Bernard Madoff

[R. Richard]

Originally Posted by trysail
Quote:
( Fair Use Excerpt )
Aug. 11 (Bloomberg) -- Frank DiPascali, the finance chief at Bernard Madoff’s investment advisory business, pleaded guilty to helping his boss carry out a $65 billion Ponzi scheme and is helping prosecutors build cases against his accomplices.

DiPascali, 52, pleaded guilty in federal court in Manhattan to 10 counts, including conspiracy, fraud and money laundering. DiPascali has been explaining to prosecutors how Madoff spent two decades committing fraud using money from new clients to pay earlier investors at Bernard L. Madoff Investment Securities LLC.

Does it occur to anybody that the bolded part sounds very much like the way Social Security works?

If a private party does it, it's called a Ponzi scheme and it's illegal. If the government does it, it's called Social Security and its legal.

 

[trysail]

http://www.bloomberg.com/apps/news?pid=20601110&sid=a23e7n9dndgY

Aug. 13 (Bloomberg) -- An accountant who has publicly blamed imprisoned con man Bernard Madoff for stealing her family’s savings has written a book that will disclose a secret she previously withheld -- they once had an extramarital affair.

Sheryl Weinstein’s account, “Madoff’s Other Secret: Love, Money, Bernie, and Me,” will be published Aug. 25...

...Weinstein, 60, has denounced Madoff publicly at least four times this year, including at the June 29 court hearing where he was sentenced to 150 years in federal prison for masterminding the largest Ponzi scheme in history. Weinstein told the judge she met Madoff 21 years ago when she was chief financial officer at Hadassah, the Women’s Zionist Organization of America Inc...

*****​

 

[trysail]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aV1m83vVjyGM

Madoff Lover Stuck With Him Because of His Tenderness, Her Lust
By David Voreacos and Linda Sandler

Aug. 19 (Bloomberg) -- Sheryl Weinstein and Bernard Madoff nurtured a tender relationship that turned sexual five years after Hadassah, the Zionist women’s organization where she was chief financial officer, invested millions of dollars with him....

*****​

...By the time they reached the Willard, Weinstein writes, she had learned that Madoff was a great kisser, a bad tipper, a name dropper, and a narcissist who may have obsessive-compulsive disorder or Tourette’s syndrome. At the Willard, Weinstein writes, she learned one of his many secrets that they discussed by telephone a few days later.

“Bernie had a very small penis,” she writes. “Not only was it on the short side, it was small in circumference. That he was now pointing it out to me was telling. It clearly caused him great angst. I wanted to be careful how I responded. Men and their penises have a strange and unique relationship.”

Still, she said: “I liked this man and didn’t want to emasculate him. His tiny penis...



It is impossible for me to convey the extent of my revulsion at this kind of shit. What kind of people are these? She's disgusting and he's beyond the pale. I can only shake my head in disbelief that anybody with a grain of sense would have anything to do with such scuzz.

 

[Boxlicker101]

http://www.bloomberg.com/apps/news?pid=20601109&sid=aV1m83vVjyGM

Madoff Lover Stuck With Him Because of His Tenderness, Her Lust
By David Voreacos and Linda Sandler

Aug. 19 (Bloomberg) -- Sheryl Weinstein and Bernard Madoff nurtured a tender relationship that turned sexual five years after Hadassah, the Zionist women’s organization where she was chief financial officer, invested millions of dollars with him....

*****​

...By the time they reached the Willard, Weinstein writes, she had learned that Madoff was a great kisser, a bad tipper, a name dropper, and a narcissist who may have obsessive-compulsive disorder or Tourette’s syndrome. At the Willard, Weinstein writes, she learned one of his many secrets that they discussed by telephone a few days later.

“Bernie had a very small penis,” she writes. “Not only was it on the short side, it was small in circumference. That he was now pointing it out to me was telling. It clearly caused him great angst. I wanted to be careful how I responded. Men and their penises have a strange and unique relationship.”

Still, she said: “I liked this man and didn’t want to emasculate him. His tiny penis...



It is impossible for me to convey the extent of my revulsion at this kind of shit. What kind of people are these? She's disgusting and he's beyond the pale. I can only shake my head in disbelief that anybody with a grain of sense would have anything to do with such scuzz.

Yeah! I mean, call it a cock, or at least a dick or prick. If you're going to write smut, do it right!!

 

[trysail]

( Fair Use Excerpt )
SEC Never Did ‘Competent’ Madoff Probe, Report Finds

Sept. 2 (Bloomberg) --The U.S. Securities and Exchange Commission never undertook a “thorough and competent” probe of Bernard Madoff amid at least six complaints that he was running a Ponzi scheme, the agency’s internal watchdog said.

