Posted on 02/16/2011 6:24:51 AM PST by safetysign
Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family.
In his first interview for publication since his arrest in December 2008, Mr. Madoff — looking noticeably thinner and rumpled in khaki prison garb — maintained that family members knew nothing about his crimes.
But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved.
(Excerpt) Read more at nytimes.com ...
The corporation cut dividends to comparative pennies almost a couple years ago and continues to do so despite the big bucks it's raking in.
Anything can be expected when Bill Daley is one of its officers along with CEO Jamie Dimon who's an Obama enabler, donor and footsie-player.
The Daley family tentacles are everywhere, but they've succeeded for endless decades in keeping mostly everything under the radar.
I suspect that Bill and Jamie extract tons of $$$'s and goodies from JPM while the investors are left to suck wind.
Madoff got too big for his britches and his deck of cards was bound to fall apart. The other high finance scam dealers play it cool while they operate in Brooks Brothers suits under legitimate corporate cover. Unlike Bernie, they are very careful and clever in their mendacity....and they succeed inordinately in their particular line of work.
Leni
Madoff complained in a 2004 phone call to one of Katz's business associates, Arthur Friedman, vice president of Sterling Equities that his BIL, Mets co-owner, Saul Katz told his country club friends that 'nobody knows how Madoff does it,' Katz's blathering likely irritated Madoff because his epic Ponzi scheme depended on an air of mystery and intrigue to ward off regulators and lure customers. IF TRUE, THAN THIS PROVES THAT THE WILPON'S KNEW!
Mets co-owners and their families reaped millions from Bernie Madoff’s schemes:
Fred Wilpon Sterling Equities co-founder; Mets co-owner Earnings: $52.8M from 57 Madoff accounts
Judith Wilpon Fred’s wife Earnings: $24.7M from six Madoff accounts
Iris Katz Saul’s wife Earnings: $35M from six Madoff accounts
Saul Katz Sterling Equities co-founder; Mets co-owner Earnings: $45M from 68 Madoff accounts
Jeff Wilpon Fred and Judith’s son, Sterling exec VP, Mets COO Earnings: $37M from 62 Madoff accounts
Richard Wilpon Fred’s brother, Sterling Equities partner, Mets board member Earnings: $23.1M from 60 Madoff accounts
Michael Katz Saul’s brother, Sterling Equities partner, Mets board member Earnings: $19.1M from 59 Madoff accounts
Heather Katz Knopf Saul and Iris’ daughter Earnings: $33M from 44 Madoff accounts
SOURCE http://www.nypost.com/p/news/local/amazin_kin_all_had_to_bern_dwIueqtoYrU2uhjaoXEUaL
Looks to me like the Katz is out of the bag......
Heh——cute.
From Face-to-face at JPMorgan Chase - NYP, by Mark DeCambre, 2011 February 16
During an investors conference yesterday, the bank's legal eagle Stephen Cutler also said that JPMorgan planned on "defending itself vigorously" against accusations of being complicit in the massive Madoff scheme. Cutler referred to Madoff trustee Irving Picard's charges against JPMorgan as "unsubstantiated." ..... < snip > Jamie Dimon's JPMorgan Chase denied allegations that it turned a blind eye to telltale signs that Bernie Madoff was perpetrating a billion-dollar Ponzi operation.
In 1980s Madoff had his fund's account with Chemical Bank;
in 1992 Chemical bought Manufacturers Hanover Trust (Manny Hanny);
in 1996 Chemical Bank merged with Chase Manhattan Bank and assumed Chase name;
in 2000 Chase bought / merged with JPMorgan to form JPMorgan Chase;
in late 2004 JPMorgan Chase bought Chicago's Bank One;
shortly after the merger Bank One's President and COO Jamie Dimon became Chairman, President and CEO of JPMorgan Chase (current JPMorgan's corporate Headquarters at 270 Park Ave., NY, NY have been HQ of Manufacturers Hanover since it acquired the original Union Carbide Building in 1981.)
Interesting to note that Madoff had "liquidity problems" at the end of 2005; it suggests that he might have had unusually high rate of redemptions / withdrawal from his fund and had to to cover it by getting fresh capital, promising a higher rate of return in a "special investment opportunity" (as he did with Wilpons).
