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Madoff's Alleged Fraud

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  • #31
    Now Congress will pay back investors who lost money and charge the taxpayers!

    No wonder the economy is in decline. They are breaking the back of honest, hardworking people.
    Last edited by Commercial Realtor; 10-01-2009, 05:56 AM. Reason: spelling


    • #32
      Judge delays Madoff jail decision

      NEW YORK - A judge has delayed a decision until Monday on whether Bernard Madoff should be sent to jail.

      Prosecutors claim Madoff has been trying to protect his assets from investors burned by a US$50 (NZ$84.5) billion fraud, and want his bail revoked.

      They say he sent $1 million worth of jewellery as holiday gifts. Before his arrest, they say, he was ready to send 100 signed cheques worth $173 million to family and friends.

      The defence says the sending of the gifts was an innocent mistake, and believe he should be free on bail.




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      • #33
        What's the odds are on Madoff's - bump-off?


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        • #34
          Madoff Remains Out on Bail But Judge Adds Conditions

          As usual... Made-off does not go to jail to await his time in court - whats the bet the guy does not even get jail time.

          The richer you are the less time you spend in jail!

          By: CNBC.com With AP and Reuters | 12 Jan 2009 | 01:10 PM ET

          A judge allowed disgraced money manager Bernard Madoff to remain free on bail Monday, rejecting an attempt by prosecutors to send him to jail for mailing more than $1 million in jewelry to family and friends over the holidays.

          The judge added restrictions to Madoff's bail, however. He remains under house arrest.

          The ruling gives Madoff, 70, more time at home in his Manhattan apartment before he pleads guilty or goes to trial as authorities probe a worldwide $50 billion investment fraud they said he confessed to a month ago.

          Prosecutors last week asked the judge to revoke Madoff's bail, saying he violated a Dec. 18 court order freezing his assets by mailing more than $1 million worth of valuables to relatives and friends.

          Prosecutors said the gifts were grounds to have his bail revoked because what's left of Madoff's assets will have to be returned to burned investors.

          But the judge not swayed by their arguments that Madoff represents an economic danger to the community because of the size of the fraud and his actions in sending the gifts.

          Judges in bail decisions normally consider two main factors: whether the defendant is a flight risk or a danger to the community.



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          • #35
            US Prosecutors to Appeal Judge's Ruling on Madoff

            Go and get him!!

            By: Reuters | 12 Jan 2009 | 07:08 PM ET

            Federal prosecutors said on Monday they will appeal a judge's decision that allows accused swindler Bernard Madoff to stay in his Manhattan apartment under house arrest.

            "The government intends to appeal the (magistrate) court's order to the district court," Acting U.S. Attorney Lev Dassin said in a letter to U.S. Magistrate Judge Ronald Ellis. Ellis responded to the letter by ordering a stay for 48 hours until 1:00 p.m. ET on Wednesday.

            Earlier in the day, Ellis issued a ruling, rejecting a government request to throw Madoff in jail.

            The ruling gives Madoff, who has become one of the most vilified figures in America, more time in his $7 million home before he goes to trial or pleads guilty as authorities probe a $50 billion investment fraud to which they say he confessed a month ago.

            Madoff's lawyers have said their client is cooperating with government investigations following his Dec. 11 arrest for what would be the biggest Ponzi scheme in history. In a Ponzi scheme, early investors are paid with the money of new clients.

            The government has until mid-February to convince a grand jury to bring an indictment against Madoff, a former chairman of the NASDAQ stock market and a once-respected figure for more than 40 years in a financial industry that is already reeling in crisis.

            It is not unusual for people accused of white-collar crimes to be offered bail packages, and at this stage of the case, indictments could come at any time, legal experts said.

            Ellis said in a written ruling on Monday: "Aside from the bare assertion that there remains some risk of flight, the government has failed to articulate any flaw in the current conditions of release."

            Prosecutors asked the judge last week to revoke bail, arguing that Madoff had violated a Dec. 18 court order freezing his assets by mailing more than $1 million worth of valuables to relatives and friends.

            They said he was a flight risk and could cause further economic harm to investors by dispersing his belongings.