“The SEC received more than ample information in the form of detailed and substantive complaints over the years to warrant a thorough and comprehensive examination” of Bernard L. Madoff Investment Securities LLC, Inspector General H. David Kotz wrote in a summary of a report released today. Tips from a money manager, a “respected hedge-fund manager,” a firm that studied Madoff’s business and two anonymous informants failed to spur a complete probe, Kotz wrote.

The inspector general’s investigation didn’t find that senior SEC officials tried to improperly influence or interfere with inquiries....


....At a congressional hearing in February, former money manager Harry Markopolos said he tried for years to warn the regulator that Madoff’s returns were impossible. He accused the SEC of “investigative ineptitude and financial illiteracy” for failing to spot Madoff’s fraud or follow up on his tips....

.......In that case, Kotz wrote, “the relatively inexperienced enforcement staff failed to appreciate the significance of the analysis in the complaint, and almost immediately expressed skepticism and disbelief.” Though investigators soon caught Madoff in lies, they failed to look into inconsistencies and accepted his explanations at face value. They also rebuffed Markopolos’s offer to provide more evidence, and remained “confused about certain critical and fundamental aspects of Madoff’s operations............”

Full story:
http://www.bloomberg.com/apps/news?pid=20601110&sid=agBw9n2hZi5U

 

[trysail]

... and you're telling me that the answer is "more regulation ?" Right. Uh, huh.


Full story:
http://www.bloomberg.com/apps/news?pid=20601110&sid=aoFFqspXtMDg

Sept. 3 (Bloomberg) -- Bernard Madoff thought regulators had caught him in 2006 and was “astonished” U.S. Securities and Exchange Commission investigators never followed up on information he gave them, the agency’s internal watchdog said.

Madoff, 71, told Inspector General H. David Kotz’s office this year that after being questioned in May 2006 and giving his account number at Depository Trust Co., an independent clearing agency, “I thought it was the end game, over. Monday morning they’ll call DTC and this will be over.” When that never happened, Madoff was “astonished,” according to a summary Kotz issued yesterday. The Ponzi scheme continued for 2 1/2 years.

“This was perhaps the most egregious failure in the enforcement investigation of Madoff,” Kotz’s report said. “They never verified Madoff’s purported trading with any independent third parties.” By checking with the clearing agency, the SEC would have “immediately realized that Madoff was not trading in anywhere near the volume that he was showing on the customer statements.”

The Kotz report detailed repeated missed opportunities by the agency after being alerted to Madoff’s Ponzi scheme activities at least six times dating back to 1992. The SEC assigned inexperienced lawyers to the investigation, supervisors denied requests of examiners to expand their review and staff withdrew a request for information from a third party on grounds a review of the data would be “too time-consuming,” Kotz said.

‘Continue to Regret’

The inquiry is the most exhaustive look yet into the SEC’s failure to detect the world’s biggest Ponzi scheme, the $65 billion fraud that spanned decades and burned thousands of investors, including universities, charities and affluent clients. Lawmakers crafting a regulatory overhaul have awaited Kotz’s findings since agency officials rebuffed questions at hearings in January and February, citing the continuing inquiry.

“It is a failure that we continue to regret,” SEC Chairman Mary Schapiro said in a statement, adding that the agency is overhauling its enforcement and inspection units and reforming how it handles tips.

The SEC case is a “colossal blunder,” Representative Paul Kanjorski, a Pennsylvania Democrat and chairman of a subcommittee on capital markets, said in a statement yesterday. Representative Spencer Bachus of Alabama, ranking Republican on the House Financial Services Committee, said the report shows “institutional failure on a grand scale.”

‘Inexperienced, Inept, Duped’

SEC staff and supervisors “consistently demonstrated they were inexperienced, inept and easily duped,” said James Cox, a law professor at Duke University in Durham, North Carolina. “These were to a person, and there were many, individuals who seemed content to punch the clock but not push the investigation in any meaningful way.”

While Kotz’s report portrays SEC enforcement staff as inexperienced and naïve, it doesn’t find that senior officials tried to improperly influence or interfere with inquiries.

“It breaks my heart,” Harvey Pitt, SEC chairman 2001-2003 and now chief executive officer of Kalorama Partners, said on Bloomberg Television. “Even Madoff was astonished that he could talk his way out of some of this; that makes it even more painful.”

