David C. Farmer, Trustee vs. Harmon - Witness Bernard L. Madoff

David C. Farmer, Successor-Trustee vs. Harmon

(Formerly Woo vs. Harmon & Nicholson vs. Harmon)

CV05-00030 DAE KSC

U.S. District Court For the District of Hawaii

Judges: David A. Ezra; Kevin S. Chang

—

DEFENDANT’S WITNESS

BERNARD L. MADOFF

Address to be determined.

Bernard Lawrence Madoff (born April 29, 1938) is a former investment fund manager and business owner who started the Wall Street firm Bernard L. Madoff Investment Securities LLC. He was chairman of that firm, which he founded in 1960, until December 11, 2008, when he was arrested and charged with securities fraud.

Bernard L. Madoff Investment Securities, which is in the process of liquidation, was one of the top market maker businesses on Wall Street, often functioning as a "third-market" provider that by-passed "specialist" firms and directly executed orders over-the-counter from retail brokers. The firm also encompassed an investment management and advisory division that is now the focus of the fraud investigation.

On December 11, 2008, Federal Bureau of Investigation agents arrested Madoff on a tip off from his sons, Andrew and Mark, and charged him with one count of securities fraud. On the day prior to his arrest, Madoff told his senior executives at the firm that the management and advisory segment of the business was "basically, a giant Ponzi scheme." Five days after his arrest, Madoff's assets and those of the firm were frozen and a receiver was appointed to handle the case. Madoff's alleged fraud may be valued at a loss of up to a $50 billion in cash and securities. To date, it is the largest investor fraud ever attributed to a single individual. Banks from Spain, France, Switzerland, Italy, the Netherlands and other countries have announced that they have potentially lost billions in U.S. dollars as a result of Madoff's crime.

Madoff has long been a prominent businessman and philanthropist, and, as a result, the freeze of his and his firm's assets significantly affected businesses around the world and a number of charities, one of which had to close as a consequence of the fraud.

Personal

Madoff was born in New York to a Jewish family. He is married to Ruth Madoff and has two sons, Mark and Andrew. Madoff has several homes in New York State. Two of them are on Long Island, in Roslyn and Montauk; his primary residence, valued at more than $5 million, is on Manhattan's Upper East Side. He also owns a home in France and a $9.3 million mansion in Palm Beach, Florida on the Intercoastal Waterway just north of Flagler Memorial Bridge. He is a member of the Palm Beach Country Club and owns a 55-foot fishing boat named "Bull."

Career

Madoff started his firm in 1960 with an initial investment of $5,000 that he said was earned from working as a lifeguard and installing sprinklers.

He has been active in the National Association of Securities Dealers (NASD), a self-regulatory organization for the U.S. securities industry. His firm was one of the five most active firms in the development of the NASDAQ, and he served as its chairman of the board of directors, and on its board of governors.

Madoff's firm was known for "paying for order flow," in other words paying a broker to execute a customer's order through Madoff, which has been called a "legal kickback." Madoff viewed the payments as a normal business practice, "If your girlfriend goes to buy stockings at a supermarket, the racks that display those stockings are usually paid for by the company that manufactured the stockings. Order flow is an issue that attracted a lot of attention but is grossly overrated." Academics have questioned the ethics of these payments. Paying for order flow is a common practice and has been recognized by the SEC. Madoff has argued that these payments did not alter the price that the customer received.

He brought several relatives into his business. His brother, Peter, was a senior managing director. Both of Madoff’s sons, Mark and Andrew, joined the team after finishing their education. Charles Weiner, a son of Mr. Madoff’s sister, also joined the firm, and Peter Madoff’s daughter, Shana, took a job with the company as a lawyer.

His sons Mark and Andrew were apparently unaware of the imminent insolvency of Madoff Investment Securities. According to the authorities, the sons confronted their father, asking him how the firm could pay bonuses if it could not pay investors, prompting Madoff's admission that he was "finished," after which they reported him to the authorities. The FBI investigation shows no signs of implicating family members of fraud.

Madoff served as the Chairman of the Board of Directors of the Sy Syms School of Business at Yeshiva University, as well as Treasurer of its Board of Trustees. He resigned his position at Yeshiva University after his arrest. Madoff also serves on the Board of New York City Center and is a member of New York City's Cultural Institutions Group (CIG). He also did charity work for the Gift of Life Bone Marrow Foundation, and ran a $19 million private foundation that donated money to hospitals and theaters.

Philanthropy

Madoff's family has been important in philanthropic circles. When his nephew, Roger Madoff, died of leukemia in April 2006, paid death notices appeared in newspapers from a range of charitable organizations including the Lower East Side Tenement Museum. Madoff donated approximately $6 million to lymphoma research after his son Andrew was diagnosed.

Madoff has also undertaken charity work for the Gift of Life Bone Marrow Foundation, and through The Madoff Family Foundation, a $19 million private foundation which he managed along with his wife, he donated money to hospitals and theaters. The foundation has also contributed to many Jewish educational, cultural, and health charities. The various organizations were mostly given charity funds backed by Madoff securities.

Madoff was also a major contributor to the Democratic party.

In the wake of Madoff's arrest, the assets of the Madoff Family Foundation have been frozen by a federal court.

