]

Ponzi scheme? What Ponzi scheme claims Made Off bean-counter? :iamwithst

http://www.google.com/hostednews/afp/article/ALeqM5hVC2ZrjuxVyaPm-P6e26rr7ywOzw

NEW YORK (AFP) ”” The accountant who allegedly rubber-stamped Wall Street conman Bernard Madoff's financial statements surrendered to authorities Wednesday and was charged with fraud.

David Friehling, 49, faces a sentence of up to 105 years in prison if convicted for his alleged role in helping Madoff cheat thousands of investors out of billions of dollars.

He was freed on a 2.5 million dollar bail and ordered to surrender his passport.

The accountant is not accused of knowing about Madoff's Ponzi scheme -- in which money from new clients was stolen to pay dividends to existing clients -- but of certifying faked accounts.

"He is charged with deceiving investors by falsely certifying that he audited the financial statements of Mr Madoff's business," said Acting United States Attorney Lev Dassin in New York.

"Mr Friehling's deception helped foster the illusion that Mr Madoff legitimately invested his clients' money."

 

[GumbyLearner]

Madoff’s 19th Century Forerunner Shows Flaws of Rules

http://www.bloomberg.com/apps/news?pid=20601170&refer=special_report&sid=aBj2XKSxQ138

March 20 (Bloomberg) -- John Sadleir, a British member of parliament, newspaper publisher, bank and railroad chairman, lay down under a bush on London’s Hampstead Heath and sipped poison prussic acid from a silver jug.

His suicide on Feb. 16, 1856, exposed a fraud that would wipe out at least three companies and cause “ruin and misery and disgrace to thousands -- aye to tens of thousands,” as Sadleir correctly predicted in a final letter to a friend.

Charles Dickens, Anthony Trollope and at least three other Victorian novelists used Sadleir as the inspiration for fictional villains. And in a note that foreshadowed the response to Bernard Madoff, 70, who last week pleaded guilty to defrauding investors of as much as $65 billion, politicians found him an inspiration for increased regulation.

“Whenever frauds like Sadleir’s or Madoff’s are exposed, people clamor for government regulation,” said George Robb, a professor at William Patterson University in Wayne, New Jersey, and author of “White-Collar Crime in Modern England: Financial Fraud and Business Morality 1845-1929” (Cambridge University Press, 1992). “The problem with regulation is it’s always reactive, they solve the last scandal. In 10 years people forget and crooks figure out a way to circumvent it.”



Notice how the Professor makes no mention of the history of the Indoor Management Rule of Corporations and the historic 'put on inquiry' test that lenders have traditionally been subject to when banks go to courts to retrieve the money they loaned.

Regulation is reactive to a degree but not in this financial crisis. The banks are very much architects of their own demise IMHO. Especially when many banks have abandoned or forgotten the centuries old standard conventions of merchantile banking.

 

[pj2105]

I'm still amazed he could pull it off for so long! His piramid scheme went on for ages and he only got found out because of the GFC (Global Financial Crisis).

Piramid schemes are like playing musical chairs...just make sure you get out first when the music stops. For him to be able to play the music for so long and for huge amounts of money as well and only get caught really because of the GFC is amazing.

 

[GumbyLearner]

I'm still amazed he could pull it off for so long! His piramid scheme went on for ages and he only got found out because of the GFC (Global Financial Crisis).

Piramid schemes are like playing musical chairs...just make sure you get out first when the music stops. For him to be able to play the music for so long and for huge amounts of money as well and only get caught really because of the GFC is amazing.

Your right that is astounding in itself pj.

Consider these factors though, I think they have certainly helped Mr.Made-off.

1. You were on the board of the NASDAQ.

2. Your son used to work at the SEC.

3. Your daughter started banging one of the Senior members of the SEC and then married him.

4. Many cases of fraud that were proven in the courts and that prima facie evidence associated from those cases pointed to your brokerage operation were ignored.

5. A rather 'humungous' complaint is lodged against you in 2005 and I don't mean the 'humungous' (you know the baddie with the metallic Jason-like mask) from Mad Max 2. But a complaint that raised numerous red flags about the activities of Made-off & Co.

6. Just to add to 2. the new boss appointed by Obama of the SEC is the same person that gave your son a job at the SEC.

I just wonder what BS will be edited from the movie version.
Hopefully it won't stink of hypocrisy like the kickbacks Senator Chris Dodd received from AIG lobby groups prior to Obama's election and the subsequent handouts they received from Mr.Dodd after he wrote them into law. And then demanded AIG pay them back. What a player!

I suppose the old adage of it's better to be seen doing the right thing rather than actually doing the right thing is all that applies here.