Arthur Levitt, SEC chairman 1993-2001 and a board member of Bloomberg LP, the parent of Bloomberg News, said the agency “slipped up big time” in failing to act on Madoff complaints.

“Any of us associated with that agency, from chairman on down to the lowest level, bears some portion of the responsibility and some large portion of the embarrassment,” Levitt said in an interview Bloomberg Television.

‘Never Answered Question’

SEC investigators had met Madoff in response to complaints, including a 2006 session where he was asked how he achieved his returns on investment. “Madoff never really answered the question,” Kotz wrote. “Madoff claimed his remarkable returns were due to his personal ‘feel’ for when to get in and out of the market.”

Because the staff lacked understanding of options trading, “they did not appreciate that Madoff was unable to provide a logical explanation for his incredibly consistent returns,” Kotz wrote. “Each member of the enforcement staff accepted as plausible Madoff’s claim that his returns were due to his perfect ‘gut feel.’”

Madoff also tried to impress and intimidate SEC examiners.

Throughout an examination by the SEC’s Northeast regional office in New York of Madoff’s firm in April 2005, “Madoff would drop the names of high-up people in the SEC,” Kotz wrote. Madoff told examiners Christopher Cox was going to be chairman three weeks before Cox was named, and claimed he himself “was on the short list” to be chairman. When examiners sought documents he didn’t want to provide, Madoff became angry, and his “veins were popping out of his neck.”

Recent Graduate

Most work on the investigation by the Northeast office was led by a “staff attorney who recently graduated from law school and only joined the SEC 19 months before she was given the Madoff investigation,” Kotz wrote. “She had never previously been the lead staff attorney on any investigation, and had been involved in very few investigations overall. The assignment was also her first real exposure to broker-dealer issues.”

Enforcement officials failed to “appreciate the significance” of evidence from former money manager Harry Markopolos in 2005 and “almost immediately expressed skepticism and disbelief about the information,” Kotz wrote. “The enforcement staff claimed that Markopolos was not an insider or an investor, and thus, immediately discounted his evidence.”

1992 Complaint

The SEC might have discovered Madoff’s fraud in 1992. The agency received client complaints about Avellino & Bienes, a Fort Lauderdale, Florida-based firm that invested client money with Madoff, and suspected the firm ran a Ponzi scheme. The SEC, learning that Madoff controlled the firm’s funds, assembled an “inexperienced” inspection team that conducted a “brief and very limited examination of Madoff,” without seeking to determine how Avellino & Bienes repaid customers, Kotz wrote.

“The result was a missed opportunity to uncover Madoff’s Ponzi scheme 16 years before Madoff confessed,” he said.

The criminal case against Madoff is U.S. v. Madoff, 09-cr- 213, U.S. District Court, Southern District of New York (Manhattan).

 

[R. Richard]

If anyone, other than a government employee, had conducted the Madoff investigation, that person would be facing jail for incompetence at the level of fraud.

It's stated that the lead investigator had only 19 months of experience. It should require no more than 19 MINUTES of experience to check with the DTC to determine what Madoff's trading pattern consisted of. That check would have revealed basically no trading. End of problem much earlier.

The SEC 'discounted' several reports of fraud by Madoff. In this case, 'discounted' means ignored and thrown in the wastebasket.

 

[Jenny_Jackson]

The only thing that really bothers me is that the SEC allowed Madoff to operate a multi billion dollar investment firm for 20 years without a license.

Oh, I forgot. Madoff's daughter was married to the head of the SEC's nephew. That explains everything.

 

[trysail]

Helen Chaitman is really grasping on this. Picard and the SIPC are absolutely right; the fact that this was a fraud and a Ponzi scheme means that the account balances on the statements were fictional in the first place. Duh!

Just 'cause you believed 'em doesn't mean those balances ever existed.

_____________________________________________
Madoff Victims Oppose Hiring Picard for Criminal Case
By David Glovin and Erik Larson

Sept. 24 (Bloomberg) -- A group of Bernard Madoff’s Ponzi scheme victims asked a judge to bar U.S. prosecutors from hiring Irving Picard, the liquidator of Madoff’s defunct firm, to help distribute forfeited assets recovered in the criminal case.

Federal prosecutors told a judge this week that they may hire Picard, the trustee for Bernard L. Madoff Investment Securities LLC, to help evaluate claims and distribute money to investors from the seizure of real estate and other assets, as part of federal forfeiture proceeding.

A group of victims today told U.S. District Judge Denny Chin in New York that Picard shouldn’t be retained by the government because he hasn’t protected the rights of victims in the bankruptcy case. The group has argued for months that Picard is miscalculating claims by ignoring fake profits on victims’ accounts from Madoff’s $65 billion scam.

