if they were suckered... it was only by his reputation, cause they all stood in line to hand over their money. no salesmanship was involved let alone suckering going on that i can see.
Posted on 12/20/2008 9:13:43 PM PST by Ernest_at_the_Beach
nvestigators are unearthing more irregularities in the financial affairs of Bernard Madoff, the man who stunned America's wealthy elite when he allegedly admitted running the biggest investment scam in history.
Initially, it was thought he was running a simple pyramid scheme. But Steve Harbeck, head of the Securities Investor Protection Corporation and the receiver of Madoff's broker-dealer business, said the investigation had uncovered a trove of records stretching back at least 20 years. "We do not seem to be dealing with a traditional Ponzi scheme alone," said Harbeck. "Ponzi" frauds occur when the money from new investors is used to pay existing ones. "This seems to be something of a hybrid," Harbeck said, adding that the potential losses could be far greater than anyone first thought.
He was unable to elaborate on the types of fraud that were emerging. But sources close to the Madoff investigations suggested the trader may also have falsified tax documents and other records to show fake profits to his investors. Harbeck would only say: "It is just too early to say exactly what else was going on here."
The new allegations are understood to revolve around two sets of books that Madoff kept for his investment advisory business. Investigators have discovered records on thousands of trades in shares and bonds and other securities in seven binders stored on the private 17th floor of the Lipstick Building on Manhattan's Third Avenue. The investigators believe the positions detailed in the binders may be fake, used only to compile fraudulent statements of account to clients.
(Excerpt) Read more at guardian.co.uk ...
Interesting. I wonder how he knew and all those ‘regs’ did not. Smart man this lawyer.
I was reading some detailed analysis of the 2005 SEC complaint against Madoff,
http://online.wsj.com/documents/Madoff_SECdocs_20081217.pdf
It seems Madoff should have been making about 3.5% to 6% on the investments during the bubble from 1999 to summer 2007. He was claiming an average return of 12% a year.
If clients were reinvesting profits with Madoff, and the fund grew at a rate larger than the difference between (real returns - stated profits + reinvested profits - capital redemptions) each time period, than he would have been able to go on forever. Except his calculation had an exponential growth rate.
And as has been mentioned elsewhere, there is no statute of limitations for these crimes, so clients will indeed be liable for gains going back well over a decade by the courts.
As long as the courts and Federal Government doesn’t edict a force de majeur.
I bet he is not the only person who knew it was a scam either. How about 99.9% of the people who invested with him!
Just to keep the books on the scam would take dozens of people.
YOU ROCK!
Thank you for all of your informative posts!
;o)
Merry Christmas!
If the return on investment wasn’t needed, it was reinvested. The investor most likely paid taxes on that profit.
There really didn’t seem to be any reason to look too closely. The US treasury was getting their money, many of the investors got their original investment back.
The firms that invested their client money in Madoff are going to find themselves sued and possibly out of business.
This nightmare has consequences not yet clearly recognized.
The money didn’t go POOF!! It’s SOMEWHERE....and these “investors” got DIVIDENDS and RETURNS for YEARS!! And WHY were most of them FOUNDATIONS and CHARITIES??? I smell TAX EVASION.
Madoff was connected to numerous so-called "non-profits," tax-exempt charities, and family foundations either as outright investors, or through hedge funds.
The landscape is littered with these "foundations and charities." Apparently Brooklyn, NY residents registered some 800 Non-Profits in Lakewood-----a small flea-bitten central New Jersey town. SOURCE http://www.taxexemptworld.com/organizations/lakewood_nj_08701.asp
The IRS has asserted that tax-exempt non-profits ("foundations and charities") are the locus classicus for IRS fraud.
Investigators may be looking at the legal parameters of prosecutable crimes including making false statements to state and federal officials, filing falsified documents, obstruction of proceedings before state and federal agencies, fiduciary negligence, and obstruction of US justice.
N/P charities and foundations might have facilitated fraud by integrating:
1. Secret control over N/P fund-raising committees.
2. Requiring only one signature on tax-exempt N/P bank checks.
3. Utilizing pre-signed tax-exempt N/P bank checks.
4. Using secret bank accounts to keep secret the actual financial position of tax-exempt N/P's.
5. Assigning bank deposit and account reconciliation functions of tax-exempt N/P's to one person.
6. Conspiring to hide oversight of expenses and supporting vouchers from public view.
7. Having no outside auditor to review tax-exempt N/P's statements.
8. Cashing unusually large amounts of tax-exempt N/P checks.
9. Having no official tax-exempt N/P deposit and withdrawal control system.
Authorities should investigate the Madoff-invested N/P’s US Postal Service mailings, wire transfers, computer transfers, electronic submissions, and unregulated money transfers, and all bank transfers connected to secret tax-exempt non-profits’ bank accounts.
Fraudulent tax-exempt non-profit activities might have involved using checks passed from one account to another in multiple conspiracies to launder monies.
The stratagem could have been international in its scope due Madoff's worldwide connections.
Authorities need to determine the extent to which donors to Madoff-invested N/P's colluded in schemes that may have included misusing reserve bank accounts, concealing transfers, inflating asset values and improperly accounting for transactions.
A formal inquiry should be conducted into the Madoff-invested N/P's and their financial activities with officers of publicly-held companies) including:
(1) Enron-style accounting frauds by manipulating N/P records,
(2) bundling contributions into the pockets of politicians,
(3) the extent to which networks of companies are financing political candidates in the names of business partners without their knowledge or consent,
(4) the extent to which officers of publicly-held companies used accounting fraud to hide illegal campaign contributions, and,
(5) the extent to which campaign donations exceeded campaign-finance limits.
