Posted on 12/17/2008 3:33:36 AM PST by Liz
Madoff's firm sent clients performance statement riddled with inaccuracies and other suspicious signs that should have raised red flags.......a Nov. 30 performance report suggests Madoff's outfit purchased Apple at $100.78 on Nov. 12. However, even accounting for a usual 3-day settlement period, the stock never traded at $100 a share.....trading range was between $90.01 and $92.43..... Others note Madoff used outmoded bookkeeping method to record performance data, and that his presentation, lacks details...... "These look like statements from the mid '90s..." said attorney Ross Intelisano, who's been retained by Madoff clients..... The lack of transparency is surprising since Madoff was considered a friend to regulators and a huge supporter of full disclosure. One forensic accountant said Madoff's client statements appear to have been printed using an outdated "impact printer," which haven't been in widespread use since the advent of laser printers. They even pre-date the dot-matrix printers used in the 1990s. "It's just odd for a guy managing $17 billion to being using this sort of technology," the accountant noted. ....... one of the more striking red flags to jump out were the deficiencies in Madoff's overall strategy. "You're trying to get above-market returns by buying the bluest of the blue chips, and the truth is the largest of the large-cap stocks move proportionately the least because they have all their information factored into them," Ellis said. "It's just not a strategy that generates above-market returns."
(Excerpt) Read more at nypost.com ...
Bernie was palling around with SEC types---Bernie bragged his niece married a SEC regulator----and many of his "investors" went to the wedding----figuring they had an "in" the rest of us poor slobs did not have. Bernie could get even more money for his investors without the SEC horning in. In effect, they were all aiding and abetting this fraud.
Most of his investors figured Madoff was doing something illegal---frontrunning---that's why they were getting big returns (16% even in down markets). These "smart, rich" types were never bothered about Madoff's sub rosa activities.
Madoff's investors----who were astute businessmen---- pocketing 16% returns calculatedly ignored this scam. Most of his investors figured Madoff was doing something illegal---frontrunning---and that's why they were getting big returns (16% even in down markets).
I do not believe these so-called "investors" sob stories for a nanosecond. Impossible to believe astute businessman who made fortunes in competitive businesses would allow themselves to be scammed.....unless......these privileged elites were in collusion with Madoff to engage in a massive tax evasion scheme. Tax evasion would explain why savvy, astute businessmen were giving this guy huge sums ---$100-500 million--- to “invest.” Keep in mind, at the end Madoff was left with some $300 million out of $50 billion. That much money does not just evaporate.
Apparently Madoff kept a cut of the “investment” and wire-transferred the bulk offshore to friendly money laundering havens-----out of sight of the IRS, SEC, and US banking laws. The whole scam crashed b/c Madoff probably wanted a bigger cut but the "investors" refused.
NOTE: They keep saying they are "wiped out." However, savvy investors DO NOT put all their eggs in one basket as these people did. This whole deal smells to high heaven. People stupid enough to give Madoff $100-500 million to evade taxes are also criminals.
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TAX-EXEMPT FRAUD Madoff was handling millions in tax-exempt funds for so-called "charities." The IRS says the biggest potential for IRS fraud are these tax-exempt non-profit charities doing deals with other tax-exempt non-profits----all posing as do-gooder "foundations" and “charities.” For instance, the charity owners go on luxury trips "for charity" which are charged to the tax-exempt. A huge part of the fraud is tax evasion-----one non-profit "donating" to another non-profit "charity." This is nothing more than money laundering.....the charity takes a cut then converts the bulk of the donation to an offshore account for the donor's use later---out of sight of the IRS, SEC, and US banking laws.
> Madoff’s “investors” are decidedly NOT victims......although they will put on a b-i-i-i-i-i-g victim act...deserving of an Academy Award.
I wonder why you say that. So far there hasn’t been any serious suggestions of collusion between Madoff and his investors for the purpose of fraud or tax evasion.
Is that what you are suggesting?
Absent that, the real question is “who is the Auditor and what was his Opinion?” I suspect an investment of this nature would have required a Prospectus to be filed with the SEC, so at some point somebody was probably asked for an Unqualified Opinion. Possibly even once per year (not sure of your US laws) the Auditor might have been asked to give an Opinion on the fairness and accuracy of the numbers.
Could this be more evidence of the "fruit" of decades of affirmative action? I wonder whether the judge who ruled that the Federal government has to pay the victims, could be an investor/victim, too? It looks to me that greed and idolatry played major roles in motivating investors to sell their homes and put money into a questionable scheme.
