Posted on 01/04/2009 6:11:53 AM PST by Liz
Pressure continues to mount on Erza Merkin to step down as chairman of GMAC....the auto- and mortgage-lender which received a $6B (taxpayer-financed) government rescue package...... Neither GMAC or the Treasury Dept. is talking about how Merkin was allowed to stay atop the privately-held GMAC operation despite his cloudy recent history - which has been marked by several lawsuits charging the 53-year-old investor with fraud. Merkin, a partner in private-equity powerhouse Cerberus Capital Management, became chairman of GMAC in November 2006 when Cerberus bought a 51% stake in the company. Merkin maintains he is a victim of Madoff.......Treasury Secy Paulson was evidently okay with handing billions in TARP taxpayer money to Merkin (knowing full well Merkin is the target of several lawsuits charging Merkin with fraud)........
(Excerpt) Read more at nypost.com ...
ORGANIZING LEGAL PRINCIPLE The following should foreclose any cockamamie ideas that taxpayers are gonna bailout these mega-millionaires (who most assuredly have money stashed offshore). The compelling legal principle of “condonation” is operating here---implied forgiveness for certain behavior. Meaning investors implicitly “condoned” Madoff’s actions over a period of time--sometimes decades.
His investors willingly acquiesced to Madoff's activities in several ways:
(1) Sending Madoff enormous sums of money, sums that were spread out over time (some families invested for generations), even AFTER they had the opportunity to assess their investments;
(2) Referring other investors to Madoff (if the investment was so bad, why did they bring in other investors?);
(3) Taking profits out of the investment, rolling it over, or putting more money in;
(4) Writing PERSONAL checks to Madoff's subrosa spinoff vehicle that was not listed on the Securities Exchange (tax evasion modus);
(5) Accepting, without question, Madoff’s obviously flawed monthly statements.
============================================
REFERENCE BY Ronald D. Orol, a MarketWatch reporter, based in Washington.
EXCERPT There were several things that alerted some in the hedge-fund industry that an investment with Madoff may not have been as safe as it initially appeared. Aksia LLC, which researches hedge funds and advises institutions about investing in the industry, said that it never recommended that clients put money in some of the "feeder funds" that allocated their capital to Madoff. On the surface, these feeder funds looked like institutional-quality vehicles, but there were "a host of red flags," Aksia Chief Executive Jim Vos and colleague Jake Walthour wrote in a letter to clients after the Madoff scandal erupted last week.
The funds were marketed as using a "split-strike conversion" investment strategy that is "remarkably" simple, but the returns it purportedly generated could not be replicated by Aksia's quantitative analyst, Vos and Walthour wrote.
The Madoff funds supposedly traded in the Standard & Poor's 100 index options market, but that market is relatively small and may not have been able to handle trading by vehicles with roughly $13 billion in assets, they said. The feeder funds had almost all their assets custodied with Madoff Securities, the brokerage unit of Madoff's firm.
Aksia checked into the auditor of Madoff Securities and discovered it was a firm called Friehling & Horowitz, which had three employees -- one of whom was 78 years old and another was a secretary. The firm's office in upstate New York was 13 feet by 18 feet. Madoff's Web site claimed the firm was technologically-advanced, but it sent paper confirmations of trades via US mail at the end of each day, rather than providing electronic access to this important information.
Paper copies provide a hedge-fund manager with the end-of-the-day ability to manufacture trade tickets that confirm the investment results.
================================================
Bernie‘s investors were savvy, astute successful business people, accustomed to picking apart and analyzing financial statements. THEY HAD TO KNOW THIS WAS A SCAM. Proof-positive is that the "investors" were writing PERSONAL checks to Madoff's subrosa separate "investment" vehicle that was not listed on the Securities Exchange (a money laundering, tax evasion modus).
LISTEN UP, MERKIN Returning funds is mandatory for clients who knew Madoff's business was fraudulent.
Some of Madoff's clients might be facing serious legal problems---- some investors were writing personal checks that were placed with a separate Madoff financial entity that was not listed on the SEC. Investigators could construe such actions as money-laundering and tax evasion.
I’m betting the fraudulent aspect of recovery of assets goes away quietly. These folks have connections all over the place, and money enough to defend the claims. You would have to have some big stones to chase those folks. Ya know whadImeen?
I would bet that Paulson was golfing buds with both of the POS, when together it was a threesome of POS, however, it would be simple to pick the fourth POS., from who also got your tax dollars..
Check the dictionary for the definition of “merkin.”
Disclaimer: Opinions posted on Free Republic are those of the individual posters and do not necessarily represent the opinion of Free Republic or its management. All materials posted herein are protected by copyright law and the exemption for fair use of copyrighted works.