New SEC Madoff rule

NY Post ^ | December 17, 2009 | NY Post

[CutePuppy]

The Securities and Exchange Commission approved final rules yesterday requiring some investment advisers who manage customer funds to undergo annual surprise audits.

The rule is prompted by the Bernard Madoff scandal, requiring certain SEC-registered advisers who have custody of clients' assets to retain an independent public accountant to conduct an annual exam.

.....

[CutePuppy]

... If funds are found missing, the accountants must notify the SEC.

From "Gee, I could've had a V-8!" files.

Don't know what amazes me more - that it took them until now to do even this minimum of "regulation" or that this particular regulation is so lame and fuzzy, and is open to the same lame and fuzzy excuses of "overworked," "incompetent" and "inexperienced" SEC staff that will miss next mini-Madoff.

[dfwgator]

Madoff bought off half the SEC, so what good is this. Who is watching the watchers?

[rotstan]

Not wanting to sound fascist or anything, but how about mandatory audits of all and capital punishment for fraud? Ok, yes, it is extreme, but it might be worthy of a test...

[Trod Upon]

“Nobody expects the Spanish Inquisition!”

[Liz]

......regulation is so lame and fuzzy, open to the same lame and fuzzy excuses of "overworked," "incompetent" and "inexperienced" SEC staff......

Also fails to take into consideration that Madoff was running simultaneous scams-----(1) a Ponzi fraud, (2) money laundering, (3) IRS fraud, and, (2) a protection racket (shielding certain investors from scrutiny).

No question, tax evasion and money laundering was the name of the game for the wealthiest Madoffians-----businessmen who were funneling income to Madoff to avoid US taxes, acting like "philanthropists." The tax-exempt Picower Foundation took out 950% profit AND had arranged this take beforehand.

The court appointed trustee who is looking into Madoff's assets unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth...... and assets and businesses in 11 places overseas.

Freeper maggief posted: Jeffry Picower, a seldom-seen philanthropist, investor and confidant of Bernard Madoff, stands accused by the Madoff bankruptcy trustee of extracting $5.1 billion from Madoff’s enterprises during the last two decades. Now a lawyer representing 100 Madoff victims suggests it was no accident that Picower was one of the few Madoff customers who made a substantial profit. (snip)

Picower may have deposited $1.6 billion with Madoff, while withdrawing as “profit” more than $6.7 billion, for a net profit of $5.1 billion “of other peoples’ money.” (snip)

While coverage of Picower has been scant, on various occasions, The St. Petersburg Times, Forbes, and, most recently, Pro Publica, have raised the question of whether he used his charities to mine information—especially about the medical developments—that he then used in chasing deals. He was the biggest shareholder in Alaris Medical Systems and collected more than $1 billion when it was bought by Cardinal Health in 2004. (snip) http://www.thedailybeast.com/blogs-and-stories/2009-06-25/did-bernie-madoff-get-a-billion-dollar-kickback/full/

Authorities should go after The Florida-based Picower Foundation, worth $1 billion AND a major backer of the abortion industry.

Barbara and Jeffrey Picower
The Picower Foundation
1410 South Ocean Blvd
Palm Beach, Fla 33480
Tele 561-835-1332
Geographic Focus: Florida; New York;
SOURCE http://www.tgci.com/funding/fdnresultnew.asp?thisID=19499

The number of tax-exempt "foundations and charities" attached to Madoff's scam is VERY fishy. NOTE: the IRS has targeted tax-exempt "foundations and charities" as the locus classicus for money laundering and tax evasion--- the BIGGEST fraud is one charity writing checks to another charity---the way these "altristic philanthropists" siphon off funds for themselves--all tax-free.

[Condor51]

*** Picower may have deposited $1.6 billion with Madoff, while withdrawing as “profit” more than $6.7 billion, for a net profit of $5.1 billion “of other peoples’ money.” (snip) ... Authorities should go after The Florida-based Picower Foundation, worth $1 billion AND a major backer of the abortion industry. ***

Yeah, I would say so. Last I checked one couldn't profit from an illegal activity. And if they scored $5.1 billion “of other peoples’ money.” from Bernie's scams, that sure seems to fit the description.

[stephenjohnbanker]

Fine upstanding American citizens.

[CutePuppy]

NOTE: the IRS has targeted tax-exempt "foundations and charities" as the locus classicus for money laundering and tax evasion--- the BIGGEST fraud is one charity writing checks to another charity---the way these "altristic philanthropists" siphon off funds for themselves--all tax-free.

Speaking of charities and money laundering:
Stanley Chais target of federal criminal investigation - LAT, 2009 December 12, by Stuart Pfeifer

Federal prosecutors disclosed Friday that they were conducting a criminal investigation of Beverly Hills money manager Stanley Chais, who is accused of serving as the Southern California link to a Ponzi scheme operated by disgraced financier Bernard L. Madoff.

