Madoff probe focuses on tax havens

guardian.co.uk/The Observer ^ | 12/28/08 | James Doran

[xtinct]

The hunt for funds allegedly cheated out of investors by Bernard Madoff, who faces fraud charges in New York, has turned to offshore tax havens where investigators believe he may have salted away hundreds of millions of dollars.

Stephen Harbeck, chief executive of America's Securities Investor Protection Corporation (Sipc) and official receiver of Madoff's now defunct brokerage business, said the hunt for funds was likely to spread all over the world. "We will trace funds wherever the trail goes," he said on the steps of the US Bankruptcy Court for the Southern District of New York.

Sources close to the investigation said forensic accountants examining Madoff's books believed he had regularly sent large sums of money to offshore accounts in the Caribbean and Europe. "There are accounts at New York Mellon Bank that we have been looking at that appear to have sent and received money from offshore locations," a senior source said. Tracking down the money investors entrusted to Madoff is likely to be one of the longest and most complicated financial investigations on record.

[xcamel]

Like the entire GDP of the Cayman Islands??

[DieHard the Hunter]

PING

Keep eyes peeled for limited-recourse loans...

[org.whodat]

Tracking down the money investors entrusted to Madoff is likely to be one of the longest and most complicated financial investigations on record.

If the bill is paid by the tax payer, many and their kids will make a career out of it. After all you will need to go to each of those places multiply times to check out the leads.

[ikka]

What are Israel’s laws regarding money laundering? Does Israel cooperate or do they have tight restrictions on how information is shared?

[proxy_user]

I’ll give you a hint: look in the bank accounts of Madoff’s long-time clients who made large withdrawals.

[Just mythoughts]

Well liberals have been screeching for years that the Bush tax cut were just for the ‘rich’. It will be interesting to discover if all of Madoff’s monies are due we tax payers.

[ladyjane]

The off-shore component of Madoff’s scheme was obvious from day one.

Why has it taken so long for any newspaper to mention this? Why does this have to come out in a foreign newspaper.

[ladyjane]

" On the same day a New York judge ruled that Madoff's investors would receive no more than $100,000 in cash compensation, no matter how much they lost. The ruling was included in a series of court orders made on 23 December by US bankruptcy judge Burton Lifland."

Interesting ruling. You don't see it mentioned in any of the articles about people who lost large amounts of money.

You have to know that a lot of people now moaning about their losses have already salted away millions in the Caymans.

[Condor51]

Madoff should be Water-boarded. He'll fess up then.

No way one person can blow $50 Billion dollars, unless of course they work for the US Gubmint.

[PasorBob]

No way one person can blow $50 Billion dollars, unless of course they work for the US Gubmint.

This is a misconception. He was paying out large returns to his "investors". The ones that got in early got all of their money back over 6-7-8 years. That's why so many people wanted in. $50 Billion went in, but $50Billion went out also in "dividends" and fees. Ponzi schemes rely on new money coming in to hide the scheme and pay "investors". The economic crises stopped the new investors. People started taking their money out. Madoff took the last chunk and hid it somewhere, but there is no $50 Billion

[Freedom4US]

Send ‘em to Gitmo!

Seriously, one wonders if perhaps some of the victims might be more amenable to this kind of thing.

Unfortunately, water-boarding is no longer an effective technique because the wonderful media journalists tipped everyone off about it. That was their intent. Pity.

[GOPJ]

I want to know who was able to "cash out" before the arreast. Also, who got the !8% - doubling their money every four years - and who got the 7% - doubling their money every ten years.

If the ACLU's "friends" were getting the "double their money every 4 years" I want to know.

[GOPJ]

I want to know who was able to "cash out" before the arrest. Also, who got the !8% - doubling their money every four years - and who got the 7% - doubling their money every ten years.

If the ACLU's "friends" were getting the "double their money every 4 years" I want to know.

[RayChuang88]

You know, we wouldn't have this mess if the FairTax was in place. Why would you trust Madoff when you can save and invest your money anywhere in the USA income tax-free?

[TonyStark]

You know, we wouldn't have this mess if the FairTax was in place. Why would you trust Madoff when you can save and invest your money anywhere in the USA income tax-free?

