Probers Work Backward on Madoff

Wall Street Journal (subscription) ^ | January 23, 2009 | Kara Scannell and Amir Efrati

[CutePuppy]

The unusual nature of how Bernard Madoff's alleged $50 billion Ponzi scheme surfaced -- with a confession from the key figure himself -- is complicating a high-profile investigation by the Securities and Exchange Commission.

.....

Typically, investigators begin with a tip or whistleblower and cut deals with lower-ranking employees to build a case against the suspected mastermind of a fraud. In this case, investigators started with a confession from the mastermind, Mr. Madoff, according to a government affidavit, and they are trying to work backward to piece together what happened.

People familiar with the investigation say the Madoff firm's records on what it was actually doing with investors' money are either in disarray or nonexistent.

As a result, investigators have stepped up efforts to gain information from those who worked with Mr. Madoff. A longtime employee, JoAnn "Jodi" Crupi received a subpoena Jan. 16 for documents about her compensation and her dealings with certain firm clients, including charities, according to a person familiar with the matter. The agency also asked for access to her personal computer, this person said. Her response is due next week.

.....

Ms. Crupi and a more senior employee, Frank DiPascali, were part of a group that dealt with clients who deposited and redeemed funds from the firm. The SEC now is preparing to issue a subpoena to Mr. DiPascali in the case, according to the person familiar with the matter. Marc Mukasey, Mr. DiPascali's lawyer, has said his client hopes investors get back as much money as possible.

The group also helped generate monthly and quarterly client statements that are now believed to be fraudulent. Ms. Crupi and Mr. DiPascali haven't been charged with any wrongdoing.

[CutePuppy]

Marc Mukasey, attorney representing Frank DiPascali, is a son of former AG Michael Mukasey. More about DiPascali is here:
Madoff’s ‘Street-Smart’ Aide DiPascali Was Investors’ Go-To Guy - http://www.freerepublic.com/focus/f-news/2167103/posts

[Steely Tom]

Probers Work Backward on Madoff

Makes sense. The regulated him backward.

[CutePuppy]

Related article, also from WSJ, sheds more light on Madoff's sons:

WSJ - Sons' Roles in Spotlight

Madoff Siblings' Contacts With Investment Arm Scrutinized

January 23, 2009
By Aaron Lucchetti and Tom Lauricella

Since Bernard Madoff's arrest, his sons, Mark and Andrew Madoff, have said that they knew nothing about the alleged fraud in their father's investment business and that they weren't involved in those operations.

.....

While neither son has been implicated by prosecutors, the sons interacted with some who worked in the Madoff investment operation. As executives at the firm, they met regularly with their father and other senior officials of the firm in closed-door discussions in the company's offices, according to former employees. They both gave their father some of their own money to manage and occasionally chatted with a key lieutenant who now is a focus of probes into the alleged fraud, and they defended their father's investment operation against critics.

Following a critical article in 2001 by Barron's, which raised questions about whether the secretive investment operation was legitimately generating returns, Mark Madoff, with Andrew watching nearby, addressed dozens of Madoff traders in the firm's offices, strongly arguing that the article was incorrect, and that Madoff's investment operation was legitimate, according to people who were there.

.....

Despite Mark's greater involvement with Madoff's trading business, he pulled out his personal funds he had invested with his father's investment-advisory operation sometime before his 2000 divorce, a person familiar with the matter said. Mark Madoff remarried in 2003 and has a home in Manhattan and Nantucket, Mass., purchased for $6.5 million in mid-2008, according to property reports.

.....

The sons also would talk occasionally with Frank DiPascali, a key lieutenant who worked in Bernard Madoff's money-management operation. Mr. DiPascali had little interaction with other trading-desk employees, according to current and former employees.

[NoControllingLegalAuthority]

This is like a guy who robbed a bank thirty years ago and turns himself in but has long since spent all the loot.

He goes to jail but nobody gets their money back.

[CutePuppy]

Link should be Sons' Roles in Spotlight

[GOPJ]

Despite Mark's greater involvement with Madoff's trading business, he pulled out his personal funds he had invested with his father's investment-advisory operation sometime before his 2000 divorce...

It's hard to believe the sons didn't know...