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            • #36
              Madoff Middleman a No-Show with Regulators: Report

              By: CNBC.com with Wires | 13 Jan 2009 | 04:39 PM ET

              Robert Jaffe, a middleman associated with alleged ponzi-schemer Bernard Madoff, didn't show up at a scheduled meeting with Massachusetts regulators Tuesday despite a subpoena for his appearance, according to a report.

              Jaffe worked for a brokerage that steered clients to Madoff, the Boston Globe reported on its Web site.

              He was scheduled to meet with the Massachusetts Securities Division this morning to talk about his knowledge of Madoff.

              "Robert Jaffe did not appear for his subpoened testimony today," Secretary of the Commonwealth of Massachusetts Thomas Galvin told CNBC. "The securities division is preparing to enforce the subpoena and take all other necessary actions to protection Massachussets investors."

              Meanwhile, a hearing has been scheduled for Wednesday at 2:30 pm in Manhattan on the government's appeal to a judge's ruling on Monday that allows Madoff to remain out on bail. The hearing is in U.S. District Court.



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              • #37
                Madoff 'Speechless' At Courthouse Arrival For Bail Hearing

                By: CNBC.com With Reuters | 14 Jan 2009 | 02:20 PM ET

                Besieged money manager Bernard Madoff has arrived at a Manhattan courthouse, where prosecutors are making another move to have him jailed. Madoff did not speak as he was ushered into the courthouse around 1:15 p.m. Wednesday. Metal barricades held back a large group of photographers.

                Earlier, a silver sport utility vehicle had pulled out of the driveway in front of Madoff's home. Paper on its side windows blocked views inside it.

                Madoff left his home under huge media scrutiny and travelled by car to lower Manhattan. The hearing is scheduled for 2:30 p.m. in Manhattan federal court.

                Madoff, a 70-year-old veteran money manager who authorities say has confessed to running a $50 billion scam that defrauded investors worldwide, is out on $10 million bail and living under guard in his $7 million Manhattan penthouse apartment.

                The government wants Madoff jailed pending trial or a guilty plea, saying he had sent at least $1 million in valuables, including diamond watches, to family and friends in violation of a court order.



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                • #38
                  A Look at Madoff's Real Numbers

                  Posted By: Cliff Mason

                  We've heard endlessly that even though Bernie Madoff allegedly turned out to be more of a con man than a money man, the strategy he claimed to be using to invest his clients' money would have been a good one if he was in fact using it. That's simply not true.

                  On Monday night's show, Jim explained how the returns from Madoff's split-strike conversion strategy would actually have been pretty awful over the last eight years. From 2000 to October of 2008, if you had roughly followed the strategy Madoff told the SEC and his clients he was using, you would've lost about 2.66% of your money.

                  In case anyone wanted more detail, here are what the approximate returns would have been from an options strategy like the one Madoff claimed to use for every year since 2001. Bear in mind that these are rough estimates from an attempt to duplicate the strategy Madoff said he used, so there's some wiggle-room with these figures. An astute trader could have done better than the returns below, and a bad one could have done worse. Think of these as a baseline for the returns you'd expect from someone using Madoff's stated strategy.
                  • In 2001, his strategy would have produced a 12% loss.
                  • In 2002, his strategy would have produced an 8.9% loss.
                  • In 2003, his strategy would have produced a 7.3% gain.
                  • In 2004, his strategy would have produced an 8.2% gain.
                  • In 2005, his strategy would have produced a 6.7% gain.
                  • In 2006, his strategy would have produced an 11% gain.
                  • In 2007, his strategy would have produced a 12.2% gain
                  • And in the first three quarters of 2008, the Madoff strategy would have produced a 21.1% loss.



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                  • #39
                    Bernie Madoff and GMAC: What's The Difference?

                    Interesting video..

                    From: http://www.youtube.com/watch?v=D3OO6sHCKM4


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                    • #40
                      Madoffs Shared Much; Question Is How Much?

                      Was the wife in on it?

                      The New York Times | 15 Jan 2009 | 11:41 AM ET

                      To friends, they were “Bernie-and-Ruth” or “Ruth-and-Bernie,” a pair so inseparable that you wouldn’t mention one without the other. After nearly 50 years of marriage, they worked in the same Midtown Manhattan office, they traveled together, and they dined together night after night, just the two of them.

