Biggest Ever Ponzi/Fraud was Disguised as a Hedge Fund $50bn

Green_Bear · January 30, 2009, 6:07pm

Madoff’s Tactics Date to 1960s When Father-in-Law Was Recruiter
By Linda Sandler and Allan Dodds Frank
bloomberg.com/apps/news?pid= … refer=home

Jan. 29 (Bloomberg) – Bernard Madoff’s practice of promising investors double-digit returns dates to the founding of his firm in 1960 when his father-in-law steered clients to him, according to court records and customers.
Madoff, accused by the U.S. of running a $50 billion Ponzi scheme, got a boost in his early years from accountant Saul Alpern, the father of his wife Ruth. Alpern referred friends and their relatives who spent winters in North Miami Beach and summers at the Sunny Oaks Hotel in New York’s Catskill Mountains in the 1960s, according to Cynthia Arenson, the hotel owner.
“His son-in-law just opened a firm, and he was doing very well,” said Arenson, 68, who lost at least $1.25 million with Madoff. “Wouldn’t you encourage your friends to invest with him? Sometimes they got 18 percent, sometimes they got 19 percent.”

JPMorgan Exited Madoff-Linked Funds Last Fall
nytimes.com/2009/01/29/busin … .html?_r=2

JPMorgan Chase says that its potential losses related to Bernard L. Madoff, the man accused of engineering an immense global Ponzi scheme, are “pretty close to zero.” But what some angry European investors want to know is when the bank cut its exposure to Mr. Madoff — and why.
JPMorgan Chase’s headquarters in Manhattan. A spokeswoman said the bank “became concerned about the lack of transparency” as it reviewed its investments linked to Bernard Madoff.
As early as 2006, the bank had started offering investors a way to leverage their bets on the future performance of two hedge funds that invested with Mr. Madoff. To protect itself from the resulting risk, the bank put $250 million of its own money into those funds.
But the bank suddenly began pulling its millions out of those funds in early autumn, months before Mr. Madoff was arrested, according to accounts from Europe and New York that were subsequently confirmed by the bank. The bank did not notify investors of its move, and several of them are furious that it protected itself but left them holding notes that the bank itself now says are probably worthless.

Bostonorberlin · February 4, 2009, 6:12pm

Do we have a Harry Markopolos in this country… Ross, McWiliams i guess
I guess alot of these comments could easily be applied to the Irish banking/regulation/regulator system

This guy was hte whislte blower who tried for 10 years to tell the regulator Madoff was a fraud , but he never gave up.
Mr. Harry Markopolos, an independent financial fraud investigator for institutional investors and others seeking forensic accounting expertise.
as well as a Chartered Financial Analyst and Certified

Here are some comments he made during todays hearings into the Madoff ponzi scheme

Markopolos
“took me 5 mins to figure Madoff was a fraud”
“took me 4 hours of modelling to prove it was a fraud”
"took me 20 mins to look at the WSJ options index page and see Madoff was several factors over the number of options traded for any given day, more evidence he was a fraud ’
“Madoffs growth line was 45 degrees , no market investor can make returns like that”
“at end of operating period he took everything out and put it into treasuries, no need to report treasuries to SEC” - warehousing, auditor shopping
“several EUROPEAN funds have yet to be exposed as MAdoff feeder funds, will be in the coming days”
“Madoff needed alot of help, IT support, money xfer support”
"I gave them 29 Red Flags indicators of Fraud , SEC didnt have the smarts in their staff or incentive to investigate any of this "
“SEC is overmatched, too slow, too under educated , same can be said for the FED”
“FED did a worse job of regulating the banks, than the SEC did of regulating the markets”
"SEC was afraid of the big players, afraid to take on the Madoffs "
"Regional turf wars, boston, NY, Wash. Among the regulators "
"need to incentitive the regulators, base salary plus massive bonus for CATCHING fraud
Numerous congressmen have asked (in all seriousness) if Mr Markopolos would take a job in Government and in Financial Regulation
“hopes to turn in another smaller (1-2 Billion) Madoff in the coming days to the SEC”
“wants to see more grey hair in the regulator, ex wall St analysts who have made all the money they can ever spend , being incentivised to work in Govt within the regulators, SEC”
“wants to see a single overall regulator, where all the sub-regulators, banking, markets, finiacial services, financial industries all report into the single regulator, with acentral shared database”
“he warned a lot of big banks,fund managers etc who knew him (Markopolus) and heeded his advice”
"very few in the SEC understood what a split strike conversion was "
"in 2001 he offered to go undercover and expose Madoff "

Madoff left a high commission with the brokers of the feeder funds so they were blinded by the money they received on commission and turned a blind eye to the questionable returns of Madoff…
Markopolus genuinely feared for his life, wore gloves no fingerprints on the docs he sent, etc. Given the size of money involved .

We don’t even have whistleblowers here , yet this guy feared for his life and continued

House financial Services Commitee … hearings into Bernie Madoff ponzi scheme
house.gov

2Pack · February 4, 2009, 7:05pm

Full testimony here and a great read it is for anyone , well at least the first 20 pages before it gets a tad dense on proofs .

online.wsj.com/public/resources/ … 090203.pdf

It proves that regulation of shysters and crooks was designed to fail …in essence . He proved it was a fraud to lots of SEC people .

Or maybe it proves that those who can do and those who can’t go on to become arrogant useless parasitic shitbag regulators in the modern era That would appear to be the general Irish experience of regulators .