“Picard is the last person in the world who should be involved” in the process, the group’s attorney, Helen Chaitman, wrote in a court filing. “His loyalty is solely to” the Securities Investor Protection Corp., the government-chartered agency that hired him as liquidator, she said.

The government said it may hire Picard as part of a request that it be allowed to repay investors through forfeiture law rather than restitution law. Prosecutors said restitution was impractical because they couldn’t yet fully quantify the amount of investor losses or identify all victims. In an order today, Chin said the government may proceed through forfeiture law.

SIPC ‘Underfunded’

Chaitman said Picard is using an erroneous formula for calculating losses to protect SIPC from bankruptcy. SIPC charges brokerages annual fees and makes initial payments of as much as $500,000 each to customers when its members fail.

Picard computes the loss by subtracting the amount an investor put into the Madoff firm from the amount withdrawn. Investors argue that each one’s loss is the fictitious amount shown on the most recent account statement.

“Congress repeatedly warned SIPC that it was underfunded,” Chaitman said. “Yet SIPC chose to charge its members a mere $150 per year for the privilege of printing on hundreds of billions of dollars of trade confirmations that the customers’ accounts were insured.”

Both men have previously challenged the use of the word “insurance” to describe the agency’s payments and insisted that SIPC is fully funded.

According to the objection, out of 15,870 filed claims, Picard has “mistakenly” validated only 2,336 claims as having a net loss. Picard’s calculation reduces SIPC payments from more than $7 billion to about $1.2 billion, Chaitman said.

“Picard, acting as SIPC’s puppet, has devised a scheme to reduce SIPC’s exposure,” Chaitman said in the filing.

Madoff, 71, is serving a sentence of 150 years in prison after pleading guilty to defrauding investors by using money from new clients to pay off old ones in the largest Ponzi scheme ever. Prosecutors said he told investors they had as much as $65 billion with Madoff Securities.

The case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York (Manhattan).

 

[Boxlicker101]

If anyone, other than a government employee, had conducted the Madoff investigation, that person would be facing jail for incompetence at the level of fraud.

It's stated that the lead investigator had only 19 months of experience. It should require no more than 19 MINUTES of experience to check with the DTC to determine what Madoff's trading pattern consisted of. That check would have revealed basically no trading. End of problem much earlier.

The SEC 'discounted' several reports of fraud by Madoff. In this case, 'discounted' means ignored and thrown in the wastebasket.

And,l these are the same kind of bureaucrats - not the same individuals, but the same kind of people - that some persons think will be able to uncover fraud in claims by providers to Medicaid and other federal medical insurers.

 

[Boxlicker101]

Helen Chaitman is really grasping on this. Picard and the SIPC are absolutely right; the fact that this was a fraud and a Ponzi scheme means that the account balances on the statements were fictional in the first place. Duh!

Just 'cause you believed 'em doesn't mean those balances ever existed.

_____________________________________________
Madoff Victims Oppose Hiring Picard for Criminal Case
By David Glovin and Erik Larson

Sept. 24 (Bloomberg) -- A group of Bernard Madoff’s Ponzi scheme victims asked a judge to bar U.S. prosecutors from hiring Irving Picard, the liquidator of Madoff’s defunct firm, to help distribute forfeited assets recovered in the criminal case.

Federal prosecutors told a judge this week that they may hire Picard, the trustee for Bernard L. Madoff Investment Securities LLC, to help evaluate claims and distribute money to investors from the seizure of real estate and other assets, as part of federal forfeiture proceeding.

A group of victims today told U.S. District Judge Denny Chin in New York that Picard shouldn’t be retained by the government because he hasn’t protected the rights of victims in the bankruptcy case. The group has argued for months that Picard is miscalculating claims by ignoring fake profits on victims’ accounts from Madoff’s $65 billion scam.

“Picard is the last person in the world who should be involved” in the process, the group’s attorney, Helen Chaitman, wrote in a court filing. “His loyalty is solely to” the Securities Investor Protection Corp., the government-chartered agency that hired him as liquidator, she said.

The government said it may hire Picard as part of a request that it be allowed to repay investors through forfeiture law rather than restitution law. Prosecutors said restitution was impractical because they couldn’t yet fully quantify the amount of investor losses or identify all victims. In an order today, Chin said the government may proceed through forfeiture law.

SIPC ‘Underfunded’

Chaitman said Picard is using an erroneous formula for calculating losses to protect SIPC from bankruptcy. SIPC charges brokerages annual fees and makes initial payments of as much as $500,000 each to customers when its members fail.

