Former chairman of Nasdaq stock exchange arrested

[Extradimensional Beatnik]

Given the track record for such things, I wonder how many of such investment firms/brokerage houses will turn out to be the modern equivalent of little BCCIs. I doubt it was all insider trading and fraud that was going on, just a hunch.

[vigilant]

not sure what i think of this one yet.

a few years ago a currency trader at a bank in baltimore defrauded $750 million. It is pretty open-and-shut what happened: he lost a lot of money, went into the gambler's tilt, lost even more money and then created a fake paper trail to conceal the losses and keep the back-office staff from red-flagging him. eventually someone tried to call one of the brokers he claimed to be using: it didn't exist, and the trader, a "pro-active" type, went to the mailroom to get a box for his belongings.

No drug money, no gun running, no terrorism, no kiddie porn. Just a bunch of really bad forex trades and some phony records. This character's wife didn't know and neither did his friends at the counterparty offices. That was 750 million that just disappeared, and it took two or three years before anyone followed the very, very short trail of breadcrumbs.

And another character, father of the dubious "Pi Cycle", had a ponzi scheme for $300 million. But he had a few accomplices.

What I'm saying is that my gut reaction is that Kevin at Cryptogon is right, that this guy is a patsy. But it's also possible to make a lot of money just disappear, and while a lot of people participated in the events that caused the disappearance, only a handful, maybe just one, need to know the full picture. the rest are just typing numbers into spreadsheets and putting in order tickets. it is classic compartmentalization.

anyway, this will be in the courts for a llooooooonnnnnggg time.

I think you are correct, this guy is most likely only a patsy. The bag man for more powerful people. If necessary they will burn his ass in the process too. Sometimes tools get used at both ends.

Somebody ought to raise the hood on this deal and see if there are CDO's involved in it. I would be very surprised if there are not. A CDO with an SUV is an untraceable license to steal. Nobody can touch the people behind the CDO and the SUV.

The fact that the judge has ordered public funds be transferred from the public till to the investors easily spanks of more theft by the Fed. The refuse to show the value of the toxic junk they are buying for pennies on the dollar, and refuse to show who they have loaned 2.2 trillion dollars to.
That is because they are loaning it to themselves, its a circle jerk.

They comprise the circle, and we are getting jerked......

The fund managers themselves have even stated they were forced into a bogus 'technical' insolvency based on the new Fair Value Pricing Rules. Fair Value basically means...

"its worth what we say, nobody can look at the details, when the bank or business becomes insolvent we'll call it toxic junk and buy it for toxic junk prices, and hell no you can't look and see what its worth or what we pay for it, congress can't look, because of course we have nothing to hide, because of course we are honest, which is why we are hiding anyway, and we can, cause we are the Fed, a private institution that conned you dumbasses into letting us in your nest again...suckers!!!"......assholes


And another character, father of the dubious "Pi Cycle", had a ponzi scheme for $300 million. But he had a few [b]accomplices.[/b]


I'm very interested in the pi cycle guy, who was it? Do you remember?

[Penguin]

More updates courtesy of Kevin at Cryptogon.com

http://cryptogon.com/?p=5752
"Madoffs auditor .. doesnt audit?"

http://money.cnn.com/2008/12/17/news/co ... 2008121808

"The three-person auditing firm that apparently certified the books of Bernard Madoff Investment Securities, the shuttered home of an alleged multibillion-dollar Ponzi scheme, is drawing new scrutiny.

Already under investigation by local prosecutors for its potential role in the scandal, the firm, Friehling & Horowitz, is now also being investigated by the American Institute of Certified Public Accountants, the prestigious body that sets U.S. auditing standards for private companies.

The problem: The auditing firm has been telling the AICPA for 15 years that it doesn’t conduct audits.

The AICPA, which has more than 350,000 individual members, monitors most firms that audit private companies. (Public-company auditors are overseen, as the name suggests, by the Public Company Accounting Oversight Board, which was created in 2003 in response to accounting scandals involving WorldCom and Enron.)

Some 33,000 firms enroll in the AICPA’s peer review program, in which experienced auditors assess each firm’s audit quality every year. Forty-four states require accountants to undergo reviews to maintain their licenses to practice.

Friehling & Horowitz is enrolled in the program but hasn’t submitted to a review since 1993, says AICPA spokesman Bill Roberts. That’s because the firm has been informing the AICPA — every year, in writing — for 15 years that it doesn’t perform audits.

Meanwhile, Friehling & Horowitz has reportedly done just that for Madoff. For example, the firm’s name and signature appears on the “statement of financial condition” for Madoff Securities dated Oct. 31, 2006. “The plain fact is that this group hasn’t submitted for peer review and appears to have done an audit,” Roberts says. AICPA has now launched an “ethics investigation,” he says.

As it happens, New York is one of only six states that does not require accounting firms to be peer-reviewed. But on the heels of the Madoff revelations, on Tuesday, the New York State senate passed legislation that requires such a process. (The bill now awaits Gov. David Paterson’s signature.) “We’ve not been regulated in the fashion we should’ve inside the state,” says David Moynihan, president-elect of the New York State Society of Certified Public Accountants.