Criminal and civil charges

Madoff was arrested by the FBI on December 11, 2008 on criminal charges of securities fraud, after he allegedly said that his business was "a giant ponzi scheme." The alleged behavior involves an asset management unit of his firm, rather than the better known market making unit.

The criminal complaint alleges that investors lost $50 billion because of the scheme. He was charged with a single count of securities fraud. Madoff was released on the same day of his arrest after posting $10 million bail. He faces up to 20 years in prison and a fine of $5 million if convicted. According to the SEC, Madoff confessed to an FBI agent that there was “no innocent explanation” for his behavior, and that he "paid investors with money that wasn't there". His attorney stated that he "will fight to get through this unfortunate set of events."

The case is U.S. v. Madoff, 08-MAG-02735, U.S. District Court for the Southern District of New York (Manhattan).

The Securities and Exchange Commission filed a separate civil suit against Madoff on December 11, 2008.

Separately, individual investors have filed civil suits against Madoff. The two firms leading the suits, Milberg LLP (suit led by partner Brad Friedman), and Seeger Weiss LLP (suit led by partner Stephen Weiss) announced on December 12, 2008 that the two firms have been retained by dozens of individual investors.

Recovery of funds

The victims of Maddoff's have been exploring the possibility of recovering at least some of their investments. One legal option available is the use of the doctrine known as fraudulent conveyance. With this option, investors who withdrew their money long before the fraud was revealed, may be forced to return their profits or even part of their initial investments.

Affected clients

The Securities Investor Protection Corporation (SIPC) is liquidating Madoff’s brokerage, with Irving Picard acting as trustee. The SIPC provides up to $500,000 in insurance for missing money or securities in individual brokerage accounts, but does not protect against bad investments.

Stephen Harbeck, president of the SIPC stated that the investment management department's financial records will take six months to sort out. "There are some assets, but I have no idea what the relationships of the assets available are to the claims against them. The records are utterly unreliable on this case.".

Although Madoff filed a report with the SEC in 2008 stating that his advisory business had only 11-25 clients and about $17.1 billion in assets, dozens of investors have reported losses, and the SEC reports a $50 billion fraud. According to Bloomberg "In all, companies, individuals and foundations have disclosed about $24 billion of investments with Madoff." Those affected include banks, Wall Street investors, charities, and individuals.

According to The Wall Street Journal the investors with the largest potential losses include:

Fairfield Greenwich Advisors, $7.50 billion

Tremont Capital Management, $3.30 billion

Banco Santander, $2.87 billion

Bank Medici, $2.10 billion

Ascot Partners, $1.80 billion

Access International Advisors, $1.40 billion

Fortis, $1.35 billion

Union Bancaire Privee, $1.00 billion

HSBC, $1.00 billion

The potential losses for these nine investors total $22.32 billion. Other investors, with potential losses between $100 million and $1 billion include Natixis SA, Carl J. Shapiro, Royal Bank of Scotland Group PLC, BNP Paribas, BBVA, Man Group PLC, Reichmuth & Co., Nomura Holdings, Aozora Bank, Maxam Capital Management, EIM SA, and AXA SA . The potential losses for these investors total $4.02 billion. Twenty-three investors with potential losses of $500,000 to $100 million were also listed, with total potential losses of $540 million. The grand total potential losses in the Wall Street Journal table is $26.9 billion.

http://en.wikipedia.org/wiki/Bernard_L._Madoff

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NEW DISCOVERY (05-06-09):

May 6, 2009

Madoff secretary: His silence is protecting others

By KAREN MATTHEWS, Associated Press Writer

NEW YORK – Bernard Madoff's longtime secretary said Wednesday that she believes the disgraced financier is not cooperating with authorities in order to protect others, and that he was a flirtatious boss who frequented massage parlors.

Eleanor Squillari, Madoff's secretary of more than 20 years, told The Associated Press she thinks her former boss carefully orchestrated his arrest and that he's protecting others who might have been involved in his multibillion-dollar scheme by not cooperating with investigators. She declined to speculate as to whom he might be protecting.

Squillari said that if she had a chance to speak to Madoff, she would ask him "to do the right thing and to let us know this happened."

"I just can't imagine why he's not cooperating, why he's saying he did it himself," she said.

"It's not humanly possible, in my opinion."

Squillari spoke with the AP after she appeared on NBC's "Today" show and ABC's "Good Morning America" to promote an account of her time working for Madoff that she co-wrote for Vanity Fair. The 59-year-old Squillari spent two months helping the FBI gather evidence against the former money manager.

In the article, Squillari said her married former boss was flirtatious and made sexually suggestive remarks. She said she once saw him perusing the escort ads in the back of a magazine and said he frequented massage parlors....

Squillari wrote about a conversation she had with Madoff years ago, after a client's secretary had been arrested for embezzlement.

"You know, (he) has to take some responsibility for this," Madoff said, according to Squillari. "He should have been keeping an eye on his personal finances."

She wrote that Madoff said he always had his wife, Ruth, watch the books and that "nothing gets by Ruth."

Squillari said she was surprised when he added: "Well, you know what happens is, it starts out with you taking a little bit, maybe a few hundred, a few thousand. You get comfortable with that, and before you know it, it snowballs into something big."