[Liz]

MADOFF FEEDER FUND Brighton Co Investments is headed by Stanley Chais, Beverly Hills, a "philanthropist" who served on "charitable" boards with Madoff. Chais told the Jewish Journal of Los Angeles that he personally invested with Madoff but also "facilitated" others who wished to do likewise. However, spokesmen for the SEC and the California Dept of Corporations said they could find no record of Chais registering as an investment advisor or a broker.

Stanley Chais offers remarks at the Weizmann Institute of Science.

STANLEY CHAIS IS PROMINENT WITHIN THE SOCIAL LABYRINTH MADOFF USED TO RAKE IN BILLIONS---

MAP IS INTERACTIVE AT WEB SITE

WEB SITE http://news.muckety.com/2008/12/28/madoff-used-social-family-networks-to-rake-in-billions/9031

[Liz]

Many of Madoff's "investors" collected payments of 12% or more interest.

There is VERY bad news for those that took money out of the Madoff fund.

Under the principle of "fraudulent conveyance," that money has to be returned, to be redistributed among the other cheated investors.

Some investors took no money out---they rolled over and reinvested their interest payments.

They will be clamoring for the money that is remaindered, as a way to recoup some of their lost "investments."

[Liz]

Keep in mind that Madoff's "investors" were savvy, successful people, who accumulated enormous sums of money, and were accustomed to constructing and analyzing intricate financial statements.

It's impossible to believe they did not know what was going on. More likely, they thought Madoff was doing something illegal---and they were profiting from it. Even more likely, Madoff was running a huge money laundry to keep enormous sums out of sight of the IRS and US banking laws.

ORGANIZING LEGAL PRINCIPLE The following should foreclose any cockamamie ideas that taxpayers are gonna bailout mega-millionaires "invested" with Madoff (who most assuredly have money stashed offshore out of sight of the SEC and IRS).

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 for decades.

Investors willingly acquiesced to these activities in several ways:

(1) Investing 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 (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) Accepting, without question, obviously flawed monthly statements.

[CutePuppy]

It proves, at the very least, that the siblings knew about and “invested” into BLM Fund, even if Bernie, supposedly, didn’t run any BLM Fund trades through the trading side of the business. Did they keep their old statements?

And Mark Madoff pulling money out of the fund early? He probably had good reasons or better investments in mind, or else it had to be just a fortunate coincidence.

[kcvl]

According to the complaint by Rosenman Family LLC, of which Martin Rosenman is the managing member, “Madoff stated that the fund was closed until Jan. 1, 2009, but that Mr. Rosenman could wire money” before that date into an account of Madoff’s firm.

Rosenman said he received a fax from Jodi Crupi, an employee of the firm, on Dec. 5 that told him to transfer funds to a JPMorgan Chase & Co. account, which he did.

On Dec. 9, Rosenman received a confirmation from Madoff’s firm telling him he’d sold short $10 million in U.S. Treasury bills, a transaction he “never authorized,” according to the court filing.

The day after Rosenman received confirmation was the day Madoff allegedly confessed, saying no more than $300 million was left in accounts, according to the criminal complaint charging him with fraud.

http://www.northjersey.com/business/news/37033589.html

[kcvl]

Two US businessmen win a round in Madoff lawsuits

http://tinyurl.com/b9sy34

[kcvl]

two Nevada LLCs under Crupi’s name. The first was a company called EastVest LLC, which was dissolved in 2004, and the second, which continues still is called Murphy Girl, LLC, which again was incorporated in Nevada, but lists an address in NJ for Crupi.

http://tinyurl.com/anb9zh

[CutePuppy]

Chais told the Jewish Journal of Los Angeles that he personally invested with Madoff but also "facilitated" others who wished to do likewise. However, spokesmen for the SEC and the California Dept of Corporations said they could find no record of Chais registering as an investment advisor or a broker.

Doesn't that sound a lot like Norman Hsu? Seems like typical Democrat culture of corrupt political enterprise - many of "bundlers" / "feeders" bunglers were involved with politically connected (and money-laundering) Ponzi schemes.

Just to think - they were uncovered in 2008 - Year of The Brown Earth Rat (according to Chinese Lunar calendar)?

[CutePuppy]

Two questions:

1. Do these people ever stop? /rhetorical
2. Any relations between Martin Rosenman and Norman Hsu’s “investor” Joel Rosenman?