Picard computes the loss by subtracting the amount an investor put into the Madoff firm from the amount withdrawn. Investors argue that each one’s loss is the fictitious amount shown on the most recent account statement.

“Congress repeatedly warned SIPC that it was underfunded,” Chaitman said. “Yet SIPC chose to charge its members a mere $150 per year for the privilege of printing on hundreds of billions of dollars of trade confirmations that the customers’ accounts were insured.”

Both men have previously challenged the use of the word “insurance” to describe the agency’s payments and insisted that SIPC is fully funded.

According to the objection, out of 15,870 filed claims, Picard has “mistakenly” validated only 2,336 claims as having a net loss. Picard’s calculation reduces SIPC payments from more than $7 billion to about $1.2 billion, Chaitman said.

“Picard, acting as SIPC’s puppet, has devised a scheme to reduce SIPC’s exposure,” Chaitman said in the filing.

Madoff, 71, is serving a sentence of 150 years in prison after pleading guilty to defrauding investors by using money from new clients to pay off old ones in the largest Ponzi scheme ever. Prosecutors said he told investors they had as much as $65 billion with Madoff Securities.

The case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York (Manhattan).

I 100% agree. Those so-called profits never existed, so how can you take then into account when figuring losses? The only numbers that should mean anything are the amounts given to Madoff and the amounts gotten back. If the former is larger, they may be entitled to something. If the latter is larger, they have not sustained a loss, except maybe on paper, and are not entitled to anything.

It may mean revised balance sheets and income tax returns, but that is the responsibility of the suckers.

 

[trysail]

Full article:
http://www.bloomberg.com/apps/news?pid=20601110&sid=a1FZmJf7QVYE


[ Emphasis mine ]

Bernard Madoff’s Accountant Friehling Pleads Guilty

Nov. 3 (Bloomberg) -- David Friehling, the accountant for con artist Bernard Madoff, pleaded guilty for his role in the largest U.S. Ponzi scheme and said he helped Madoff and others prepare phony tax returns.

Friehling, 49, entered his plea today in Manhattan federal court. He has also reached a cooperation agreement with the government and is helping prosecutors with their probe. He becomes the third person to plead guilty in the multibillion- dollar fraud. Madoff is serving 150 years in prison and aide Frank DiPascali is in jail awaiting sentencing.

The accountant, who served as Madoff’s outside auditor since 1991, told U.S. District Judge Alvin Hellerstein that he didn’t conduct an independent investigation of Bernard L. Madoff Investment Securities LLC as accounting rules required of him. He said he was unaware of Madoff’s Ponzi scheme and accepted on “face value” his claims about the finances of the firm.

“In surely the biggest mistake of my life, I placed my trust in Bernard Madoff,” Friehling told Hellerstein. “I am truly sorry for the suffering of all the victims.”

Friehling pleaded guilty to nine counts including securities fraud, investment-adviser fraud, and three counts of obstructing tax law administration. In detailing the tax charges, he said he helped Madoff and others prepare false returns...

‘Numerous Individuals’
Asked by Hellerstein if the others were “connected to” Madoff, Assistant U.S. Attorney Lisa Baroni interrupted so that Friehling wouldn’t answer and said he helped “numerous individuals.”

After court, defense attorney David Lankler declined to identify the others.

Jacob Frenkel, a former U.S. Securities and Exchange Commission lawyer now in private practice, said in an interview that the “implication” of this courtroom exchange is that Friehling is helping prosecutors develop tax cases against people associated with Madoff.

“David Friehling was one of the key enablers of Bernard Madoff’s historic fraud,” U.S. Attorney Preet Bharara said in a statement. “Friehling has taken responsibility for his crimes and will now assist us in holding others accountable for their involvement.”

Friehling was sole proprietor of Friehling & Horowitz CPAs PC. The firm occupied a 550-square-foot office in New City, New York, and served as auditor to Bernard L. Madoff Investment Securities since 1991. At one time the accountant operated the firm with his father-in-law, Jerome Horowitz, who retired in 1998 and died this year.

Seeking Leniency
Friehling, a resident of New City, a northern suburb of New York City, faces 114 years in prison...

 

[R. Richard]

F
Friehling, 49, entered his plea today in Manhattan federal court. He has also reached a cooperation agreement with the government and is helping prosecutors with their probe. He becomes the third person to plead guilty in the multibillion- dollar fraud. Madoff is serving 150 years in prison and aide Frank DiPascali is in jail awaiting sentencing.

