Some updates via Cryptogon:
http://cryptogon.com/?p=5677
"The Desperate Final Hours of the World’s Biggest Ever Financial Fraud"
UPDATE: Madoff Claims to Have Acted Alone
Impossible.
It’s like I said when the news first broke. He’s trying to stay alive. This one goes all the way up the ladder. One wrong word and he’s dead, his family is dead, etc. He knows it. He’s sticking to a script.
For the first time, I’m preemptively adding a story, this story, to the Assassination category. People involved with this, at the levels we don’t even know about yet, mainly, the management of day-to-day operations, are probably already dead. I could be wrong, but far less serious situations than this have produced corpses.
Via: New York Times:
http://finance.yahoo.com/banking-budget ... -to-Vanish
But a question still dominates the investigation: how one person could have pulled off such a far-reaching, long-running fraud, carrying out all the simple practical chores the scheme required, like producing monthly statements, annual tax statements, trade confirmations and bank transfers.
Firms managing money on Mr. Madoff’s scale would typically have hundreds of people involved in these administrative tasks. Prosecutors say he claims to have acted entirely alone.
“Our task is to find the records and follow the money,” said Alexander Vasilescu, a lawyer in the New York office of the Securities and Exchange Commission. As of Sunday night, he said, investigators could not shed much light on the fraud or its scale. “We do not dispute his number — we just have not calculated how he made it,” he said.
…
Even before Madoff collapsed, some employees were mystified by the 17th floor. In recent regulatory filings, Mr. Madoff claimed to manage $17 billion for clients — a number that would normally occupy far more than the 20 or so people who worked on 17.
One Madoff employee said he and other workers assumed that Mr. Madoff must have a separate office elsewhere to oversee his client accounts.
…
Fairfield boasted about its investigative skills. On its Web site, the firm claimed to investigate hedge fund managers for 6 to 12 months before investing. As part of the process, a team of examiners conducted personal background checks, audited brokerage records and trading reports and interviewed hedge fund executives and compliance officials.
In 2001, Mr. Madoff called Fairfield and invited the firm to inspect his books after two news reports questioned the validity of his returns, according to a person close to Fairfield. Outside auditors hired to inspect Mr. Madoff’s operations concluded that “everything checked out,” this person said.
The Fairfield Greenwich Group “performed comprehensive and conscientious due diligence and risk monitoring,” Marc Kasowitz, a lawyer for Fairfield, said in a statement. “FGG, like so many other Madoff clients, was a victim of a highly sophisticated massive fraud that escaped the detection of top institutional and private investors, industry organizations, auditors, examiners and regulatory authorities.”
—End Update—
There are multiple connections to narcotics money and other covert operations here somewhere. I don’t know where just yet, but let’s keep our eyes open for them as people associated with this begin to commit “suicide” etc.
This was WAY, WAY to big to have been managed by one guy, or a small group of people.
Via: Guardian:
http://www.guardian.co.uk/business/2008 ... treet-news
Bernard Madoff, one of Wall Street’s most respected financiers, apparently planned to carve up his last $300m (£200m) between friends, family and employees before making the shocking confession that his investment prowess was really the result of one of the world’s biggest ever frauds.
But, according to the Federal Bureau of Investigation, the 70-year-old could not implement his plan before his huge pyramid scheme - whose 10-12% annual returns had attracted top-flight investors around the globe - collapsed with losses of at least $50bn.
His once-devoted followers were today still counting the cost of their investment in the funds run by Madoff. Investors in his native US as well as the UK, Spain, France, Italy, Switzerland and Japan appear to be caught up in the alleged scam.
Spanish bank Santander announced last night that it had exposure to Madoff Securities of €2.33bn (£2.1bn), of which €2.01bn was invested for institutions and private banking clients outside Spain, through an Ireland-registered subsidiary of its Optimal fund.
Other possible victims include Royal Bank of Scotland, which is 58% owned by the UK taxpayer, Alliance & Leicester and parts of Bradford & Bingley, and hedge funds such as Man Group, which has an estimated exposure of $240m.
Thousands of wealthy individuals, largely from Jewish communities in New York and Florida, were also expected to turn to their lawyers as news spread that Madoff had been arrested, charged with fraud and released on a $10m bond after apparently confessing to his two sons, Mark and Andrew, and FBI special agent Theodore Cacioppi.
The highest profile loser in the UK so far is Nicola Horlick, the City fund manager whose investment firm, Bramdean, had almost 10% of its assets invested with Madoff. This in turn leaves Horlick’s investors, such as local authority pension funds in Merseyside and Hampshire, and property tycoon Vincent Tchenguiz, potentially exposed to the unravelling scandal.
Swiss private bank Reichmuth Matterhorn admitted yesterday it had lost $327m, amid speculation that the total bill in Switzerland could be much higher. US hedge funds are also affected as well as prominent US business executives.
As investigators from US regulator the securities and exchange commission ploughed through the records at the New York headquarters of Bernard L Madoff Investment Securities, they faced accusations last night that they had not examined his books since he registered the firm in September 2006. The Financial Services Authority, the UK watchdog, was thought to be keeping abreast of the situation.
Madoff is himself regulated by the FSA, along with his two sons, his brother Peter and six other registered individuals, though his eponymous London-based offshoot. However, Stephen Raven, chief executive of London-based Madoff Securities International, said the firm was “not in any way part of” the New York company caught up in the alleged scam.
Unravelling the Madoff investment scheme could take months as he faces questions from both the FBI and the SEC, which has filed separate civil charges.
In a statement signed by Cacioppi, Madoff is quoted as saying that he “paid investors with money that wasn’t there”, that he was “broke” and “insolvent”, and “it could not go on”.
Madoff’s alleged scam appears to have started to unravel when investors feeling the pain of the credit crunch put in claims for redemptions of $7bn - a sizable sum for a firm that claimed to have $17.1bn under management. Last Tuesday he stunned a senior colleague - believed to be one of his sons - with the revelation that he intended to pay bonuses in December rather than February. When challenged, and appearing under “great stress”, Madoff arranged a meeting in his Manhattan apartment where he made the startling confession: “It’s all just one big lie.”
He said he was “finished”, had “absolutely nothing” and his investment firm was “basically a giant Ponzi scheme” - a type of fraud invented by Charles Ponzi in the US after the first world war which involves disbursing “returns” to investors out of money from new entrants.
He said he had planned to hand himself over to the authorities but first wanted to divide up the $200m to $300m he had left among selected employees, families and friends - hence the need to pay bonuses early. The confession which was apparently made to his sons was reported to the authorities and the distribution of assets never took place.
He is due in court on Friday. His lawyers have said they “will fight to get through this unfortunate set of events”. The blame game has already begun. Horlick has attacked a “systemic failure of the regulatory and securities markets regime in the US”.
“It is astonishing that this apparent fraud seems to have been continuing for so long, possibly for decades, while investors have continued to invest more money into the Madoff funds,” she said.
There are also warnings from lawyers that practices such as these are more likely to unravel during tricky market conditions. Steven Philippsohn, chairman of the Commercial Fraud Lawyers Association, said: “This is the tip of the iceberg.”