Madoff, 70, pleaded guilty in March to charges that his secretive investment advisory operation was a multibillion-dollar fraud. The former Nasdaq chairman faces up to 150 years in prison.

Madoff's attorney, Ira Sorkin, said Wednesday he has no comment on any of the secretary's allegations.

Squillari said the Madoff who was arrested was not the same man she knew. She said she was shocked and then angry after his arrest.

"I'm having a hard time getting past the person that I did know, who was so kind and generous, and I admired him," she told NBC. "I can't seem to get it in my head that he did this. It's like it's somebody else."

And she decided to help the FBI....

When the arrest became public, Squillari and a co-worker took turns fielding calls from distraught investors.

"You couldn't do it for more than 15, 20 minutes at a stretch," she said. "The people were so devastated, they were so scared, they were crying. ... You didn't know what to tell them. There was no information to give. It was very frustrating, and it made you feel sick."

Squillari said she invested years ago but pulled her money out in the 1990s because as a single mother with two children and a "very limited income," she needed to supplement her earnings.

Related Searches:

bernard madoff

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NEW DISCOVERIES (02-04-09): More evidence of fraud, money-laundering, racketeering, and undisclosed conflicts-of-interest between parties involved in this case:

February 4, 2009

SEC pummeled as Madoff tipster testifies

By Rachelle Younglai and Karey Wutkowski

WASHINGTON (Reuters) – Harry Markopolos, a former investment manager who tried to warn U.S. regulators about Bernard Madoff, joined lawmakers in blasting the Securities and Exchange Commission but said he was forwarding more tips to the agency.

Markopolos told a congressional hearing on Wednesday that SEC staff were neither willing nor able to uncover Madoff, arrested in December and charged with a record-shattering $50-billion fraud.

Calling SEC staff "too slow, too young and too undereducated," Markopolos said the regulator was hindered by lawyers, did not understand red flags, could not do the math and was captive to the financial industry.

"They looked at the size of Madoff and he's a big firm and we don't attack big firms," said Markopolos, who became aware of Madoff when the firm he worked for tried to pursue the same kind of strategy Madoff did but never got the same steady, strong returns.

Members of the House Financial Services subcommittee hailed Markopolos but excoriated five SEC officials who declined to answer specific questions about the Madoff case, citing ongoing investigations.

"You couldn't find your backside with two hands if the lights were on... You have totally and thoroughly failed in your mission," said New York Democratic Rep. Gary Ackerman.

SEC Chairman Mary Schapiro, who did not testify, later sent a letter to the senior members of the subcommittee, offering to meet to explore ways to get the panel information without impeding the civil and criminal investigations of Madoff.

Markopolos said he knows the names of a dozen so-called feeder funds that helped Madoff raise money from pension funds and wealthy investors and that he would turn these over to regulators this week.

Markopolos, now a fraud investigator, said Madoff could not have acted alone, citing accountants and people helping convey money to his scheme. Madoff was arrested after his sons went to authorities saying their father had confessed to them.

LOW POINT FOR THE SEC

Madoff, a former chairman of the Nasdaq stock market, has been accused of running a massive Ponzi scheme in which he paid off earlier investors with money from later investors.

Asked if there were other Madoffs waiting to be discovered, Markopolos said he was forwarding information to the SEC about a Ponzi scheme of around $1 billion.

For the SEC, Wednesday's testimony marked what some insiders called the worst day in the agency's history, further tarnishing its reputation and sending morale to a new low.

Lawmakers angrily questioned the SEC's head of enforcement, Linda Chatman Thomsen; the agency's top examiner Lori Richards; Erik Sirri, the SEC's trading and markets chief; Andrew Donohue, who is in charge of investment management and the SEC's acting general counsel, Andrew Vollmer.

Capital markets subcommittee chairman, Paul Kanjorski, a Democrat from Pennsylvania, threatened to reform the SEC out of existence.

And Ackerman, who personally escorted Markopolos out of the hearing room, told the SEC officials: "We thought the enemy was Mr. Madoff, I think it was you. You were the shield."

Schapiro's letter to Kanjorski and Rep. Scott Garrett of New Jersey, the subcommittee's ranking Republican, said Wednesday's hearing "cannot have been satisfactory for you."

"There needs to be a full accounting, both of Mr. Madoff's activities and why we did not detect the fraud, which we truly regret," wrote Schapiro, sworn in last week as SEC chairman.

GIFT-WRAPPED TIP

Markopolos described his failed efforts to get regulators to probe Madoff from 2000 on. "I gift-wrapped and delivered the largest Ponzi scheme to them," he told the lawmakers.

Markopolos became suspicious of Madoff's ways in 1996 after he and a friend pored over mathematical models that might recreate Madoff's returns only to determine that there was no way Madoff could consistently outperform the markets.

Harsh words were lobbed at former SEC employees including Meaghan Cheung, the agency's New York branch chief whom Markopolos contacted in 2005. Cheung, Markopolos said, was arrogant, never grasped the concepts in his report or asked him any questions. Cheung left the SEC in fall of 2008.

The SEC division heads told the panel that the agency was considering a number of changes in light of the Madoff case, including how frequently investment advisers are examined.

Thomsen, who appeared visibly shaken during the hearing, responded to charges that her enforcement division had too many lawyers. "Within enforcement we have lots of accountants, lots of market specialists and investigators."