“David Friehling was one of the key enablers of Bernard Madoff’s historic fraud,” U.S. Attorney Preet Bharara said in a statement. “Friehling has taken responsibility for his crimes and will now assist us in holding others accountable for their involvement.”

Seeking Leniency
Friehling, a resident of New City, a northern suburb of New York City, faces 114 years in prison...

Given the fact that Friehling has turned state's evidence, I could certainly support a reduction in his prison sentence, say to 110 years.

 

[Boxlicker101]

“In surely the biggest mistake of my life, I placed my trust in Bernard Madoff,” Friehling told Hellerstein. “I am truly sorry for the suffering of all the victims.”

Friehling pleaded guilty to nine counts including securities fraud, investment-adviser fraud, and three counts of obstructing tax law administration. In detailing the tax charges, he said he helped Madoff and others prepare false returns...

If he knew the returns were false, how could he possibly claim he did know about the fraud? If he knew the tax returns were bogus, how could he have trusted Madoff to be telling the truth in other matters?

 

[trysail]

Madoff Trustee May Disregard Fake Profit, Judge Says
By Erik Larson and Thom Weidlich

March 1 (Bloomberg) -- The judge overseeing the bankruptcy of Bernard Madoff’s defunct business approved a liquidator’s request to reject years’ worth of fake profit from the fraud when calculating victims’ claims for repayment...

Full story:
http://www.bloomberg.com/apps/news?pid=newsarchive&sid=ab4G1TQVyr7A



Also:
Madoff Tipster Markopolos Fixes SEC Math, Mulls Murder
“No One Would Listen: A True Financial Thriller”
Review by James Pressley

...The truly shocking thing about this book is its cumulative effect, not any individual revelation. Step by step, Markopolos exposes the dangerous “mismatch in skills” between SEC lawyers and the market pros they regulate.

“Sending lawyers to oversee capital markets professionals is like sending chickens to chase foxes,” he says with characteristic bravado.

Time after time, Markopolos offered SEC officials mathematical evidence that they seemed ill equipped to comprehend. In May 2000, for example, Markopolos says he met with a senior SEC enforcement official in Boston to explain why Madoff couldn’t be making money, as claimed, with a stock-and- options trading strategy known as a split-strike conversion. All Markopolos got for his trouble was a blank look.

“It very quickly became clear he didn’t understand a single word I said after hello,” he writes...

Full article: http://www.bloomberg.com/apps/news?pid=newsarchive&sid=a9Aa_FFITv00



I very much doubt the ability of any bureaucrat-lawyer-layman-regulator to both detect and halt any sophisticated Ponzi operator prior to losses and the scheme collapsing of its own accord.

 

[R. Richard]

Madoff Trustee May Disregard Fake Profit, Judge Says
By Erik Larson and Thom Weidlich

March 1 (Bloomberg) -- The judge overseeing the bankruptcy of Bernard Madoff’s defunct business approved a liquidator’s request to reject years’ worth of fake profit from the fraud when calculating victims’ claims for repayment...

In the case of a fraud operation, particularly a ponzi scheme, it's normal legal practice to work on a 'cash in, percentage of cash out' basis. Since the profits were imaginary, it's not reasonable that they would be used to calculate a settlement.

 

[trysail]

Book-TV's ( "After Words" ) interview of Harry Markopolos, the sleuth who tried ( over eight years ) to alert the SEC that Bernie Madoff was running a scam:
http://www.booktv.org/Program/11456...uld+Listen+interviewed+by+Nicole+Gelinas.aspx Markopolos' book is No One Would Listen.


Harry Markopolos' book website:
http://www.noonewouldlisten.com

Hints:
http://lp.wileypub.com/markopolos/index9.html
http://www.sec.gov/news/studies/2009/oig-509/exhibit-0236.pdf


It wasn't that difficult to figure out; it's astounding just how many people fell for what was clearly "too good to be true."

 

[Boxlicker101]

Book-TV's ( "After Words" ) interview of Harry Markopolos, the sleuth who tried ( over eight years ) to alert the SEC that Bernie Madoff was running a scam:
http://www.booktv.org/Program/11456...uld+Listen+interviewed+by+Nicole+Gelinas.aspx Markopolos' book is No One Would Listen.


Harry Markopolos' book website:
http://www.noonewouldlisten.com

Hints:
http://lp.wileypub.com/markopolos/index9.html
http://www.sec.gov/news/studies/2009/oig-509/exhibit-0236.pdf


It wasn't that difficult to figure out; it's astounding just how many people fell for what was clearly "too good to be true."