                      “They came once or twice a week, for about 22 years, and for the last five I could count on one hand the number of times they came with another couple,” says Giuliano Zuliani, owner of Primola, an Italian restaurant in Manhattan. “They always wanted a quiet table in the back, just the two of them.”

                      But little about the love story of Ruth and Bernard Madoff looks enviable today.

                      On Dec. 10, according to a court filing by the Madoffs’ lawyer, Mr. Madoff admitted to his wife and their two sons that his multibillion-dollar hedge fund was an elaborate Ponzi scheme. If that is true, Ruth Madoff learned of her husband’s crimes as suddenly as the rest of the world. One day, she was married to a stock-market genius, the next she was married to one of history’s great con men.

                      That, anyway, is the official Madoff version of events. At this point, as a mess that Mr. Madoff himself is said to have estimated at $50 billion lands in litigation, the main characters aren’t talking. In the absence of direct answers, all that’s left is the sort of psychological puzzle that belongs in Act II of a David Mamet drama, right before we find out who are the players and who are the played.



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                      • #41
                        Santander’s Madoff Sales Mean ‘Catastrophe’ for Teacher, Vendor

                        By Charles Penty and Esteban Duarte

                        Jan. 21 (Bloomberg) -- Banco Santander SA sold Bernard Madoff investments to a teacher and a street vendor, not just to wealthy private banking clients in Spain and Latin America.

                        Branch managers channeled customers with money from property sales or inheritances to private banking salespeople, lawyers for the investors said. A retired school teacher put 300,000 euros ($388,000), half her savings, in a structured product linked to Madoff, said Jordi Ruiz de Villa, an attorney at the Barcelona law firm Jausas. The vendor invested 325,000 euros of lottery winnings in a similar product and may have to return to street sales, according to lawyers at Cremades & Calvo-Sotelo in Madrid.

                        “The fact that someone has a sum of money in the bank doesn’t make him a suitable customer for this type of product,” said Ruiz de Villa, who’s representing about 30 account-holders with potential claims of 10 million euros, including the teacher. “Some retail clients have suffered true personal catastrophes because of this.” He wouldn’t provide the teacher’s name.

                        Santander, Spain’s biggest lender, may lose customers at the domestic branch network that accounts for a third of profit if it is found to have misled people who trusted their neighborhood bankers, said Peter Hahn, a fellow at Cass Business School in London. The bank, led by Chairman Emilio Botin, has said clients have 2.33 billion euros invested with Madoff, including 320 million euros from private banking customers in Spain.

                        “The model in Spain where customers just left it to Big Daddy Botin to take care of things has been broken,” said Fernando Zunzunegui, a Madrid-based lawyer. He said he is taking on Madoff-related claims valued at 8.2 million euros from 20 clients who are “clearly retail.” He declined to provide detailed information about his firm’s clients.

                        ‘Qualifying Investors’

                        Ruiz de Villa and Zunzunegui said they are signing up clients and reviewing the cases in preparation for filing possible lawsuits against Santander. Javier Cremades, chairman of Cremades & Calvo-Sotelo, said he’ll push for a settlement first.

                        New York-based Bernard L. Madoff Investment Securities LLC collapsed last month after Madoff told his sons it was a $50 billion Ponzi scheme, according to a complaint filed by the U.S. Federal Bureau of Investigation. Worldwide, the victims include banks, charities and investors such as Madrid-based billionaire Alicia Koplowitz and film director Steven Spielberg.

                        Santander, based in the Spanish city of the same name, on Dec. 14 said international private banking clients and institutional investors had 2.01 billion euros of potential losses in Madoff-related funds. The rest of the money is in investments sold to “qualifying investors” in Spain.

                        Legal Protections

                        Branch customers were sold products linked to Madoff through Santander’s Geneva-based Optimal Investment Services hedge-fund arm, said the three lawyers representing the bank’s customers. Investors were asked to sign statements that they understood what they were purchasing and met the criteria for investing.

                        The bank has said it won’t compensate clients who invested with Madoff because the losses involve fraud. A spokeswoman for Santander said the bank had no further comment on the matter.

                        Selling structured products to wealthy clients has been a popular strategy in Spain and wasn’t in itself wrong, because Santander believed it would yield safe and stable returns, said Fernando Luque, an analyst at Morningstar Inc. in Madrid.

                        “Many of these institutions like Santander are going to be protected by the documentation, but the question is how great is the business damage from all this,” Hahn of Cass Business School said.