Republican Rep. Spencer Bachus, of Alabama, was the only lawmaker who praised the agency. "We don't mean to convey that there hasn't been good work by the SEC," he said.

Kanjorski said he was going to introduce legislation that would give the Public Company Accounting Oversight Board, the authority to examine the auditors of broker-dealers.

Madoff's auditor was a small, unknown firm that was not registered with the PCAOB.

http://news.yahoo.com/s/nm/20090205/bs_nm/us_madoff_congress;_ylt=AswWa.v6VYYdxG7YDEOHNDN34T0D

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February 04, 2009

Bravo Harry Markopolos! The Man Who Unmasked Madoff

By The Greek

While every other Congressman mispronounced his name, Harry Markopolos turned out to be a hero on a grand scale. Harry testified before a House panel today on his long-unheralded but finally understood unveiling of Bernie Madoff. The details of his heroic effort were broadcast in living color to the masses today.

The lengths to which this man went for the sake of righteousness are unheard of in today's dirty society. His selflessness and concern are as rare to find in today's society as we suspect it is to find a pilot who can successfully land an airplane on a river without any engine power. It's good to know that in this world of greed ridden thieves and selfish heartlessness, there are still heroes as well.

Harry Markopolos told the House Financial Services Committee today that it took him about five hours to figure out that Bernie Madoff was a fraud. He said it was plainly evident, but he did some financial modeling to prove it. Markopolos noted the hardest evidence was found in the Wall Street Journal options section; you could match up his options holdings to the WSJ's accounting of the open interest on these securities.

He said, you would clearly see that Madoff was claiming to own more options than even existed on the market for some securities. Of course, we also know that Madoff's holdings list included a mutual fund that had ceased to exist. Harry agreed he probably put a hundred hours (or so) into evidence compilation, all for the sake of justice and "for the American flag," as he put it.

The Congressmen commended Harry, and even offered him a key job at the SEC. He responded in what is now understood as classic Harry selfless manner, that family obligations would keep him from taking such a job for at least the next two years. This was reminiscent to me of a rumor I heard about his initial response to film producer inquiries.

When asked about movie rights and such, he responded that he had no interest; that Hollywood would just pervert the story with sex and drugs.

You watched the man on C-SPAN, and you thought to yourself, is he real? Is this possible? Can someone like this still exist in today's day and age? Yes he is for real! When God looks at Harry on his C-SPAN in the sky, we suspect he likes what he sees.

During his testimony, Mr. Markopolos even noted that he offered to go undercover for the sake of justice, something far and beyond the call of duty of a private citizen of this country. The story seems made for film, no doubt, as it included real cloak and dagger. Mr. Markopolos said he discerned there was a good chance Eliot Spitzer might be a Madoff investor. Thus, he submitted his information to the New York Attorney General's office in a manner worthy of James Bond. He insured there was not a trace of his finger prints on the document, and kept his name relatively unknown to the group. He went even farther than this, offering his services to the SEC, to go undercover, keeping his identity unknown to all in order to bring Madoff to justice. I must admit that it seems a bit much when watching it from the comfort of your living room, but try to imagine how far someone who was in as deep as Madoff might go to ensure his theft remained under the radar.

Relative to this concern, Congressman Ackerman asked Harry exactly why he feared for his life. He then noted Harry's mention of mafia funds invested through Madoff's offshore feeder funds. Ackerman sought to tie the two together in asking if there was some unreported threat against Markopolos. Harry comically, while at the same time very seriously, noted directly to the "Russian mobsters and Latin American drug cartels" that might be watching, that he was acting on their behalf, to save their money from Madoff's theft of them. Gee wiz... if there were ever a good reason to keep Madoff locked away in isolation, and not roaming freely on the Upper East Side, it would seem a vengeful mafia interest would be adequate enough.

When asked by Congressman Ackerman if Madoff could have acted alone, Markopolos sternly responded, "No!" Harry said "he had a lot of help," specifically a robust IT department making sure all the false transactions added up. He noted that the people handling the wire transfers of incoming and outgoing funds must have had dirty hands as well.

Madoff cunningly kept under the radar by "auditor shopping." According to Markopolos, Madoff had three different auditors from three different countries for the year end reporting of 2004, 2005 and 2006. Auditor shopping is something a reporting firm might do to best ensure it received a favorable opinion, and changing auditors each year might have occurred in order to keep any one auditor from gaining too much familiarity with Madoff's operations.

The auditors likely viewed association with Madoff as a great testament to their own businesses and a useful marketing tool, at least when signing on. In any event, the auditors come into question now, since they either failed due to incompetence or due to participation.

One Congressman, who seemed a huge fan of this analytical hero, asked him how he knew exactly where the money was. Markopolos strongly replied, "My team was out there in the field talking to the Madoff feeder funds and identifying who they were...we identified 14 feeder funds, of which only two have come public. There are twelve more out there hiding in the weeds." This man, who is quickly becoming a legend of modern financial market history, is turning over a list of these funds to the SEC Inspector General on Thursday.

The House Committee apologized to Markopolos for failing him, and for the SEC's failure of him. The story of the many failures of the Securities and Exchange Commission is a long one, and destined for its own article here. This piece is meant to shed light on one of this generation's heroes, and to remind the world that good men still exist. Harry's day must have offered one of those moments most of us experience at some point in our lives; it's when our efforts are finally understood, that moment when we can exhale.