I wonder if people who invested in Madoff also responded to emails from Nigeria. The latter are obviously too good to be true, and so was Madoff's scam. I guess the difference would be that the Madoff investors were dealing with a person.

 

[trysail]

I wonder if people who invested in Madoff also responded to emails from Nigeria. The latter are obviously too good to be true, and so was Madoff's scam. I guess the difference would be that the Madoff investors were dealing with a person.

The vast majority of the folk who invested in Madoff displayed and fell victim to that most horrifying of all human predispositions: mob behavior.

Book-TV's ( "After Words" ) interview of Harry Markopolos, the sleuth who tried ( over eight years ) to alert the SEC that Bernie Madoff was running a scam:
http://www.booktv.org/Program/11456...uld+Listen+interviewed+by+Nicole+Gelinas.aspx Markopolos' book is No One Would Listen.


Harry Markopolos' book website:
http://www.noonewouldlisten.com

Hints:
http://lp.wileypub.com/markopolos/index9.html
http://www.sec.gov/news/studies/2009/oig-509/exhibit-0236.pdf


It wasn't that difficult to figure out; it's astounding just how many people fell for what was clearly "too good to be true."

 

[R. Richard]

In the 19 April 2010 Investor's Business Daily (I have a time machine) there is an article about Harry Markopolos. Harry was a Wall Street fund Manager and he filed FIVE detailed complaints, with the SEC, about Bernie Madoff. The SEC ignored all five complaints.

Yes, sports fans, this is your government at work for you.

 

[trysail]

This is, unfortunately, a terrible piece because it doesn't clearly report who the awards are supposed to come from. Have they been made against the bankrupt estate? Have they been made against Madoff investors who received distributions from Madoff? Was the Sandalwood case a derivative suit on behalf of Merkin? The article makes almost no sense.



Merkin Investors Awarded $12.7 Million in Madoff Case
By David Voreacos

http://noir.bloomberg.com/apps/news?pid=20601103&sid=a6zyxe0PUNoQ

Sept. 3 (Bloomberg) -- Investors in J. Ezra Merkin’s Gabriel Capital LP, a feeder fund for Ponzi schemer Bernard Madoff, were awarded about $12.7 million by a panel of arbitrators.

Sandalwood Debt Funds A and B claimed that Merkin engaged in common-law fraud, breach of fiduciary duty and negligent misrepresentation, according to an award made public yesterday in New York State Supreme Court. The panel awarded $10.5 million to Fund B and $2.1 million to Fund A without explaining its reasoning. The arbitrator also assessed fees of about $112,000. Sandalwood has asked a judge to confirm the award.

The funds “alleged that they had been induced to make and retain their investments in Gabriel on the basis of misrepresentations and non-disclosures with respect to the fact that a portion of the capital had been invested” with Madoff, according to the award.

New York Attorney General Andrew Cuomo has sued Merkin and Gabriel, claiming Merkin secretly placed money with Madoff in exchange for $470 million in fees. The trustee overseeing the bankruptcy of Bernard L. Madoff Investment Securities LLC and investors also have sued Merkin, a New York financier who denies wrongdoing.

Closed Doors
The arbitration involved six days of evidentiary hearings in May, with seven witnesses testifying behind closed doors, according to the award. Sandalwood offered 85 exhibits and Merkin, the only respondent, entered 41 exhibits.

Andrew Levander, an attorney for Merkin in other Madoff litigation, didn’t handle the Sandalwood case, said a spokeswoman. His lawyer for the arbitration, Guy Petrillo, didn’t immediately return a call seeking comment. Laurence B. Orloff, a Sandalwood attorney, declined to comment.

Sandalwood A and B are limited partnerships with offices in Roseland, New Jersey, according to the award.

Merkin, 57, was closely associated with Madoff on a business and social level since at least the 1990s, according to court filings by investors suing him.

Madoff, 72, is serving a 150-year term in federal prison in Butner, North Carolina, after pleading guilty to orchestrating history’s biggest Ponzi scheme. His investors lost about $20 billion in principal.

The case is Sandalwood Debt Fund A v. Merkin, 651441/2010, New York State Supreme Court, New York County (Manhattan).

 

[R. Richard]

IMNTHO, David Voreacos, the author of the article needs to go back to the 9th grade and learn how to write.

 

[Loring2]

No way ...

This is, unfortunately, a terrible piece because it doesn't clearly report who the awards are supposed to come from. Have they been made against the bankrupt estate? Have they been made against Madoff investors who received distributions from Madoff? Was the Sandalwood case a derivative suit on behalf of Merkin? The article makes almost no sense.



