BERNIE CASH STASH; OFFSHORE LOOT SOUGHT (tax evasion, money laundering suspected)

NY POST ^ | 12/29/08 | LAURA ITALIANO

[Liz]

Investigators believe Madoff stuffed hundreds of millions of dollars in Ponzi profits into offshore tax havens.....forensic accountants are scouring Madoff's books as federal officials ready an indictment against the hedge-funder, who remains under house arrest. Accountants believe Madoff regularly sent bundles of money to Caribbean and Europe offshore accounts. He has been ordered to provide the SEC a detailed list of his assets - including investments, loans, lines of credit, business interests and brokerage accounts.

[Liz]

......the Securities Investor Protection Corp (receiver of Madoff's now-defunct fund) is examining Madoff's New York Mellon Bank accounts that appear to have sent and received money from offshore locations..........

HOW'D HE DO THAT? To pull off a $50 billion scheme, the Madoff cabal would have had to involve investors, relatives, associates, co-conspirators (or subsets of them), businesses and tax-exempt organizations....all with similar goals.

Madoff may have escaped scrutiny by routing his scheme through telephone lines with a maze of complex telecommunications' systems equipped with call-forwarding and voice mail systems, and numerous postal and commercial mail boxes..........and perhaps money-transfer systems that operate in ethnic enclaves and places like NYC's Diamond District.

The "investment" monies could have been disguised (to evade the IRS) by routing through a network of domestic and international bank accounts using counterfeit checks.....opening commercial bank accounts in the name of bogus businesses and wire-transferring and/or depositing "investment" checks into those accounts.

The checks could have had invalid bank routing numbers, forged endorsements, or been drawn on the proceeds of other counterfeit checks deposited in other bank accounts. Before banks discovered the fraud, the funds might have been transferred out of the accounts……probably offshore----leaving banks unable to recoup their losses.

State and federal tax authorities could have been swindled, if the scheme involved filing hundreds of phony tax returns in real or fictitious names, falsely claiming federal EITC credits (meant to benefit low-income earners).

In an international scheme with offshore ties, the co-conspirators or subsets of them might have obtained hundreds of taxpayer identification numbers for phantom citizens with worldwide addresses, and used the information, along with phony passports, to claim hundreds of bogus tax refunds.

[bcsco]

State and federal tax authorities could have been swindled...

No, to accomplish what you describe they'd have to be accomplices. The same holds true for the bankers involved...at least at some level.

[Rumplemeyer]

Follow the money boys, which Democrats was he donating to and which ones were responsible for overseeing his regulators?

[pointsal]

For me, it is that damned smirk on Bernie’s face. The rascal was not alone.

[bcsco]

The rascal was not alone.

I doubt it would be possible to create such an intricate network without insiders being complicit. Especially if fraudulent checks and accounts are used. This is a much broader issue than even the Feds may know at this time. $50B is a lot of cash to launder...

[Liz]

Investigators poring over Madoff's books have discovered he routinely falsified documents in a fraud that could take months to unravel.. In a classic fraud MO, Madoff kept two (or more) sets of books. One set keeps track of losses at Bernard L. Madoff Investment Securities LLC's (his investment advisory arm), while the other set is what investors were shown.

It is not known how many customers Madoff's firm had. A variety of investors have been identified: Spain's Grupo Santander SA, Britain's HSBC Holdings PLC and New York Mets owner Fred Wilpon. More victims emerged last Tuesday: Rye Investment Management, Rye, NY lost $3.1B, almost all of its clients' funds, and Austria's Bank Medici, which had two funds with $2.1B (1.5 billion euros) invested with Madoff.

Madoff's investors (savvy astute businessmen accustomed to analyzing and picking apart financial statements) were apparently pocketing 16% returns. One can reasonably conclude they calculatedly ignored the scam and probably even aided and abetted it.

It could be postulated that 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).

We should 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.

Madoff lived the lavish lifestyle of a prince---mansions in the Hamptons, Palm Beach and a penthouse on the tony East Side of NYC. His yacht is docked at Cap D'Antibes, the French Riviera and he had two private planes at his disposal. Probably the whole scam crashed b/c Madoff needed a bigger cut but the "investors" refused.

[Hildy]

Of course he wasn’t alone..in our new “GODLESS” society where money reigns supreme, there are no “rules” on how to obtain their God, money. The ends justify the mean.

[Hildy]

It’s MIND-BOGGLING. Absolutely mind-boggling.

[Liz]

The tax-exempt dimension to this fraud is very fishy here. Madoff was connected to numerous so-called "non-profit," tax-exempt charities, and family foundations. The Robert I. Lappin Charitable Foundation, Yeshiva University and Steven Spielberg's tax-exempt Wunderkind Foundation----and more---have all fallen victim to Madoff. 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.

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.

The N/P's might have facilitated IRS 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, and more specifically 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.

The BIGGEST FRAUDS are between N/P and N/P.....writing checks to each other (which is the MO for laundering tax-exempt monies).