                        Lottery Winner

                        Spanish securities law requires anyone offering investment services to “suitably evaluate” a customer’s experience and market knowledge and ensure that he or she understands the risks.

                        The criteria for being a potential private banking customer are lower in Spain than other countries, said Manuel Romera, head of financial industry studies at Instituto de Empresa, a business school in Madrid.

                        A 2006 study by the school showed that Spanish banks tend to start targeting clients with 500,000 euros in assets, compared with 1.5 million euros for international banks.

                        The lottery winner invested in a Santander structured finance product, according to Cremades & Calvo-Sotelo. The firm is representing some 80 individuals in Spain and Latin America, mostly Santander customers, who have about 35 million euros of claims. Cremades declined to provide the investor’s name.

                        ‘Stable’ Fund

                        The teacher put half the proceeds from an apartment sale in a “multi-strategy” structured product, 35 percent of which was in Optimal Strategic U.S. Equity, an Irish-registered fund whose trades were executed by Madoff, according to Santander’s description of the investment, which was shown to Bloomberg by Ruiz de Villa.

                        The document describes the investment as “conservative” and “probably the most stable” of all funds run by Optimal. Structured products have a defined maturity date and include a mix of assets to meet investor needs in areas such as risk hedging and diversification.

                        ‘Pending Valuation’

                        A retired electronics executive said his private banking account manager told him losses on a 400,000-euro investment he made three years ago could be 80 percent. His bank statement now lists the product as “pending valuation,” the executive said in an interview. He asked not to be identified because he may have to return to work.

                        Spain’s anti-corruption prosecutor last week said it had opened an investigation into Madoff’s alleged fraud.

                        M&B Capital Advisers, a brokerage founded by Botin’s son Javier and Guillermo Morenes, husband of his daughter Ana Patricia Botin, has said its investors put 152 million euros in funds linked to Madoff.

                        Santander shares have fallen 18 percent since the bank released details of potential Madoff-related losses. The Bloomberg Europe Banks and Financial Services Index dropped 27 percent in the same period.

                        In a speech at the Euromoney magazine awards last July in London, Botin urged bankers not to buy products they don’t understand.

                        ‘Incalculable’ Damage

                        “The damage to reputation from all this to the Santander name is incredible, incalculable, the kind that takes years to repair,” said Bernhard Bauhofer, founder of Wollerau, Switzerland-based Sparring Partners GmbH, a consulting firm that specializes in corporate image management.

                        Santander, which calls itself “the world’s best bank,” has avoided most of the fallout from the U.S. subprime lending crisis. Last February, the bank took a 737 million-euro writedown on its stake in Sovereign Bancorp after the Philadelphia-based lender plunged in value following charges for loan losses. That compares with the $49 billion of losses and writedowns posted by Zurich-based UBS AG, the largest total among European banks.

                        In the five years through 2007, Santander’s net income tripled to more than 9 billion euros as Botin expanded in Latin America.

                        Spain has the world’s highest density of banks, with 96 branches per 100,000 people, compared with 18 for the U.K., according to a World Bank study. Santander has about 4,840 retail branches in Spain, while Banco Bilbao Vizcaya Argentaria SA has about 3,484.

                        In that environment, Santander has been expanding its private banking business. The division, with almost 110 billion euros under management, targeted 18 percent growth in managed assets in 2008 and a 20 percent increase in pretax profit, according to the bank’s 2007 annual report.

                        ‘Back to Basics’

                        “Spain is a country of salesmen, but we also need financial experts to better explain the product to clients,” said Romera, at Instituto de Empresa.

                        The Madoff case highlights the need for Spanish banks to return to good investment practices that should preclude clients from putting more than 15 percent of their money in a single security or product, said Jose Miguel Mate, chief executive officer of Tressis SV, a Madrid-based wealth management company.

                        “There will be a way back to the basics and to common sense,” said Mate, a former commercial director of Banif, another private bank owned by Santander.

                        Last edited by Marc; 22-01-2009, 08:54 AM.
                        "There's one way to find out if a man is honest-ask him. If he says 'yes,' you know he is a crook." Groucho Marx


                        • #42
                          Former Madoff Accountant Claims He Is a Victim Too

                          Michael Bienes, a man who once funneled clients' money to Bernie Madoff, has lost millions too, according his lawyer.