Merkin Investors Awarded $12.7 Million in Madoff Case
By David Voreacos

to know for certain except for a few things. Madoff's estate has been liquidated and the proceeds distributed. That is a done deal and his wife was able to retain several million dollars for living expenses.

Basically one set of lawyers is now out of the picture, or if they remain anywhere connected with the case, they've changed hats and are now suing and counter suing each other. The early victims are being sued by those who came later because the people/corporations that received distributions were tacitly complicit with Madoff.

It gets downright complicated at this point with the Sandalwood case having been derived from the Merkin case and I understand that there are a dozen or so other cases either active or pending.

Why do this?. Well, the Madoff Estate is defunct and there is no money there but many of the people and foundations who were co-victims have a lot of money and this an attempt to get some of that. Right now it isn't the Attorneys and Accountants who matter; It's the Private Investigators who really know this crap.

Loring

 

[trysail]

http://noir.bloomberg.com/apps/news?pid=20601087&sid=a1TBdgx.JVs0&pos=3


Madoff Trustee Spends $26.9 Million, Gets $849,000 for Victims
By Bob Van Voris

Oct. 31 (Bloomberg) -- Irving Picard, the trustee overseeing the bankruptcy of Bernard Madoff’s investment firm, spent $26.9 million in the six months ended Sept. 30 while recovering $849,000 for victims of Madoff’s Ponzi scheme, according to a report filed in Manhattan federal court.

Picard has recovered a total of about $1.5 billion for creditors of Bernard L. Madoff Investment Securities LLC, he said in a filing with U.S. Bankruptcy Judge Burton Lifland made public yesterday. The trustee said he has evaluated 14,030 investor claims as of Oct. 22 and approved 2,280. He has committed to paying $738 million on behalf of the Securities Investor Protection Corp., which is obligated to compensate cheated investors as much as $500,000 on most claims, according to the report.

The largest component of the expenses for the half-year period is $15.8 million in legal fees to Picard’s firm, Baker & Hostetler LLP. Most of the money recovered in the six-month period, $771,000, came from Madoff investors who received preferences, or payments, in the 90 days before the bankruptcy filing, according to Picard’s report.

“I have nothing to add to the report and exhibit,” Picard said in an e-mail today.

Madoff, 72, was arrested in December 2008 and charged with securities fraud for directing the biggest Ponzi scheme in U.S. history. He pleaded guilty in March 2009 and is serving a 150-year prison sentence.

At the time of his arrest, Madoff’s account statements reflected 4,900 accounts with $65 billion in nonexistent investments, according to Picard. Investors lost about $20 billion in principal.

The case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).

 

[trysail]

Obtaining a judgment is one thing— collecting it is something else entirely.

____________________________

Madoff Trustee Gets $1 Billion Default Judgment Against Fund

The trustee liquidating Bernard L. Madoff Investment Securities Inc. won a $1.073 billion default judgment yesterday against a so-called feeder fund named Harley International (Cayman) Ltd.

The Harley fund, in liquidation in the Cayman Islands, was sued for more than $1 billion by the Madoff trustee on account of payments received within two years of bankruptcy. The liquidators for the Harley fund didn’t respond to the complaint or to the Madoff trustee’s motion for summary judgment.

It remains to be seen whether the Madoff trustee can collect on the judgment in the Cayman Islands or elsewhere in the world where the Harley fund may have assets. Were the situation reversed, the U.S. would say that a judgment abroad against a company under bankruptcy protection in the U.S. would be barred by the so-called automatic stay.

U.S. Bankruptcy Judge Burton R. Lifland granted judgment for $1.07 billion received within two years of the Madoff bankruptcy. Because the Madoff firm was a Ponzi scheme, the transfers to the Harley fund were fraudulent transfers.

The Madoff trustee also received a $425 million preference judgment to recover payments the Harley fund received within 90 days of the Madoff bankruptcy. A preference is a payment received on account of outstanding debt within three months of bankruptcy.

The Madoff firm began liquidating in December 2008 with the appointment of a trustee under the Securities Investor Protection Act. Bernard Madoff individually went into an involuntary Chapter 7 liquidation in April 2009. His bankruptcy case was consolidated with the firm’s liquidation. Madoff pleaded guilty and is serving a 150-year prison sentence.

The Madoff liquidation case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities Inc., 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan). The criminal case is U.S. v. Madoff, 09-cr-00213, U.S. District Court, Southern District of New York (Manhattan).