Assistant U.S. Atty. William J. Stellmach revealed the criminal investigation in a motion that sought to postpone for six months a civil lawsuit filed by the Securities and Exchange Commission against Chais in June.

Stellmach said that proceedings in the SEC lawsuit, if not suspended, could interfere with an "ongoing, parallel criminal investigation" of Chais. FBI special agents have conducted interviews during the investigation and reviewed materials provided by the SEC, Stellmach said. .....

The government's motion marked the first public confirmation that Chais, 83, could face criminal charges. In addition to the SEC's lawsuit, California Atty. Gen. Jerry Brown filed a lawsuit against Chais that sought to recover investor money.

Stellmach said charges that Chais and others could face include conspiracy, mail fraud, wire fraud, securities fraud and money laundering. A decision on whether to pursue criminal charges against Chais should be made by June, Stellmach said.

The SEC lawsuit said Chais portrayed himself as an investment "wizard," without disclosing that he merely funneled hundreds of millions of investor dollars to Madoff, who made all investment decisions. Chais operated in Beverly Hills but has moved to New York.

Chais attracted several wealthy Southern California investors, among them Oscar-winning screenwriter Eric Roth, who wrote "The Curious Case of Benjamin Button," and Mark Peel, executive chef and part owner of Campanile restaurant. .....

Interesting recent developments and answers re Picard and SIPC recovery and payments to Madoff investors:
Most Madoff Victims Denied SIPC Repayments a Year After Arrest - BL, 2009 December 11, by Erik Larson

Most of the people who say they lost money with Bernard Madoff have had their claims denied because they invested with the con man indirectly or withdrew more money than they put in.

Trustee Irving Picard has turned down about 9,900 of the 11,500 people whose claims he has analyzed, with another 4,500 cases still to be looked into. The 1,600 people whose claims he has approved have losses totaling $4.69 billion, though they’ll get at most $500,000 to begin with, pending the results of Picard’s suits against people he regards as beneficiaries of the biggest Ponzi scheme in history.

One year after Madoff’s arrest in his penthouse apartment in Manhattan on Dec. 11, 2008, exposing the swindle that ruined thousands of investors, the denial of most claims and the approval of some at lesser amounts than victims sought has emerged as the biggest dispute in the case. Many alleged victims argue they should be paid years’ worth of fake profit.

While Picard said yesterday he’s processing claims as quickly as possible, he declined to estimate when he’ll finish.

“Getting visibility into older account records has unfortunately been a slow process,” Picard said in an e-mail. “We are making progress and issuing new determinations regularly.”

Picard’s method for determining claims is “grossly unfair,” retiree Ken Macher, who claims he lost a savings account once worth $1.6 million, said in a Dec. 7 filing in U.S. Bankruptcy Court in New York. Picard is depriving Macher of “some small relief from the loss of our entire investment,” he said.

Macher’s claim was denied because he withdrew $1 million in 2007 after having invested only about $365,500, according to the filing. Macher, of Fairfax, California, said the funds were immediately placed in another Madoff account that was wiped out. .....

U.S. Bankruptcy Judge Burton Lifland will consider the disagreement at a Feb. 2 hearing in New York. .....

Of course, Picard has no reason to rush things, he is sitting pretty:
Picard, his law firm ask for $22M pay - NYP, 2009 November 24, by Kaja Whitehouse

The people responsible for liquidating Bernie Madoff's assets and distributing the proceeds to victims of his Ponzi scheme are on track to earn more than $37.7 million for less than a year's work.

Yesterday, bankruptcy trustee Irving Picard and his law firm, Baker & Hostetler, asked a US judge to grant them a whopping $22.1 million in fees for five months of work ended in September. The firm requested $21.28 million plus $280,682 in expenses for acting as counsel to Picard.

That includes a 10 percent "public interest discount" from the firm's normal rates. .....

But, SEC is still fighting the imaginary "crimes" and "wrongdoers," even those already acquitted of wrongdoing:
SEC's civil war - NYP, 2009 December 10, by Kaja Whitehouse

Undeterred by the recent acquittal in a related criminal case, Securities and Exchange Commission Chairman Mary Schapiro is moving full speed ahead with civil charges against two former Bear Stearns hedge fund managers accused of concealing the health of those funds from investors.

A lawyer for Ralph Cioffi, one of the two managers, told a federal judge yesterday there's "zero" chance the SEC will settle or drop its case against the defendants. That's despite federal prosecutors' stunning defeat last month in a high-profile criminal case tied to same alleged misdeeds.

A jury of eight women and four men found Cioffi and co-defendant Matthew Tannin not guilty on all charges, blowing up the government's first case tied to Wall Street's role in the mortgage meltdown. The duo was accused of bilking investors out of $1.6 billion by lying about how strong the funds were. The case was expected to serve as the government's template for pursuing Wall Street wrongdoing linked to the financial crisis. .....