From Madoff Trustee Sues JPMorgan Chase (primary banker sued for billions; facilitated money-launder) - AT, by Michael Cohn | FR posted by Liz, 2011 February 06 In October 2008, JPMorgan Chase filed a suspicious activity report with British authorities to relay some of its concerns about Madoff, but not the SEC. It said in a filing with the U.K.'s Serious Organized Crime Agency that the claims for Madoff's investments were “too good to be true - which means it probably is.” ..... < snip > In 2007, another JPMorgan Chase said he heard from a co-worker at lunch that “there is a well-known cloud over the head of Madoff and that his returns are speculated to be part of a [P]onzi scheme - he said if we google the guy we can see the articles for ourselves - Pls do that and let us know what you find." ..... < snip >
As we know, Madoff's fund activity was run from affiliate office in London (similar to MO of Joseph Cassano's AIG Finanical Products London division which wrote most of the toxic CDSs, and Al Gore's GIM - Generation Investment Management - which is in the business of investing in "sustainable green" fraud) and the SEC, FInRA and NY / US South District Attorneys apparently already have turned the blind eye to investigating Madoff despite much more substantial tips from other sources (Markopolos et al), so going to UK's SOCA made a lot more sense and was a serious step, yet it was still based on nothing "substantial." And this was done in the middle of unfolding possible financial collapse, when something like this was hardly a priority for financial institutions trying to survive or helping others to survive. Apparently SEC staffers were very "inexperienced" (according to the report of SEC IG Katz) or may be too busy "googling" porn, rather than googling or auditing Madoff.
Basically, the Picard's thesis is that the banks and funds should have been not only doing due diligence on Madoff for the purpose of determining if they want to invest with him, but also doing the job of the SEC, FInRA, SAGs/DAGs and the FBI to document and report any possible potential fraud, based on nothing more than something is "too good to be true". How about starting with Social Security, defined benefit pensions and other pay-as-you-go U.S. government schemes... er, "programs"?
From From Prison, Madoff Says Banks ‘Had to Know' of Fraud - CNBC / NYT, by Diana Henriques, 2011 February 15
..... Bernard L. Madoff said he never thought the collapse of his Ponzi scheme would cause the sort of destruction that has befallen his family. .....
Interesting how little he cares about anybody who may have unsuspectingly invested life savings with him or with the funds that invested with him, other than his family or friends.
..... In his first interview for publication since his arrest in December 2008, Mr. Madoff... maintained that family members knew nothing about his crimes. .....
Here's the big one. He claims that his family members, who were sophisticated elite members of NASD, worked at his firm, were at his side almost every day, knew nothing about the scheme, yet the bank that held his account for more than 20 years was supposed to know he ran a Ponzi scheme and report on him to the authorities who would actually then stop him, so there would not be so much destruction to his family? Nice try, Bernie.
..... But during a private two-hour interview in a visitor room here on Tuesday, and in earlier e-mail exchanges, he asserted that unidentified banks and hedge funds were somehow “complicit” in his elaborate fraud, an about-face from earlier claims that he was the only person involved.
Well, before Picard and his "deep pockets" lawsuits Madoff couldn't have come up with this, he meant alone as in "my friends and family didn't know"... now, that the "deep pockets" might pay off his victims - hey, that can change the entire game. Irving Picard, you found some great scapegoats that anyone can hate - sounds good, NYTimes and I will play along.
..... “They had to know,” Mr. Madoff said. “But the attitude was sort of, ‘If you're doing something wrong, we don't want to know.' ” While he acknowledged his guilt in the interview and said nothing could excuse his crimes, he focused his comments laserlike on the big investors and giant institutions he dealt with, not on the financial pain he caused thousands of his more modest investors. .....
The banks and investors "had to know" (apparently they just could Google it) but the people closest to him, working with him, living with him, scheming with him - "didn't know." Yep, the game is afoot...
..... Mr. Madoff said he was startled to learn about some of the e-mails and messages raising doubts about his results - now emerging in lawsuits - that bankers were passing around before his scheme collapsed. “I'm reading more now about how suspicious they were than I ever realized at the time,” ..... He did not assert that any specific bank or fund knew about or was an accomplice in his Ponzi scheme, which lasted at least 16 years and consumed about $20 billion in lost cash and almost $65 billion in paper wealth. Rather, he cited a failure to conduct normal scrutiny. .....
So at the same time he says the banks and the funds "had to know" about his Ponzi scheme, he is surprised that they even suspected that anything was wrong or "too good to be true"... "It's all their fault... They didn't stop me from defrauding and now look at my poor family." The game goes on...
Madoff met several times (at least twice) with Picard and his legal team, and gave them information he thought would be "instrumental" in helping to recover assets from people who were "complicit" in his scheme. I'll bet they are not FOBs / "Friends of Bernie". Yet he had not shared any of this information with federal prosecutors who worked on criminal cases because he only wanted to help recover assets, not criminal evidence. Having it both ways, again...
Fred Wilpon and Saul Katz? Why, "they knew nothing. They knew nothing."