David Friehling, the only active accountant at Friehling & Horowitz, according to the AICPA, might seem like an odd person to flout the institute’s rules. He has been active in affiliated groups: Friehling is the immediate past president of the Rockland County chapter of the New York State Society of Certified Public Accountants and sits on the chapter’s executive board.

Friehling, who didn’t return calls seeking comment, is rarely seen at his office, according to press reports. The 49-year-old, whose firm is based 30 miles north of Manhattan in New City, N.Y., operates out of a 13-by-18-foot office in a small plaza.

A woman who works nearby told Bloomberg News that a man who dresses casually and drives a Lexus appears periodically at Friehling & Horowitz’s office for about 10 to 15 minutes at a stretch and then leaves. (State automobile records indicate that Friehling owns a Lexus RX.) The Rockland County District Attorney’s Office has opened an investigation to see if the firm committed any state crimes.

People who know Friehling, through the state accounting chapter and through the Jewish Community Center in Rockland County (where he’s a board member) were reluctant to discuss him. Most members of both boards wouldn’t comment except to say they were surprised by Friehling’s connection to Madoff.

“He’s nothing but the nicest guy in the world,” says David Kirschtel, chief executive of JCC Rockland. “I’ve never had any negative dealings with him.”

[HiFi_Zither]

Valleywag/Gawker has discovered that Madoff had an apartment in NYC and a vacation home in Montauk.

http://gawker.com/5113807/the-house-built-on-a-ponzi-scheme

[Byrne]

From the Postman:
Frank J. Avellino - Bernie Madoff's partner in crime

[Sounder]

Hmmm...

From;http://www.sunniforum.com/forum/showthread.php?t=41361

So why plead guilty? The answer is simple. Look on the net and you will see that because this case is being labelled a fraud, it would appear that investors are going to be able to claim their investment back under the US government's financial fraud protection scheme. A judge has already given his approval in principle for compensation, w ithout any evidence having been presented and financial fraud being demonstrated in a court of law. And it would appear that there will never be such a demonstration in a court of law. Why? It would appear that all the funds financial records are mostly "missing" (rather like Dov Zakheim's US$1.4tn) and those few records that do survive are in a terrible mess.

However, since the guy has pleaded guilty we do not need to demonstrate the fraud, because he says he is guilty.

And look further on the net and you will see that these "victims" have also been told by the US tax authorities that they will probably also be entitled to claim back some taxes on these defrauded sums.

Rather than saying this hedge fund has gone bust, due to its choice of investment assets and investment methologies, a scenario which is highly probable in the current financial paradigm, since all the professionals are predicting that at least 30% of all hedge funds are about to fail, more than 700 of them, the CEO chooses to fess up to fraud. If the CEO admits the fund has gone bust, then all those wealthy members of the Jewish community get nothing, but if the CEO admits to fraud they get their money back as compensation from the US tax payer, just as they are also drawing money back from the tax payers with the other hand.

And, as can be seen at the Daily Mail link above, the investors in this fund only get to litigate the fund directors against Lloyds insurers in London for even more compensation. Done properly the compensation could end up paying out far more than the original fund returns (yes this is sarcasm, it was bound to creep in eventually in yet another swindle like this).

Would that I could believe that Madoff were a good guy who slipped and then became repentant. But given the facts, this simply cannot be true.

[Jeff]

Head of Fund Invested in Madoff Said to Commit Suicide

December 23, 2008, 12:28 pm

Rene-Thierry Magon de la Villehuchet, a founder of the hedge fund Access International Advisors, was found dead early Tuesday in his office in Manhattan, the French business daily La Tribune reported on its Web site, after losing as much as $1.4 billion that had been invested with Bernard L. Madoff, the money manager accused of running a $50 billion Ponzi scheme. Mr. de la Villehuchet, 65, committed suicide, La Tribune said, citing a someone close to Mr. de la Villehuchet.

Mr. de la Villehuchet had been trying to recover the money that Access International raised in Europe and invested through Mr. Madoff’s business, La Tribune reported.

Paramedics responded to a call at a Manhattan address matching that of Access International, people briefed on the situation told DealBook. They found a victim, whom they pronounced dead, but have not yet identified the man.

Luxalpha, a $1.4 billion Luxembourg-based fund sold across Europe, invested in Bernard L. Madoff Investment Securities. Access International last week called Mr. Madoff’s arrest “a shocking development” in a note to investors. Investors in the fund included a unit of Rothschild and several clients of the Swiss bank UBS.

UBS had been the custodian and administrator of the fund until this year when Access International took over. No one answered the phone at Access International’s New York office.

UBS has stated that Mr. Madoff was not on the bank’s wealth management recommended list as a direct investment option but it produced and sold funds containing the investment manager’s products. UBS would establish fund of funds structures at clients’ requests.

link

[chiggerbit]

Hmmm, New York University, said said to be one of Madoff's victims, is suing the hedge fund execute Ezra Merkin. There's something kind of weird about NY University, whose president is Bob Kerry. It's odd how many times Kerry is present when something muddy is going down. My gut tells me that Kerry has on-going connections with CIA. Kerry, who was one of those involved in a Phoenix-like massacre in Vietnam in which old men, women, children and babies were slaughtered, was appointed to the 9/11 commission a while after it began it's job. The timing of the late appointment was kind of weird in itself, but the appointment of a terrorist to investigate a terrorist act was very weird.