Now you've done it. You've invoked FR's resident IRS plants and government employee contingent who will insist that the "unFair Tax" (an abandonment of the 2nd plank of the Communist Manifesto now in place) will increase compliance costs, open the door to higher taxation, and cause birth defects, all the while completely ignoring the truth of the observation you've made.

[Liz]

It is particularly relevant that Madoff’s investors were affiliated exclusively w/ Orthodox Judaism----no other institutions connected with Reform, Conservative or Reconstructionist branches of Judaism invested with Madoff.....

The average "anti-Semite" might ask: How can Orthodox be designated "disadvantaged minorities" when they are investing hundreds of millions of dollars w/ Madoff?

Orthodox Judaism was designated a "disadvantaged minority" under Lyndon Johnson's "Great Society." This meant that Orthodox became beneficiaries of millions upon millions of tax dollars----federal community development funds. Federal and city assistance received over the years include CETA (Comprehensive Employment Training Act) monies, Section 8 housing assistance, school meal funds, Headstart, HUD grants, and low interest loans. In 1984, federal aid was expanded when the federal government included Orthodox in a priority group of six disadvantaged minorities recognized by all federal agencies.

Ira Rennert, Fifth Avenue Synagogue board chair invested some $200 million w/Madoff. Rennert is also GMAC chairman.

Hamptonites complain this astoundingly palatial mega-mansion in the posh Hamptons is actually a "synagogue-residence-yeshiva" for Orthodox Judaism students. The complex---which rivals Versailles and Buckingham Palace----was built by Fifth Avenue Synagogue board chair Ira Rennert.

It is believed that J. Ezra Merkin, Fifth Avenue Synagogue president, through Mr Merkin‘ s Ascot Partners fund, had about $1.8 billion invested w/ Madofff. Members of the Fifth Avenue Synagogue, located on the wealthy Upper East Side of Manhattan, are estimated to have lost about $2 billion. Mr Merkin was also Chairman of Yeshiva University Investment Committee, He introduced clients to Madoff and gave him access to prominent Jewish charities and universities.

REFERENCE Yeshiva University is a huge complex and Orthodox stronghold---it maintains four campuses in New York City and a campus in Israel: along with dormitories, a library, a hospital and other medical facilities; several Graduate and Professional Schools, rabbinical schools, a museum, academic centers and institutes for high school level students, and centers for Israeli studies in New York, and in Israel, etc, etc, etc.

===================================================

Right about that time to check tax returns.

6/23/00, Ha'aretz----Black list of money launderers
PARIS - A list of 15 countries "encouraging money laundering" was published by a special investigative committee originally set up by the G-7.

The publication of the list was preceded by three days of intense negotiations between the United States, Japan and the European Union, and was leaked to the French daily Le Monde which published it yesterday. It is still unclear if the 26 nation Finance Action Task Force (FATF), as the investigative committee is known, initiated the leak or was forced to hasten the list's publication, which was originally scheduled for Monday.

The "black list" includes Lebanon, Liechtenstein, Russia, Panama, Israel, the Bahamas, the Cayman Islands, the Cook Islands, Dominica, the Marshall Islands, Nauru, Niue, Panama, the Philippines, St. Kitts and the Grenadines.

The exclusive list was chosen with diligence from a "gray list" which included 31 suspect states, among them Cyprus, Gibraltar, Monaco, and Antigua. The difference between the two lists is that the "gray" one includes countries whose banking laws are tougher than those of countries on the "black list."

According to a spokesman for the FATF, Israel is on the list of 15 because it lacks legislation to counter the laundering of crime monies, including the fact that it does not require the declaration of cash deposits, and also because of "controversial" figures given by commercial banks. The spokesman added that Israel informed the committee that it planned legislation on these issued for the next month - a month too late for the FATF.

ADDENDUM According to some news reports, Israel tried and tried to get legislation passed to curtail money laundering, but political parties connected to Orthodox Judaism loudly opposed the legislation (as of circa 2000).

[Liz]

An Iowa company, Agriprocessors, produces Kosher meat and poultry for Orthodox consumers. It was founded by Brooklyn butcher Aaron Rubashkin, and managed by his son Sholom. In a federal affidavit filed as part of a 60-page application for a search warrant of the premises, details were revealed of the government's investigation including numerous allegations of health and safety violations, mistreating workers, and using controversial slaughter practices.