Entire article is trying to build support for Picard's lawsuits, but Madoff contradicts himself at every step. His goal is still to do everything that he can to protect his family and friends, and Picard is complicit with that, as long as he can keep the game going for a while and grab as much money from the legal abuse of the expensive and time-consuming "deep pockets" and "class action" type lawsuits.
Here is pièce de résistance that gives away their "deep pockets" game:
Mr. Madoff argued in several e-mails that Mr. Picard's responsibility was to return only the $20 billion in out-of-pocket cash that investors lost in his scheme. Given that Mr. Picard has already recovered roughly $10 billion, Mr. Madoff calculated that the lawsuits against major banks and hedge funds would produce more than enough to cover the rest of the cash losses without Mr. Picard having to pursue “clawback” litigation against some longtime investors who withdrew more from their accounts than they put. .....
Quintessiential Madoff's scheme - protecting his friends and family from criminal and financial consequences by pointing fingers at others who could be made "accountable" for his schemes... even from behind the country-club prison walls.
But can Picard explain why he gave pass to Bernie's "surrogate father," Norman F. Levy, who, according to SIPC, transferred more than $83 billion in and out of his account just between 1998 and 2001? BTW, Levy died in 2005, and it's possible that estate withdrew money from Madoff upon his death, thus resulting in or contributing to Madoff's acute "liquidity problem" (see above) in that year.
Madoff ‘Surrogate Father' Moved Billions in Account - BL, by Bob Van Voris, 2011 February 11
Or why Picard quietly settled with some other "net winners" FOBs for less than he could have if he used legal "strong-arm tactics" he is using in his "deep pockets" lawsuits?
Madoff Trustee May Do What Bernie Didn't: Give Victims Profit - BL, by Bob Van Voris, 2011 February 11
On the ironic side, Madoff pal sued by kin - NYP, by Bob Fredericks, 2011 February 10
"It's ironic," said Jersey lawyer Todd Conn, who represents Karen L. Cohn ..... < snip > Maurice Cohn, who ran Cohmad Securities, a Bernie Madoff-linked investment firm, has been sued by his daughter for allegedly duping her into signing over her house to a trust he controlled, The Post has learned.
Cohmad was named as a combination of Cohn and Madoff.
The OIG report would have mentioned reports coming from banks. The OIG report mentioned other confidential reports and tips, reports from options houses, etc.
No mention of banks reporting suspicious money transfers, structured transactions, etc.
Under Federal law, it is illegal for either the bank filing a a SAR or the government to reveal the existence of the SAR to anyone.
So the banks ‘had to know’ but there was no way that his kids, who worked in the company itself, could know? Come on, Bernie!
therefore they have failed in their fiduciary duty to their depositors and investors.
Not a lawyer, but isn’t that a criminal offense.
You have got to be kidding, this is money in the bank, not money lost after Bernie was “discovered”.
I’m afraid I still don’t understand how big this scheme was.
It is if they knew about these issues and then signed the earnings statements, it is.
Remember, Sarbanes-Oxley has criminalized CEO’s and CFO’s signing off on financial statements that they know are not correct. There are criminal penalties now for a CEO and/or CFO signing off on statements made to the SEC concerning financials of a company when they know there are misrepresentations being made.
The trouble is, this law, like so many others, is not being enforced. We supposedly passed SarbOx into law in 2002 in the way of the Enron scandal to prevent it from happening again. Well, it has happened again, only in a much larger, systemic way in the banking sector.
There are huge opportunities for the SEC making criminal referrals out of the 2008 melt-down if they’d use SarbOx, because there’s no question that the CEO’s and CFO’s knew that their financials were BS. Heck, when Erin Callan could not keep a straight face on a phone call, that was effectively the beginning of the end for Lehman. She should have been charged, because she clearly knew that their financials were not in order as the short-sellers were hammering her with questions.
Same deal with the Madoff scandal. Billions of dollars were being flung around the banking system by Madoff... and bankers didn’t ask questions why these large amounts were being shell-gamed?
As in so many other areas of the law, we don’t need new laws. All we need to do is enforce the ones we have. Sadly, the bankers have received a “get out of any inconvenient questions free!” card from the DNC and GOP.
The government may reveal the existence of a SAR ‘in performance of their official duties’ - which for the OIG (and SEC, FinCEN, et al) would mean disclosure during an investigation.
The OIG wouldn’t even have to reveal the content of the report. If a report had been filed by one or more banks, the name of the filing bank wouldn’t necessarily have to be revealed.