Charges might include Madoff-invested N/P's accounting managers misappropriating funds to cover personal expenses, fraudulently overcharging for management services, diverting non-profit funds, then converting them to campaign accounts, or in the style of WorldCom greed spending thousands of non-profit dollars on organization credit cards for personal expenses.
A formal inquiry should be undertaken with respect to the Madoff-invested N/P's relatives, associates, co-conspirators or subsets of them, and donors (particularly officers of publicly-held companies), the business dealings between recipients, employees and elected and appointed officials and the extent to which influence-peddling is taking place.
More specifically we need to know the extent to which relatives, associates, and principles of the Madoff-invested N/P's and co-conspirators or subsets of them, directed political activities from tax-free non-profit organizations in illegal arrangements.
Authorities need to determine the extent to which the Madoff-invested N/P's manipulated philanthropic transactions, such as:
(1) loans, the (2) sale, (3) exchange or (4) leasing of property to related organizations, and donors, and the extent to which organizations reported (5) "excess benefit transactions" on Form 990, and, (6) the extent to which executive pay properly accounted for with the IRS.
The Madoff-invested N/P's need to reveal the dimension of contributions these organizations that may have been illegally redirected to political activity and be requested to explain:
(1) how the Madoff-invested N/P's solicit non-profit contributions,
(2) how non-profit donations are made, and,
(3) the manner in which donors to the Madoff-invested N/P's (particularly officers of publicly-held companies allocated company assets).
The Madoff-invested N/P's should be asked for details about who inside, and outside, these organizations is soliciting contributions, how the various subcommittees are funded, and the extent to which the Madoff-invested N/P's their donors (particularly officers of publicly-held companies) are colluding to perhaps finance political campaigns surreptitiously, and are engaging in other illegal transactions.
I believe that and I cannot believe that Madoff’s clients were unsuspecting.
If these people get a bailout, that will trigger the revolution.
Cox has also been threatened or bribed by powerful forces
He's more stooge than moron
Powerful forces like the hedge funds that got in on the TARP bailouts yeserday
My bet is that if he had worked as hard at Wallmart he could be worth millions of dollars
And may the good Lord be with you!
Thanks dixiechick2000!
We’re just a couple mellowing old farts who have a little time on our hands and enjoy digging into stuff and sharing what we find or asking others dig in to .. and now The Good Lord plops an Obama on our doorsteps .. we are so blessed. :-)
Merry Christmas and a Joyous Holiday to you both!
Yes, it’s likely that until the past year most happy Madoff “investors” not only kept their original principal with him but kept adding to it, plowing back some of that 10-17% “return” they were seeing on their statements, etc. If they really believed that he was making them all this for real (and it was real to them as long as he could keep the new sources of money flowing in at sufficient levels).... and they did not have any immediate needs for more of their money, then Madoff did not face any great pressure for return of funds. Presumably that’s how he managed to keep it going for many years, until the current economic and credit crises changed everything and brought it all crashing down.
They all had paper “statements” that showed their funds growing and growing at a rapid pace, and perhaps only a tiny % of the Madoff investors ever asked for their “principal” to be cashed out.... only in case of a death or major crisis etc. would these funds need to be cashed out when people believed they had the best fund manager (or the best inside trader, as many of them may have believed).
if they were suckered... it was only by his reputation, cause they all stood in line to hand over their money. no salesmanship was involved let alone suckering going on that i can see.
It IS possible for one person to generate all the fake data, trade tickets, individual account reports, etc, via the use of complex programming, especially since it’s quite clear from the 2005 Markopolos document and the SEC’s non-response to it that nobody, and I mean NOBODY was doing any cross-checking of the reported data/tickets/custodial holdings, etc. However, it is absolutely NOT plausible that this was done by 70-year-old Bernie, whose background shows no evidence whatsoever that he could have acquired the skills to do this. If there were really just 2 or 3 people in on the scheme (which is possible), at least one would have to be, IMO, no older than 45 to possess the necessary skills, and accordingly would have to have joined the scheme after it was already underway (though possibly as long as 15-20 years ago, when it was much smaller).
Alternatively, though, it is actually possible that someone hired to generate all this stuff, or at least to set up the porgramming to do it, didn’t know what it was for. I work in a related business and deal with some very high level hedge funds. They do have some brilliant, but highly compartmentalized “quant geeks” roaming around, who could be told to set up reverse-engineered trading data, ostensibly for the purpose of assembling data in order to develop a future trading strategy based on what *would have* worked if is had been done in the past. Then hand the data, along with faked starting capital accounts to: 1)a different quant geek with accounting-type expertise, and tell him this is the data on what actually happened, and that his job is to update the capital accounts; and 2) to yet another quant geek, with instructions to set up a program so that “in the future” similar trade data can be advance-fed into a system which will place trading orders and generate trade tickets. These geeks tend not to ask questions about how their tasks fit into the larger world — they love to bury themselves in their programming and spreadsheets, and let others deal with that confusing “people stuff”. If something along these lines happened, there had to be one mastermind who is extremely smart and quant/computer savvy, and is therefore not Bernie.
Whether there were only 2-3 really aware of the scheme (e.g. possibly Madoff, his wife, and the head of the pseudo-accounting firm that “audited” the Madoff advisory business), or a dozen or more, there were certainly quite a lot of other people — auditors, regulators, bankers, etc — who were shirking their duties to an appalling degree, just assuming everything was fine because it was “Bernie Madoff”, and confident that if anything was really amiss, somebody ELSE would have caught it and blown the whistle. When everybody who is supposed to be scrutinizing this sort of thing assumes they don’t really have to, because somebody else is also supposed to be doing it, a scammer can pull off almost anything. Bernie may have had a well above average awareness of the degree to which Wall Street/hedge funds are operating on the “I’m sure somebody else has checked it out” system, and along with one or more accomplices, exploited that awareness to a truly extraordinary degree.
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.