God bless you Harry.

You can exhale now.

http://www.wallstreetgreek.blogspot.com/2009/02/bravo-harry-markopolos-man-who-unmasked.html

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NEW DISCOVERY (01-04-09): More undisclosed conflicts of interest between Trustee David C. Farmer, James Nicholson, Steven Guttman, Joshua Gotbaum, Alejandro Wolff, Judith Neustadter Fuqua, Linda Lingle, Jack Abramoff, AIPAC, Barack Obama, Bill Clinton, Hillary Clinton, Rahm Emanuel, Michael Mukasey, Bishop Estate, Goldman Sachs, Robert Rubin, Henry Paulson, The Nature Conservancy, Faye Kurren, Judge Barry Kurren, Judge David Ezra, OHA, Bernard Madoff, J. Ezra Merkin, GMAC, Cerberus Capital Management, Robert Katz, etc.:

December 25, 2008

J. Ezra Merkin Ordered Not To Destroy Records

by Darren

J. Ezra Merkin has been ordered to not destroy any financial records related to the dealings of Bernard J. Madoff. Merkin is the chairman of GMAC who runs several hedge funds which invested with Madoff. The dealings came to light when one of Merkin’s clients, New York University, learned that Merkin had lost $24 million of their capital.

The suit claims that Merkin and his hedge fund, Ariel Fund Ltd. and its’ management group Gabriel Capital Corporation, failed on their responsibility of cash management by turning the money over to Madoff for investment. The Ariel Fund Ltd has already announced plans to liquidate their holdings in light of the recent scandal. The suit also mentions Fortis, who partnered with Merkin in the creation of Ariel Fund Ltd. All told, NYU had invested a staggering $94 million into the fund.

As the losses come in from the Madoff scam, the elite of New York City Jewish philanthropy are among the victims, as well as helping to perpetrate the fraud. Merkin is the grandson of Hermann Merkin who was known as a titan of Jewish philanthropy. He donated gave millions to help build Yeshiva University, and the Fifth Avenue Synagogue.

Human loss mounts in Madoff Ponzi Scheme

The human expense of the Madoff scheme is mounting. Charitable foundations and lives have been destroyed. Merkin clearly used his influential position and the capital of Yeshiva University to invest $1.8 billion into Bernard Madoff’s firm.

That was little consolation, however, to Yeshiva University, said to have lost $110 million of its endowment; or to Congregation Kehilath Jeshurun, the Ramaz School of Manhattan and SAR Academy in Riverdale, said to have lost substantial sums; or to several family foundations belonging to Merkin’s fellow trustees at Yeshiva University, including Robert M. Beren and Ludwig Bravmann.

Another Ascot casualty was a charitable trust founded by real-estate magnate Mortimer Zuckerman, the chairman of real-estate firm Boston Properties and owner of the New York Daily News and U.S. News & World Report. That lost $30 million.

NYU said Merkin blindly turned the money over to Madoff.

“Without making disclosures in the quarterly reports to investors, and in the face of an extraordinary number of ‘red flags,’ Merkin, for years, simply turned over a substantial portion of Ariel’s funds to Madoff,” said NYU in their complaint.

Merkin has so far denied wrongdoing, laying the blame squarely on Madoff.

“Mr. Merkin remains committed to obtaining for shareholders the best results possible in the wake of the terrible fraud committed by Bernard Madoff,” Andrew Levander, attorney for J. Ezra Merkin said.

Madoff has caused huge damage to the work of Jewish philanthropic organizations

It’s safe to say the the amount of damage to Jewish philanthropic organizations is significant....

Superior Investor

See also:

http://www.kycbs.net/AIPAC.htm

http://www.kycbs.net/Cerebus.htm

http://www.kycbs.net/GM.htm

http://www.kycbs.net/No-Bailout-for-Billionaires.htm

http://www.youtube.com/watch?v=U_yA8J-oGQk

http://www.kycbs.net/Jews-Control-America.mht

http://www.voy.com/129276/1273.html

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NEW DISCOVERY (12-24-08): More undisclosed conflicts of interest between Trustee David C. Farmer, James Nicholson, Steven Guttman, Joshua Gotbaum, Judith Neustadter Fuqua, Linda Lingle, Jack Abramoff, AIPAC, Barack Obama, Bill Clinton, Hillary Clinton, Rahm Emanuel, Michael Mukasey, Bishop Estate, Goldman Sachs, Robert Rubin, Henry Paulson, The Nature Conservancy, Faye Kurren, Judge Barry Kurren, Judge David Ezra, OHA, Bernard Madoff, Robert Katz, etc.:

http://www.kycbs.net/AIPAC.htm

http://www.youtube.com/watch?v=U_yA8J-oGQk

http://www.kycbs.net/Jews-Control-America.mht

http://www.voy.com/129276/1273.html

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NEW DISCOVERY (12-18-08): More factual evidence of undisclosed conflicts of interest between various entities in this case.

December 18, 2008

Fallout over Madoff ripples through Washington

By LARRY NEUMIESTER, Associated Press

NEW YORK – As Bernard Madoff returned home to his Manhattan apartment, it was impossible to overlook the disorder he has brought on with his alleged $50 billion investment fraud.