                          "They (Bienes and his wife Dianne), have given away over $35 million dollars and their losses are far bigger than that," Mark Raymond, an attorney with the firm Broad and Cassel told CNBC.

                          Raymond declined to say how much money Bienes and his wife originally invested with Madoff.

                          Bienes, who now resides in Fort Lauderdale, has a long history with Madoff. In the 1960s Bienes joined the accounting firm of Madoff's father-in-law. In 1983, he and his former partner Frank Avellino bought the business and renamed it Avellino & Bienes. In the intervening years the firm funneled client money into pools managed by Madoff.

                          Raymond says some of the money was solicited, with Avellino and Bienes promising returns of 18 percent. Other money came in via word of mouth, Raymond said, as customers knew investing with Avellino and Bienes meant you were really investing with Madoff. This came to an end in 1992 when the SEC accused Bienes and Avellino of selling unregistered securities to an unregistered investment advisor.

                          Raymond says the matter with the SEC was settled in a week and the money, plus interest was returned to investors in the 3,200 accounts Avellino & Bienes managed.

                          One of those investors, Gerald Blumenthal of Boca Raton, Florida confirms this, telling CNBC the firm returned the money right after it was investigated by the SEC. Blumenthal took the money that was returned and reinvested it with Madoff. He says he has lost those funds, along with an IRA he had invested with the 70 year-old Madoff.

                          Read more


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                          • #43
                            Madoff Apartment Outfitted with Surveillance Gear

                            By: CNBC.com | 22 Jan 2009 | 05:09 PM ET

                            Alleged ponzi-schemer Bernard Madoff's Upper East Side Manhattan penthouse is getting new monitoring equipment in compliance with a court order.

                            After avoiding jail for the second time, Madoff has been allowed to remain free under house arrest. See the video for more.

                            Still, the bail agreement that granted that level of relative freedom dictates that security equipment must be installed in his luxurious residence.

                            Madoff’s wife is paying for the surveillance equipment.

                            As another safety measure, all incoming and outgoing mail is to be opened and observed.

                            Meanwhile, the trustee overseeing the liquidation of Madoff’s securities has asked judges to cancel the leases on six luxury cars that belong to the beleaguered investor.



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                            • #44
                              Madoff Hearing: SEC's Top Enforcer To Testify

                              By: Reuters | 26 Jan 2009 | 01:33 PM ET

                              Several top U.S. securities enforcement officials will testify at a Congressional hearing into Bernard Madoff's alleged $50 billion fraud, the Senate Banking Committee said Monday.

                              The committee has called for testimony by the Securities and Exchange Commission's director of enforcement, Linda Thomsen, and the SEC's director of compliance, inspections and examinations, Lori Richards.

                              It has also asked Stephen Luparello, the interim CEO of broker-dealer watchdog the Financial Industry Regulatory Authority, to testify. Both regulators have been criticized for missing one of the largest investment frauds in history.

                              Incoming SEC chairman, Mary Schapiro, who was previously FINRA's chief executive, has said FINRA did not have the authority to inspect Madoff's investment advisory services, where the fraud allegedly took place.

                              Tuesday's hearing will be first time Congress will have a chance to directly question key regulators.



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                              • #45
                                Bernie Madoff’s Palm Beach House Gets Toilet Papered

                                Covering a neighbor’s house in toilet paper is a time honored suburban prank — typically used to up the stakes in a high-school rivalry or perhaps as a Halloween “trick.” Now the teens of Palm Beach, Fla., have found another reason to toss the Charmin — losing their trust funds.

                                The Palm Beach Post reported Monday that the tree in front of Bernard Madoff’s Palm Beach home has been covered in toilet paper. Teenage boys claimed credit for the prank, according to the Post, saying they lost their trust funds in the Madoff scandal.

                                His Palm Beach home, which sits empty while Mr. Madoff is confined to his Park Avenue pad in Manhattan, is proving to be a tempting target for area pranksters: Just last month, the Palm Beach Post reports, someone swiped a $10,000 piece of bronze yard art from the property only to return it with a note: “Bernie the Swindler, Lesson: Return Stolen Property to rightful owners. Signed by - The Educators.”
                                –Emily Friedlander



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