These “victims” are no different than the ones who go along with the Nigerian scam of accepting and holding other people’s stolen money into their personal accounts for a percentage. They participated in the fraud by believing Madoff’s insider contact stories. The difference is that the “victims” of Nigerians never see a cent. They should all go down.
bttt
Wait for the sobbing to begin about how the SPIC should bail them out or if that fails so should the US Treasury. These clowns were invested in a hedge fund. Hedge funds are created to minimize the oversight that is afforded mutual funds and brokerage houses. Assume that risk and take your chances I say. I hope they don’t see one penny from the USG or the peon investors who are left to deal with the common trading houses because they don’t have the sophistication, nor resources, to be in these investment pools. Pitt, former SEC Chairman was on Cavuto last night saying he thinks the SPIC should cover these clowns because it was not intended to be insurance against stock losses (hence money lost by Joe Blow on Enron was not an SPIC problem) rather to cover losses from thefts and defalcation from brokerage firms. As I said earlier, my view is that hedge funds, like blind pools, do NOT fall under the mantle of SPIC coverage because oversight of their operations was limited and the dupes knew that.
WEll said, but wait until we get the deluge of tears from the widows and orphans. Hankies all around.
They wire millions to offshore banks for a cut, the donor also get's a tax deduction too...right?
No filings, no prospectus, no SEC oversight whatsoever on this operation which was separate from the registered Broker/Dealer. As to “auditor”, Madoff used a solo practitioner, from upstate NY I believe. Seriously. As such (along with the red flags above), there is much merit to the argument that many investors figured they had an ‘inside’ track and only needed to look the other way....
THE MODUS OPERANDI Businessmen donate to these "charities"----millions that were taken out of businesses without the stockhoders' knowledge or consent---upon which no taxes were paid.
The "charities" take a cut, then wire the bulk of the monies to offshore banks........for the donors' personal use---all out of sight of the SEC, IRS and US banking laws.
Most of them donated to Dems---means the FEC was also screwed.
LOL......on the back of a used paper bag...... which had first been used to drain the gefiltefish.
Not trying to be picky, but isn't the date on that document March 24th 1865?
The SEC auditor probably dismissed it as a "typo".
As the bard of Avon wrote: “tis better to be thought a hapless victim of a Ponzi scheme than to admit to tax evasion.”
Mr Madoff ran his scam through a spinoff----separate from his main firm----Bernard L. Madoff Investment Securities. The much larger main company operated broker-dealer accounts - trading securities for investors - while the spinoff was a hedge fund.
EXCERPT Madoff was single-handedly managing billions of dollars in offices he kept separate from the rest of his firm........The only oversight was conducted in a Rockland County accounting office only slightly larger than a cubicle. The firm's main office was in NYC.
Madoff made his fortune embracing the latest and best technology, BUT he forbade investors to get online access to their accounts, insisting instead on paper printouts....
For well over a decade, competitors and experts said they found Madoff's track record suspicious. He seemed immune to any volatility in the market and, no matter what was happening in the economy at large, managed to finish each month with almost identical profits. . Madoff dismissed attacks as envy and said critics simply did not understand the complexities of his strategies.
Aksia LLC was hired to investigate Madoff several years ago, said principal Jake Walthour. The probe only increased the concerns about the fund. Madoff's returns were "abnormally smooth" from month to month, and it seemed impossible to replicate his investment strategy or verify his track record.
Madoff claimed to be moving as much as $13 billion in and out of the market every month, but "no one on the street could verify it or even see his footprints," Walthour said. "That organization was incredibly secretive." When they staked out the tiny accounting firm no one had ever heard of, investigators concluded something was amiss. "We decided there are several scenarios here, one of which is, this could be a Ponzi scheme," Walthour said.
Those who have invested in the fund have told investigators that withdrawing cash from it was an arduous process that involved faxes and inexplicable delays. That's because in a Ponzi scheme, money from new investors is used to pay those seeking to withdraw their money.
SOURCE Bloomberg and NY Post wire reports
http://www.nypost.com/seven/12132008/news/regionalnews/alarm_bells_in_1999_ignored_143971.htm
Everything Madoff did is suspect and cannot be rationalized against existing measures---he did not give a fig about laws, rules and regulations.
I want to know if anyone on Capitol Hill aided and abetted Madoff.
The "investors" chuckled----good ol' Bernie screwed the feds again.
Oh, please.
If you believe that, I got a bridge I can sell you cheap---it's in Brooklyn. And how do you want to handle the down payment.
“If” ............?
We need to know the “extent to which” Congress aided and abetted this guy.
> If you believe that, I got a bridge I can sell you cheap-—it’s in Brooklyn. And how do you want to handle the down payment.
Having worked in a previous life for one of the largest Audit Firms in the world in the Risk Management field, I do believe it, and if you are offering investments to the general public you probably better believe it too.
Auditors don’t specifically look for fraud; however they do look for the fairness and accuracy of the financial material as presented, and they are supposed to satisfy themselves of that. If satisfied, they are supposed to offer an Unqualified Opinion. If they have reservations, they can give a Qualified Opinion and state their reservations. It’s not much of an assurance, but it at least tells the investor that the numbers are/are not as they appear on paper.
For losses of this size and nature, involving an investment offered to the public, I would have expected the SEC to have more than a little bit of interest. And I would have expected their Auditor to be more than a little bit concerned. But then that’s just my personal view: your mileage may vary.
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