Cameras awaited him as he walked out of the courthouse toward his black SUV. Minutes later, a smirking Madoff was swarmed by more cameras as he entered his apartment building, with the scrum at one point turning into a shoving match between Madoff and a journalist.

He was then fitted with an electronic-monitoring bracelet and placed under house detention in his $7 million apartment.

Madoff's chaotic commute came on a day when the fallout over the scandal spread through the nation's capital, with the Securities and Exchange Commission taking more heat and Congress jumping into the fray.

The chairman of the House capital markets subcommittee, Rep. Paul Kanjorski, D-Pa., announced an inquiry that will begin early next month into what may be the biggest Ponzi scheme of all time and how the government failed to detect it. The SEC is also looking into the relationship between Madoff's niece and a former SEC attorney who reviewed Madoff's business.

Madoff made his appearance in the courthouse to shore up conditions of his bail package. The judge had required him to find two additional co-signers to vouch for Madoff, but he was apparently unable to find anyone as the cloud of scandal swirls around him.

Judge Gabriel W. Gorenstein responded by approving a modification to the bail package. As a result, Madoff had to show up to sign over his Upper East Side apartment and his homes in Palm Beach and the Hamptons.

Madoff, who has already surrendered his passport, now will be required to be at his apartment from 7 p.m to 9 a.m. His wife was required to surrender her passport as well. His lawyer, Ira Lee Sorkin, said the electronic monitoring was in place by Wednesday evening.

In Washington, SEC Chairman Christopher Cox again found himself on the defensive after days of withering criticism that his agency did not do enough to root out the fraud.

"We have thus far no evidence of any wrongdoing by any SEC personnel," Cox told reporters at SEC headquarters. "We need to go about this in a thorough, professional way."

SEC Inspector General David Kotz is looking into the agency's failure to uncover the alleged fraud in Madoff's operation. One area Kotz said he will examine is the relationship between a former SEC attorney, Eric Swanson, and Madoff's niece, Shana, who are now married.

As an SEC attorney, Swanson was part of a team that examined Madoff's securities brokerage operation in 1999 and 2004. Neither review resulted in any action against Madoff. In a statement about Swanson's role, the SEC compliance office cited its strict rules prohibiting employees from participating in cases involving firms where they have a personal interest.

A spokesman for Swanson said that he and Shana Madoff met at a breakfast in October 2003, started dating in April 2006 and married last year.

Another potential conflict also emerged in Washington on Wednesday.

U.S. Attorney General Michael Mukasey recused himself from the Madoff probe because his son, Marc Mukasey, is representing Frank DiPascali, a top financial officer at Madoff's investment firm. The Justice Department refused to say when Mukasey became aware of the conflict but confirmed he was removing himself from all aspects of the case.

DiPascali was the Madoff employee who had the most day-to-day contact with the firm's investors. Several described him as the man they reached by phone when they had questions about the firm's investment strategy, or wanted to add or subtract money from their accounts.

The events unfolded the day after Cox delivered a stunning rebuke to his own career staff, blaming them for a decade-long failure to investigate Madoff.

Credible and specific allegations regarding Madoff's financial wrongdoing going back to at least 1999 were repeatedly brought to the attention of SEC staff, Cox said. He said he was gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate the allegations or at any point to seek formal authority from the politically appointed commission to pursue them.

Cox's critics said that targeting the staff was Cox's attempt to salvage his own reputation.

"He put in place the people he is now shifting the blame to," said Ross Albert, a former SEC senior special counsel and federal prosecutor and now a private attorney in Atlanta.

Senate Majority Leader Harry Reid, D-Nev., suggested Cox bears some of the responsibility for what went wrong.

"I served in Congress with Christopher Cox, but I don't think he's going to make the All-Star team," said Reid.

Kotz said his office would move as quickly as possible to complete the inquiry into why regulators didn't pursue Madoff more aggressively.

Kanjorski, the lawmaker, said his subcommittee's inquiry will examine the alleged Madoff fraud and try to determine why the SEC and other regulators "failed to detect these substantial evasions."

http://news.yahoo.com/s/ap/20081218/ap_on_bi_ge/madoff_scandal

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December 17. 2008

SEC Chairman says agency failed to investigate Madoff

Associated Press - Yahoo News

WASHINGTON – Securities and Exchange Commission chairman Christopher Cox said Tuesday his agency repeatedly failed for at least a decade to pursue allegations of wrongdoing by Wall Street figure Bernard L. Madoff, the alleged perpetrator of a $50 billion Ponzi scheme.

Cox ordered a probe by the SEC's inspector general, saying the agency's staff had never brought the Madoff matter to the attention of commissioners.

Since the SEC staff never recommended that the commission open a formal investigation, subpoena power was not used to obtain information and the staff relied on information voluntarily produced by Madoff and his firm.

"I am gravely concerned by the apparent multiple failures over at least a decade to thoroughly investigate these allegations or at any point to seek formal authority to pursue them," Cox said in a statement.

In a forceful condemnation of the SEC staff, Cox said there had been credible and specific allegations regarding Madoff's financial wrongdoing going back to at least 1999.