Unrelated to above, but too bizarre not to mention:
Former Special Assistant NY Attorney General Gets 14-Year Sentence for Plot to Eliminate Witnesses - BL, 2009 December 05, by Patricia Hurtado

Robert Simels, a New York criminal defense lawyer, was sentenced to 14 years in prison for his conviction in a scheme to “eliminate” federal witnesses slated to testify against one of his clients.

Simels, 62, a former special assistant attorney general for the New York Special Prosecutor’s Office, was convicted in August of multiple counts of witness tampering, bribery, and illegal possession of eavesdropping equipment. He was ordered yesterday to pay a $225,000 fine and report to prison on Jan. 8.

U.S. District Judge John Gleeson in Brooklyn, New York, who presided over the trial, yesterday cited Simels’s attempts to bribe witnesses and lie about it on the witness stand as reasons for a long prison sentence. .....

[Liz]

Thanks for the great research.

The SEC lawsuit said Stanley Chais portrayed himself as an investment "wizard," without disclosing that he merely funneled hundreds of millions of investor dollars to Madoff. Chais and others could face charges that include conspiracy, mail fraud, wire fraud, securities fraud and money laundering. Pursuing criminal charges against Chais is pending.

Stanley Chais ran Brighton Co Investments and served on several "charitable" boards with Madoff. Chais (pronounced Chase) told the Jewish Journal of Los Angeles that he not only personally invested with Madoff, but he 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. Chais operated in Beverly Hills but has moved to New York.

Stanley Chais offers remarks at the Weizmann Institute of Science.

Besides being an the “investment wizard" Stanley Chais portrayed himself as a “philanthropist.“ L/E should scrutinize the $198 million Chais Family Foundation for money laundering and IRS fraud. Putting phantom people on the payroll, accounting fraud, faking legal and admin fees, are actually money laundering techniques.

Checks tax-exempt foundations make out to other “n/p charities” are sources for wrongdoing, according to the IRS------the recipient takes a cut of the money then deposits the rest for the “philanthropist‘s” use later---all out of sight of the IRS.

Keep in mind that Madoff was running simultaneous scams-----(1) a Ponzi fraud, (2) money laundering, (3) IRS fraud facilitation, and, (2) a protection racket (shielding certain investors from scrutiny). L/E 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.

Investigators unraveling Madoff's finances have learned that scores of Jewish nonprofits and charities that “invested” with the swindler had actually withdrawn millions of dollars. J Ezra Merkin---a well-connected "philanthropist"---- ran several offshore hedge funds facilitated introductions to Madoff.

Merkin also once headed GMAC and received billions in taxpayer bailouts. GMAC's Merkin and his pal Chrysler's Feinberg bought Bank Leumi from the Israeli for govt $500M----an “insider” deal not just anybody could get. Bank Leumi looms large in the missing Madoff billions (and the missing billion dollar bailouts) since Israel is the only place in the world where an individual certified as being of Jewish heritage, can fly-in, got to a bank with a suitcase full of cash, and nobody asks where they got it, or whether taxes were paid on it.

Americans have not yet learned the full extent of official corruption, thievery, schemes and scams involving $TRILLIONS of tax dollars aided and abetted by the elected dupes on Capitol Hill.

Hadassah is another charity that should undergo scrutiny---Hadassah withdrew MORE money from Madoff than it originally put in------it funds health care initiatives, Zionist education, and the Hadassah Medical Organization in Jerusalem. Hadassah now says it plans to finish construction of a new medical tower in Jerusalem and that it has added 8,000 new members in recent months (man, that was one great outreach (/snic). The American Jewish Congress says it lost $21 million in the fraud.

The tax-exempt dimension to Madoff's fraud is very fishy. Madoff was running simultaneous scams-----(1) a Ponzi fraud, (2) money laundering, (3) IRS fraud facilitation, and, (2) a protection racket (shielding certain investors from scrutiny).

Madoff was connected to numerous so-called tax-exempt " charities, and family foundations." The Picower Foundation, The Chais Family Foundation, Robert I. Lappin Charitable Foundation, Steven Spielberg's tax-exempt Wunderkind Foundation, tax-exempt Yeshiva University, the Kehilath Jeshurun synagogue, the Maimonides, Ramaz and SAR day schools---and more---all “invested” with Madoff.

The IRS has asserted that tax-exempt "foundations and charities" are the locus classicus for tax evasion and IRS fraud. The landscape is littered with these "foundations and charities." Brooklyn, NY residents registered some 800 tax-exempts in Lakewood-----a small flea-bitten central New Jersey town.

Madoff's damage to Jewish nonprofits and charities that aid Israel, is still being assessed. The connection is crucial since Israel is the place where an individual (certified as being of Jewish heritage) can debark from any place on earth, go to a bank with a suitcase full of cash, and nobody asks where they got it or whether taxes were paid on it.