The OIG would have said merely stated in their report that SAR’s were filed as part of their post-mortem on how Madoff evaded SEC investigation, because a SAR being filed would have been a big red flag that should not have been ignored by the OCC, FBI or Federal Reserve. The OIG revealed plenty of other confidential information in their report, in semi-redacted manner for the public report, laying out the breadth and scope of the information that the government had on Madoff and yet chose to ignore.
Remember, we’re talking of billions of dollars here.
That the OIG report is silent on the issue means to me that the bankers went along with this scam - and why wouldn’t they? Their bread was being buttered with the very best butter.
Well, remember that a SAR under the AML laws is basically a computer implementation of Fed regulations that automatically generates the SARs. Presumably, they are reviewed by someone before being filed, but this would typically be a low-level DDA account auditor/security enforcer.
It is possible that he saw the who the account was, asked his boss, and go told “it’s OK” based on the presumed nature of Madoff’s business. But no banker would dare risk suppressing these reports for business reasons. The banks usually have rules prohibiting even talking to the customer’s relationship manager about such matters.
FWIW, JPM filed a SAR to the British authorities just before Madoff’s scheme blew up.
http://abcnews.go.com/Blotter/page?id=12297036
As the Madoff Trustee’s filing on 2/4/2011 indicates, there were automated systems flagging Madoff’s transactions... yet JPM was not filing reports.
http://www.madofftrustee.com/CourtFilings-Download.aspx?Docket=805
(you have to suffer through a lot of “redacteds” in this filing... - but start reading around p. 60...)
For those who don’t want to wade through the complaint, here’s the one nugget therein:
“222. JPMC also faced regular account activity that would have been suspicious regardless of the type of business JPMC thought Madoff was running. The 2000 OCC BSA/AML Handbook identified numerous “red flags” that financial institutions needed to consider as part of their transaction monitoring procedures. These red flags included: (a) unexplained repetitive or unusual patterns of activity; (b) frequent large dollar transactions without corresponding explanations as to how those funds would be utilized; (c) spikes in customer activity with little or no explanation; and (d) wire activity with offshore banking centers or financial secrecy havens. The 703 Account exhibited all of these types of transactions, and exhibited them repeatedly.”
JPM had him dead to rights. The filing to the UK office makes it clear that other parts of JPM viewed Madoff’s activity as suspicious, especially as massive fund outflows were being seen.
You’re right, I *agree* with you, and that is how it works.
But the GAO found that SAR filings are increasing, and it wonders whether SAR’s are being filed as a “CYA” by the bankers, possibly flooding the system with noise:
http://www.gao.gov/new.items/d09226.pdf
Why, given the filing in the UK, would JPM have kept looking the other way?
Well, the amount of business they had with Madoff, and the loans they extended to him... that might color their opinion on whether or not to kick over this particular hornet’s nest. Especially, when one considers the amounts, it would really draw some attention within FinCEN...
If you or I worked at JPM, I’m sure we could have been covering our tushies with a SAR — especially considering the amount being wired to “high risk” offshore locations. That’s a big red flag for the FBI for drug money and terrorism now...
Thanks for the info, CP!
From Madoff’s Credibility Ends When His Mouth Moves: Ann Woolner - BL, by Ann Woolner, 2011 February 17
Instead, he said of them, “I would have loved for them to not lose anything, but that was a risk they were well aware of by investing in the market.” The fact that they weren’t investing in the market is why Madoff’s in prison. He concocted mountains of phony paperwork to trick them into thinking they were, and that they were doing quite well at it. ..... < snip > < snip > ..... You might expect that having almost two years in prison to reflect, after learning of the suicides, the heartbreak, the financial devastation he left in his wake, Madoff might have used his first newspaper interview to express gut-wrenching remorse, perhaps fling his soul onto the mercy of those he hurt.
Good comments in the article on what Madoff didn't say, and didn't offer any proof or specifics (particularly referring to JPMorgan and other non-FOB parties accused by him and Picard of being "complicit in one form or another" in his crimes or "should have known" about them). Picard would have to rely on Madoff's testimony to prove to the courts that institutions knew about the specific crimes he accuses them of, rather than vague statements that they "should have known" or "had to know."
Conclusion: there is no evidence of JPMorgan's knowledge or involvement in Madoff's scheme in 115-page lawsuit that was filed by Picard to bankruptcy court - wrong legal venue, at that.