The SEC chairman's criticism of his own agency marks only the latest instance in which federal regulators have overlooked clear warning signs of possible fraud.

Its oversight of the Wall Street investment houses drew significant criticism. A review by the SEC inspector general determined that the agency's monitoring of the five biggest Wall Street firms, which included Bear Stearns, was lacking.

Cox's statement on Madoff was a stunning declaration in a scandal that has produced a series of dramatic developments.

Shock waves from the Madoff affair have radiated around the globe as the number of prestigious charitable foundations, big international banks and individual investors said to have fallen victim to an unprecedented fraud has grown. U.S. investigators are laboring to deconstruct the scheme.

The SEC chairman alleged that Madoff kept several sets of books and false documents, and provided false information involving his advisory activities to investors and to regulators.

Cox also ordered the removal from the ongoing investigation of any SEC staff members who have had contact with Madoff or his family.

Madoff remains free on $10 million bail.

Since his arrest on Thursday, the SEC has been under increasing pressure to explain why it didn't uncover the prominent Wall Street figure's criminal activity years ago.

Hours before Cox denounced his own staff, a former SEC chief accountant, Lynn Turner, said that "I can't comprehend how a well-run investigation would have missed a fraud of this magnitude."

Another expert agreed. "The fact that that this could go on for so long with someone who was known to the agency raises questions of the effectiveness of our regulatory scheme," said Charles Elson, the director of the Weinberg Center for Corporate Governance at the University of Delaware.

The SEC's enforcement division looked into Madoff's business in 2007. The agency did not refer the matter to commissioners for legal action. What did the investigators find and why didn't they look harder? Until Tuesday night, the SEC had refused to say anything beyond a brief statement it issued Friday revealing the 2007 probe.

Cox himself has come in for strong criticism.

In March, a few days before Bear Stearns nearly collapsed into bankruptcy, Cox told reporters the agency was closely monitoring the five firms and had "a good deal of comfort" in their capital levels. Then as federal officials orchestrated the rescue, Bear Stearns was bought by rival JPMorgan Chase with a $29 billion government backstop.

The chairman of the Senate Banking panel that oversees the SEC, Sen. Jack Reed, D-R.I., said in an interview Tuesday that the Madoff affair "illustrates the lack of credible enforcement over several years by the SEC." He criticized the agency's "lack of a strong commitment to be vigilant."

In the Madoff case, a securities executive, Harry Markopolos, complained to the SEC's Boston office in May 1999. Markopolos told the SEC staff they should investigate Madoff because he felt it was impossible for the kind of profit he was making to have been gained legally.

But the SEC's Boston office has itself been accused in the past of brushing off a whistle-blower's legitimate complaints, in a case that led the head of that office to resign in 2003. The whistle-blower, Peter Scannell, eventually persuaded state regulators and the SEC to act against mutual fund giant Putnam Investments, where Scannell worked.

"It's flabbergasting that nobody can nail the bums in the SEC who turn their back on and/or aid and abet people who defraud investors," Scannell said in a telephone interview Monday.

Before Tuesday, Cox said that his agency had taken decisive actions in response to the market turmoil, including an unprecedented temporary ban this fall on short-selling of stocks of financial companies. The SEC also has procured billions of dollars in settlements with big investment banks that have agreed to buy back auction-rate securities from investors hurt by the collapse of that market in February. Auction rate securities are debt instruments, typically issued by a municipality, in which the yield is reset on each payment date via a Dutch auction, a method of selling in which the price is reduced until a buyer is found.

http://news.yahoo.com/s/ap/20081217/ap_on_bi_ge/madoff_scandal

December 16, 2008

THE FINTAG NEWSLETTER

Madoff part 2.

Last Thursday the news broke and it hardly registered a blip on the news radar. Today we face financial meltdown of the hedge fund industry and the loss of tens of billions of dollars and the destruction of livelihoods.

Yesterday I looked critically at the investors who had not read the prospectuses or carried proper due diligence. The problem with Madman Madoff's funds is you could only touch them by investing through feeder funds. These feeder funds were promoted by interested parties who put layers of fees on top and sold them as proper fund of funds.

Take the Fairfield Sentry fund. It has a proper Auditor - PWC, an administrator and a custodian - Citco. It is a BVI fund and is managed by a well known Investment Manager. So far, so good. Ok, the custodian only looks after 5% of the assets (the other 95% are looked after by Madoff) but unless you like reading small print it looks like fine.

The biographies of the managers are respectable, including Jeffrey Tucker who used to work as a lawyer for the SEC. The fund has a board including 2 directors located in risk adverse Switzerland. One of the directors is not paid which is strange but I guess he must be paid elsewhere. Thankfully, Goldman Sachs is a sub custodian although I think Refco must have been a misprint.

The Investment objective is "The Fund seeks to obtain capital appreciation of its assets principally through the utilization of a nontraditional options trading strategy described as "split strike conversion", to which the Fund allocates the predominant portion of its assets. This strategy has defined risk and profit parameters, which may be ascertained when a particular position is established ..." and sounds quite convincing.

I am not so sure about the Investment Restrictions including "e) no more than 10 percent of the Net Asset Value of the Fund may be invested in securities of countries where immediate repatriation rights are not available;" but I like the fact US citizens are excluded - "The Fund will require as a condition to the acceptance of a subscription that the subscriber represent and warrant that he has a net worth in excess of U.S. $1,000,000 and is not a U.S. person".