A former Agriprocessors supervisor told investigators that some 80% of the Agriprocessors workforce were illegal aliens. The source said he believed rabbis responsible for Kosher supervision entered the United States from Canada without proper immigration documents. The rabbis are believed to be Israelis.

Agriprocessor sources related stories of illegal aliens using fraudulent documents and Social Security numbers that were presented for employment. Several sources said they were aware of undocumented workers paid by supervisors in cash. The affidavit says the government has probable cause to believe that an Agriprocessors supervisor assisted workers in acquiring fake documents in exchange for a cut of the proceeds.

================================================

Money laundering or tax evasion might be integrated into bank fraud schemes ----Rubashkin diverted millions of dollars in customer payments (that were part of First Bank’s collateral) and instructed an Agriprocessors' employee to delete evidence of the scheme from the company’s computers........for which Rubashkin was arrested and charged with bank fraud.

Money laundering or tax evasion might be integrated another notorious case......Rubashkin apparently "sold" $2 million worth of meat to Allou Healthcare (a company controlled by the Rubashkin's Orthodox brethren) Only problem is, Allou distributes health and beauty items------it is not in the food business. Authorities might consider that Allou paying Rubashkin for a product it did not sell might be a kickback, money laundering or tax evasion scheme.

The Des Moines Register headlined that methamphetamine (AKA crystal meth) was discovered in active production at Agriprocessors (a substance that has been linked to Israeli suppliers). Back in 2004, Orthodox from Williamsburg, Brooklyn, and Monsey, NY, were involved in importing ecstasy drugs from Israel. Some got recruitment fees for bringing in friends. An investigation resulted in indictments against seven of the alleged drug lords. Sean Erez, an Israeli who authorities believed ran the ring, absconded to Amsterdam as L/E weighed a request for extradition to the US.

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FOR YOUR REFERENCE ADL's Abraham Foxman claims USAG Michael Mukasey, as an Orthodox Jew, would be viewed as a heightened flight risk in light of federal magistrate Judge Jon Scoles' recent denial of bail to Sholom Rubashkin, former manager of Agriprocessors Kosher meatpackers, Iowa.

Judge Scoles ruled that Rubashkin posed a risk of flight and declined to release him on bail, pointing to evidence that he had a travel bag with cash and travel documents on hand at the time of his arrest. Judge Scoles also noted that two others accused of crimes connected to Agriprocessors are believed to have fled to Israel.

Scoles noted Israel's Law of Return, which grants automatic citizenship to Jews. “The most troubling aspect is the government does not appear to have alleged, nor does the Detention Order conclude, that Defendant Rubashkin has any particular ties to Israel (he is alleged to have visited Israel in Dec '07),”

Foxman wrote. “Instead, the government and the Detention Order appear to conclude that simply because Defendant Rubashkin is Jewish, and because Jews may have a claim on Israeli citizenship, his religion is relevant to a bail hearing.” Rubashkin's attorneys argued that invoking the Law of Return was illegitimate, noting that under the government's reasoning, every American Jew would be viewed as a heightened flight risk, including Mukasey himself and two justices of the US Supreme Court. They further proposed several additional measures to ensure Rubashkin did not flee, including 24-hour security surveillance at the defendant's expense.

Scoles denied the motion, noting Rubashkin's attorneys “attach too much significance” to the Law of Return factor in the original decision and that they had not produced any new information bearing on his risk of flight. Rubashkin was arrested in late October on charges relating to the hiring of illegal workers at Agriprocessors' Postville, Iowa, plant.

While free on bond, Rubashkin was arrested a second time and charged with bank fraud. Rubashkin is accused of diverting millions of dollars in customer payments that were part of First Bank’s collateral, and instructing an employee to delete evidence of the scheme from the company’s computers.

[bert]

Hmmm.... who are the money launderers? Might they be an international group of orthodox jews that operate in much the same manner as the moneyed Arabs who move money aboutamong themselves for Al Qeada?

I think yes.

Did Madoff exploit this furtive cabal?

[GOPJ]

...forensic accountants examining Madoff's books believed he had regularly sent large sums of money to offshore accounts in the Caribbean and Europe.

Why isn't Madoff in jail?