And now, at last, tables are being turned on Bernie's new partner - Irving Picard - in their latest efforts to make everyone happy by deflecting the blame, protection of FOBs and "deep pockets" legal extortion schemes. He is getting deserved backlash from real victims for quietly shielding FOBs (Friends of Bernie) by favorable settlement terms and thus keeping the damaging info from criminal prosecutors:
From Madoff victims file to stop $220M deal - NYP, by Chuck Bennett,
The estate of Norman Levy, a Manhattan real estate broker who acted as Madoff's surrogate father and was one of his first investors, settled with trustee Irving Picard for $220 million last year, but a lawyer representing several hundred victims has asked a federal bankruptcy judge to cancel that deal. "What in God's name were they doing together," asked lawyer Helen Davis Chaitman, referring to the billions that Madoff moved between his accounts and Levy's accounts via JPMorgan Chase. Levy, who died in 2005, was identified as Customer No. 1, the man who moved $100 billion back and forth with Madoff, in Picard's lawsuit against the bank. ..... < snip > Victims of Bernie Madoff were fleeced again when the federal trustee charged with finding their stolen billions agreed to a relatively low settlement with one of the Ponzi schemer's closest confidants, court papers filed yesterday charge.
The irony here is delicious - Picard is now on the hot seat and his spokesman called Chartma's motion "without merit".
Here is an interesting mini-Madoff episode that shows why Madoff's "consistent" or "stable" results were so effective as a sales pitch to certain demographic (and why he was really surprised to find that there were people doubting his returns and his scheme):
From Fugitive Kim used Bernie M.O. - NYP, by Kaja Whitehouse, 2011 February 18
For 16 straight months -- starting with the first signs of the credit crunch in September 2007 and prior to Madoff's downfall in late 2008 -- the founder of Liquid Capital Management had been reporting bizarrely consistent monthly returns of precisely 0.14 percent, The Post has learned. Before that, Kim's returns had been highly volatile, up 518 percent one month and down 51 percent the next. Experts say the volatile numbers are more plausible, given Kim's strategy of trading futures. But volatility is a turnoff to investors, and Kim was eager to attract funding. ..... < snip > Fugitive hedge-fund manager Brian Kim, who stands accused of cheating investors out of $4 million, appears to have scrambled to cover a telltale sign of his alleged fraud on the heels of Bernie Madoff's massive Ponzi scheme.
In the aftermath of Madoff confession "stable returns" became a red flag for fraud watchers. 35-year old Kim, immediately changed his MO and "returns" - in January, 2009 Kim replaced the 0.14 number with returns that were still unusually consistent, but slightly varied and not identical from month to month.
Another "affinity" or "identity" mini-Madoff Ponzi schemer (this one Amish, of all people) seems to have gotten little more than a slap on the wrist:
From 77-year-old Amish financial adviser charged in Ponzi scheme - NYP, 2011 February 17
The commission alleged that between 1986 and June 2010, Monroe L. Beachy -- while running the unregistered A&M Investments in Sugarcreek, Ohio -- raised approximately $33 million from over 2,600 investors, the vast majority of whom were from the Amish community, which otherwise shuns much of the modern world. ..... < snip > ..... The SEC let Beachy settle its complaint without denying or admitting he had violated the Securities Act. No penalty was paid based on his financial condition, the agency said. ..... < snip > A 77-year-old Ohio-based Amish financial adviser defrauded members of his community out of tens of millions of dollars in a Ponzi scheme reminiscent of Bernie Madoff, according to filings from the Securities and Exchange Commission.
And another "sleeper" Madoff-like (too big and too different to call it mini-Madoff) Ponzi soap opera just became even more interesting:
Stanford Sues U.S. Prosecutors, SEC and FBI Agents - BL, by Andrew M. Harris and Laurel Brubaker Calkins, 2011 February 17
SEC spokesman Kevin Callahan and DoJ spokeswoman Laura Sweeney declined to comment, FBI Houston's office PR person Shauna Dunlap has yet to return the call.
Stanford's 39-page lawsuit doesn't sue the agencies directly, but names 12 persons working for the SEC, FBI and the DoJ as defendants. Complaint includes attorney Stephen Korotash who leads the SEC’s civil suit and criminal case prosecutors Gregg Costa and Paul Pelletier.
Stanford accuses individuals of "abusive law enforcement", denying him the "constitutional rights," right of legal defense, in part by intimidation and freezing "his" accounts, and seeks $7.2 billion in damages.
Seems to me the whole purpose of the Madoff exercise was to get the Wilpons off the hook-—to clear the Wilpons of any wrongdoing.
Not that I believe it.
And even if they did NOT know-—the Wilpons still have to give back any monies they made which are considered ill-gotten gains....said to be some $300 million.
By law, one cannot benefit from financial fraud.
This doesn't make sense. It's generally agreed that the maximum amount of actual CASH that BM took from investors...not the fictional profits..was just over $20 billion...
Thoughts?
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.