The 13 year track record averages in excess of 10% a year and its volatility is very low indeed. The fund has grown and subscriptions exceed redemptions so it must be a popular.

Excellent. So where did it go wrong? Well PWC have some explaining to do. It looks like they never validated the underlying investments. Madoff obviously just gave them the NAVs and they took them as red. Citco's care of duty is to look after the assets and it has done so. Shame it only looked after 5% but that is better than nothing. The manager should perhaps have carried out some proper due diligence on the underlying but then it made so much in fees it got a bit punch drunk.

So there you go. A sound investment run by people who didn't quite do their jobs. I take back all my negative posturing and instead tell you how I see it through a slew of crap cartoons and virals....

http://fintag.com/

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December 16, 2008

Jew Watch

Boca Raton, FL

There is much more to this story:

According to these reports, New York financier Bernard Madoff was the target of Obama Forces as he is believed to have masterminded the financing of Israel’s vast espionage operations in the United States since the 1960’s.

Mr. Madoff, who holds duel citizenship in both the United States and Israel, was apprehended this past week while attempting to flee the United States and move billions of Mossad funds out of New York, and which was thwarted by US District Court Judge Louis Stanton who said ‘the order he issued appeared necessary to prevent Madoff or an agent from moving funds out of the court's jurisdiction and to "preserve the status quo" for whatever may come from future proceedings’.

These reports further state that the powerful US Attorney, and Obama ally, Patrick Fitzgerald was behind the takedown of Madoff and his Mossad backers who Fitzgerald has been investigation since the 2005 arrest of Pentagon Official Lawrence Franklin, and who was charged with passing American Military secrets to the powerful American-Jewish Lobby AIPAC which is known to be one of Mossad’s most powerful front organizations operating in the US.

To the power of the Mossad’s influence of the United States Government through the use of its ‘lobby’s’ we can read:

“The American Israel Public Affairs Committee (AIPAC) which directly lobbies the legislative branch of the U.S. Government

The Conference of Presidents of Major American Jewish Organizations which "is the main contact between the Jewish community and the executive branch" of the U.S. Government Reports from Israel are detailing how the takedown of Madoff by Obama’s Forces are also now affecting the Mossad’s many front operations in the US called foundations, and as we can read as reported by Israel’s Haaretz News Service:

“An alleged $50 billion fraud by Wall Street financier Bernard Madoff has caused deep ripples in the Jewish philanthropic world, forcing the closure of two prominent U.S.-based charities and threatening the financial lifeline of a slew of other groups.

The Chais Family Foundation, a California-based charity group invested entirely with Madoff, was forced to shut down operations on Sunday after years of donating some $12.5 million annually to Jewish causes in Israel and Eastern Europe, the JTA announced.

"I can confirm that the Chais foundation has closed," the JTA quoted Chais President Avraham Infeld as saying on Sunday. "All of its funds were exposed with Mr. Madoff. We have made a decision regrettably and with much pain to close down the foundation."

The Robert I. Lappin Charitable Foundation, a Massachusetts-based group which financed trips for Jewish youth to Israel, was also forced to close on Friday because the money that supported its programs was invested with the former Nasdaq chairman.”

The timing of this takedown of the powerful Mossad backed Jewish Lobby, and its associated spies, by Obama’s Forces, these reports continue, was due to President-Elect Obama’s plans to ‘radically shift’ American foreign policy away from Israeli influence upon his taking office.

To the power of the Mossad’s influence of the United States Government through the use of its ‘lobby’s’ we can read:

“The American Israel Public Affairs Committee (AIPAC) which directly lobbies the legislative branch of the U.S. Government ...

Topix Forum

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December 16, 2008

Madoff bought influence in Washington

By: Eamon Javers and Lisa Lerer

Within a day of the Dec. 11 arrest of Wall Street financier Bernard L. Madoff, his Washington lobbyists were scrambling to sever all ties to a man who’s been accused of a $50 billion fraud and who may go down in history as the largest financial scam artist ever.

The lobbying firm Dow Lohnes Government Strategies filed paperwork on Dec. 12, terminating its lobbying contract with Bernard L. Madoff Investment Securities. That ended more than 10 years of Madoff lobbying in Washington, in which his investment firm spent more than $400,000 to influence the federal government.

But lobbying is just a piece of Madoff’s influence in Washington. His family has contributed nearly $400,000 to political committees. And his niece, Shana Madoff Swanson, who serves as a compliance attorney at his firm, is married to a former high-ranking Securities and Exchange Commission official, Eric Swanson.

Swanson was the assistant director in the SEC’s Office of Compliance Inspections and Examinations’ market oversight unit in Washington. According to his biography, Swanson “supervised and conducted inspections and examinations that involved a wide range of issues including best execution, order handling, insider trading [and] market manipulation.”

The SEC has come under criticism for not following up on tips that Madoff’s investment returns seemed suspicious. Mr. Swanson left the SEC in 2006. He married Madoff’s niece the next year. He now works at a firm called BATS Exchange, which describes itself as “the third-largest stock exchange” in the United States, behind the New York Stock Exchange and Nasdaq.