Keep your eyes open for the people behind the other "victim" oranizaions.

http://www.reuters.com/article/topNews/ ... me=topNews

New York University sues fund executive over Madoff
Wed Dec 24, 2008 3:44pm EST By Grant McCool

NEW YORK (Reuters) - Hedge fund executive Ezra Merkin has been sued again for entrusting investments with confessed swindler Bernard Madoff, this time by New York University, which said it lost about $24 million.

The lawsuit in New York State Supreme Court is among a series against Merkin and other funds during the past week as investors seek to recover losses from the purported $50 billion Madoff scandal that would be Wall Street's biggest fraud.

A judge issued a temporary order on Wednesday, barring Merkin from liquidating Ariel Fund Ltd, named in the lawsuit by New York University, which calls itself the largest private university in the United States.

The order, which expires on January 6, will have no impact on plans announced December 18 to wind down the Ariel fund, Merkin's attorney Andrew Levander said in a statement. He said the investment manager would not receive fees and attorneys had promised to preserve documents.

"Mr. Merkin remains committed to obtaining for shareholders the best results possible in the wake of the terrible fraud committed by Bernard Madoff," the statement said.

Madoff, a 70-year-old investment adviser and former chairman of the NASDAQ stock market, was arrested on December 11 and charged with securities fraud. Authorities said Madoff confessed to running a $50 billion Ponzi scheme in which early investors were paid off with the money from new clients.

He is under house arrest in his Manhattan apartment on $10 million bail.

Investors can also make claims for money lost with Madoff through the Securities Investor Protection Corp (SIPC), which is overseeing the liquidation of Bernard L. Madoff Investment Securities LLC via a court-appointed trustee.

A U.S. bankruptcy court judge on Tuesday authorized the nonprofit group, created by Congress in 1970, to mail claim forms to customers in the first week of January. Customers have six months to return the forms.

"They will return those claim forms to the trustee with data indicating what they believe they were owed, how much they put in, how much they withdrew," said Stephen Harbeck, SIPC president and chief executive. "Since the records in this case are unreliable, the more information people can get us the faster we will be able to satisfy the claim."

Harbeck expects it will take several years to sort through investor losses in the Madoff scandal.

Merkin, who is chairman of GMAC LLC, is named in the lawsuit brought by NYU, along with his Gabriel Capital LP fund and Ariel Fund Ltd. GMAC is the finance business owned by General Motors Corp and private equity firm Cerberus Capital Management LP.

New York City Police Commissioner Raymond Kelly said Villehuchet had cuts on his wrists from a box cutter and pills nearby.

The Frenchman's Access International had an exposure of $1.5 billion, officials said.

The total amount of money lost in the Madoff scandal is not yet known, but it could be the largest fraud on Wall Street, duping rich people all over the world as well as charities and nonprofit organizations.

The case is New York University v. Ariel Fund Ltd 08- 08603803 in New York State Supreme Court (Manhattan).


"The Funds 'feeding' money to Madoff, including Ariel, made a conscious effort to conceal Madoff's involvement from their own investors," the NYU lawsuit said. "This concealment was a requirement dictated by Madoff, which was agreed to by Merkin and other 'feeder' funds."

Merkin was sued last week in U.S. District Court in Manhattan for his management of Ascot Partners LLP, a fund he founded that lost an estimated $1.8 billion with Madoff.

On Tuesday, hedge fund executive Thierry Magon de la Villehuchet, 65, was found dead in his office in an apparent suicide, reportedly distraught over being duped by Madoff. Continued...

[jingofever]

Avellino's Housekeeper Throws A Wrench In The Madoff Timeline:

Frank Avellino, who has been raising money and investing with Madoff for over four decades, is being sued by his housekeeper. She claims Avellino told her to invest her money in a fictitious firm called Kenn Jordan Associates, but that one day Avellino informed her live savings were all gone.

That day was December 1, 2008.

That's 10 days before Bernie Madoff was arrested.

So we can think of three explanation for what's going on here.

1. The housekeeper is lying. So far it's all been her side of the story, and maybe she just happened to make up the name Kenn Jordan Associates, which, oddly enough, was the charitable firm that Avellino once managed. Anything's possible.

2. Frank Avellino had his housekeeper's money in a totally different fraud or bad investment that just coincidentally collapsed right around the same time as Madoff's scam collapsed. Of course, this would be out of character for Avellino, who's obviously spent years and years giving money to Madoff in one manner or another.

Or.

3. The housekeeper's money was actually placed with Madoff, and Avellino knew that the Ponzi had collapsed well before anyone else. Before Peter Madoff. Before the Noels. Before the sons. Before the FBI.

Which do you think sounds the most likely?

[justdrew]

there was clearly a network of people bringing in the money, and they must have had suspicions, there was no grounds to trust this guy. Probably at least the top rung of money finders were in on it.

I still wonder if there isn't something more this whole thing than just personal fraud.