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.

[Xenophon450]

Have they checked his freezer yet?

[Liz]

Madoff financed many politicians. The Center for Responsive Politics has looked into the matter of the Madoff family’s political contributions between June 1993 and October 2008.

Federal Election Commission records show that members of the Madoff family made some 250 political contributions to 45 candidates and committees totaling $391,350.

The largest individual recipients were Rep. Ed Markey (D-MA), $34,000; Sen. Chuck Schumer (D-NY), $31,000; Sen. Ron Wyden (D-OR), $25,000; Sen. Hillary Rodham Clinton, $23,500; Rep. Richard Gephardt (D-MO), $12,000; Sen. Frank Lautenberg (D-NJ), $6,600; and Sen. John Kerry (D-MA), $4,500. The Democrat Senatorial Campaign Committee, which Schumer currently chairs, received $104,050. Among Republicans, the lion’s share of Madoff family contributions went, oddly enough, to Rep. Jack Fields (R-TX), $13,000. Sen. John McCain received $2,000.

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Politicians are held to a HIGHER legal standard than ordinary folk. The fact remains....... if pols profited from Madoff's illegal financial dealings, they are aiding and abetting. And if they are withholding info from authorities, they are guilty of obstructing and delaying justice.

[ladyjane]

We should not believe these so-called "investors" sob stories for a nanosecond... Tax evasion would explain why savvy, astute businessmen were giving this guy huge sums ---$100-500 million--- to “invest.”

Obvious since Day 1. The government doesn't want us to know how much *it* got cheated out of tax revenues, how it was allowed to continue for so long, and realize there are other scams out there like Bernie's.

[Loud Mime]

This is a case for extreme measures. Start with sodium pentathol.

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

BGRND 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.

Is this astoundingly palatial oceanfront Hamptons mega-mansion
a "synagogue-residence-yeshiva" for Orthodox Judaism students?

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

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/ Madoff. 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.

[Liz]

The government doesn't want us to know how the Madoff fraud was allowed to continue for so long..........

The SEC's "explanations" do not wash. They backed-off investigating Bernie----not b/c they are incompetent----- but b/c SEC investigators risked losing their jobs if they zeroed in on Madoff.

Ironically, the very same people he was scamming rushed to his defense when warned of the scam. One financier who sounded the alarm about Madoff was accused of being anti-Semitic..... by Madoff's investors.

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

In the ranks of L/E, it is NOT advisable to imply people of Jewish heritage are doing something illegal---even moreso, it is a career killer to suggest it. FBI agents have been lacerated and condemned----even losing their jobs.

Madoff's concentrating his efforts on affinity investors certainly validates this---Madoff seemed to know L/E dared not suggest he was doing something illegal.

BTW, this applies to all facets of government. Cascading stories of mega-wealthy Madoff investors living lives of luxury inside posh gated communities coast-to-coast, must be especially painful---b/c the US Census Bureau was asked to stop reporting its findings that Jewish-Americans are the nation's wealthiest.

Our cowardly politicians also might have acted--they backed off---fearful of losing big buck campaign donations and voting blocs they assiduously court.

News clips of supremely confident Madoff’s smug, smirking face as he casually strolls to his penthouse from the courthouse, fitted with an ankle monitor----speak volumes. Even after being nailed as a crook, Madoff gets kid glove treatment; confinement to his luxe penthouse rather than being locked-up behind bars, where he belongs.

[theDentist]

forensic accountants are scouring Madoff's books as federal officials ready an indictment against the hedge-funder, who remains under house arrest.

House arrest. You can bet that if you had embezzled $5000 from your company, you wouldn't be under house arrest... you'd be in a cell while the acountants examined the books.

[Liz]

How money laundering is generally done is to purchase buildings/properties in countries X, Y, and Z, resell them, and voila, the money has been immediately laundered. From there, the money is deposited into those countries offshore bank accounts under phony company names where Madoff’s name never appears.

Makes sense to me.

I have also heard of scams wherein properties are bought in the US....which leaves a paper trail for the honest citizen.

However, in scam schemes, the scammers go to the county Hall of Records and erase the purchase from the official records. No one is the wiser.

[ErnBatavia]

He needs to have that house confinement terminated pronto, and he brought back in and squeezed hard.

[freekitty]

I always thought it odd too how large sums of money could disappear just like that.

Sounds like this is the real scam of the century and I bet his sons are a part of it. Let everyone believe all these rich people went belly up (not that some of them didn’t) then when the coast is clear; all the investors who counted go get their money and live happily ever after.

[Liz]

Madoff remains under house arrest............

That smug look on his face as he languidly strolled from the courthouse to his penthouse with an ankle monitor----smirking as if to say," I'm a filthy rich crook and you peons can't do a damn thing about it."

Watching news clips of sincere, winsome, doe-eyed Madoff pontificating on why investors do not understand his "strategy," is a case study in the criminal use of gravitas.