Green_Bear · February 5, 2009, 6:19am

Irish investment fund seeks to freeze €31.6m
MARY CAROLAN
irishtimes.com/newspaper/fin … 17173.html

ANOTHER IRISH-BASED investment fund has brought court proceedings here arising from the activities of alleged US fraudster Bernard Madoff.
Fortis Prime Fund Solutions Custodial Services (Ireland) Ltd has brought proceedings to freeze €31.6 million given by it to HSBC Security Services (Ireland) Ltd to administer for the purpose of buying shares through British Virgin Islands-based investment company Defender Ltd.
Fortis, of Park Lane, Spencer Dock, Dublin, claims the investment monies it gave to HSBC, as an administrator, was credited to HSBC bank in London on November 28th last, just days before the arrest of Bernard Madoff by the FBI.
It claims the funds were to be passed on to Defender, described as an “open-ended investment company”, which has as its objective the achievement of long-term capital appreciation through the allocation of assets to a single trader. Fortis said the assets were to be allocated through Bernard L Madoff Investment Securities LLC.

grumpy · February 6, 2009, 12:54pm

That would be KPMG, E&Y, PWC & B DO (B DO without the space is O!)

ft.com/cms/s/0/cc8cddbe-f3b4 … fd2ac.html

What_Goes_Up · February 7, 2009, 2:56pm

From CSPSAN Junkie:
cspanjunkie.org/?p=1808#more-1808

Parts 1&2 are Harry Markoplolos and Parts 3&4 are SEC employees.

Part 1
[gvideo]https://video.google.com/videoplay?docid=-2001237832838852193[/gvideo]

Part 2
[gvideo]https://video.google.com/videoplay?docid=7042347976248432607[/gvideo]

Part 3
[gvideo]https://video.google.com/videoplay?docid=1360063413126883170[/gvideo]

Part 4
[gvideo]https://video.google.com/videoplay?docid=-1195492002582043689[/gvideo]

What_Goes_Up · February 7, 2009, 9:19pm

What_Goes_Up · February 8, 2009, 3:01am

marketwatch.com/news/story/m … 71CACE9%7D

A king among clowns
Last update: 12:01 a.m. EST Feb. 5, 2009
By David Weidner, MarketWatch

Commentary: Hand Markopolos regulatory job and watch Harry give 'em hell

NEW YORK (MarketWatch) - Harry Markopolos needs to head whatever government agency is responsible for checking up on Wall Street. Period.

How could anyone come to any other conclusion after watching the man thoroughly dissect the regulatory failure that allowed Bernie Madoff’s alleged Ponzi scheme to thrive? Markopolos not only knew exactly what Madoff was doing, he knew what regulators weren’t doing and why.

Just when you thought the financial crisis has created nothing but villains, along comes Markopolos, the bookish, humble whistleblower who courageously fought in vain for nearly a decade to get regulators to take a close look at Madoff.

He took Capitol Hill by storm Wednesday, unleashing a double blow of written and spoken testimony that painted a devastating picture of the alleged Ponzi schemer Madoff and unleashed withering criticism of the Securities and Exchange Commission and Financial Industry Regulatory Authority.

“One would almost think that the SEC’s top leadership was going out of its way to drive good people out of the SEC and destroy the morale of those who stay,” Markopolos said in prepared remarks. As for FINRA, suffice it to say that Markopolos didn’t push the Madoff case on the agency because he felt Madoff had too many ties to the organization.

FINRA is “a corrupt organization” looking to protect its members, he said.

Again, Markopolos demonstrated how Madoff’s reliance on bullying and intimidation helped keep his scheme under wraps. See related commentary on Madoff’s work culture

Even as respectful as senators were of him, Markopolos’ oozing integrity and class made the room feel as if he were the one sitting high on the dais. Markopolos’ common sense contrasted the pompous grandstanding from congressmen such Alabama’s Spencer Bachus, the apologies from Lori Richards, an SEC compliance director, and the excuses from Stephen Luparello, FINRA’s interim CEO.

They came off pretty badly, but not as badly at Linda Thomsen, the SEC’s enforcement director. After Markopolos delivered hours of testimony and hundreds of pages of evidence about how he had tried to alert the SEC about Madoff, Thomsen gave one of the most jarring answers we’ve heard in all these hearings about the financial crisis.

“If we knew that it was provable fraud, it (investigating) would be easy,” she said.

If you want to commit a triple homicide in front of police headquarters and get away with it, you better hope detective Thomsen is assigned to the case.

Thomsen is just where the problems begin. Congressional leaders should be alarmed that they just signed off on Mary Schapiro to run the SEC. Schapiro’s record at FINRA is one of multiple small-time settlements and fines while huge frauds, including Madoff, went unchecked. Her appointment is even more troubling considering the testimony offered Wednesday.

…(cont’d)

Green_Bear · February 8, 2009, 1:26pm

President Obama has hired the foxes to guard the hen house. There is no chance of “change”.

also

What_Goes_Up · February 8, 2009, 2:20pm

There are just too many quotable quotes from the whole Harry Markopolos testimony - it’s just two hours of joy!

Absolutely names names and calls it as it is - but…

Best. Exchange. Ever.

45 mins 04 secs in on [*Part 2 of his testimony * (https://www.thepropertypin.com/viewtopic.php?f=19&t=16425&start=149):

Rep. Alan Grayson (D-Florida):Now, right now Mr Madoff was arrested and he is confined, correct?
Harry Markopolos: Um, he’s under penthouse arrest.
AG: Penthouse arrest… right…and,…and,… ehh… hee, hee, hee…can you explain that further?
HM: He’s leading a life of luxury. He does have a serious complaint - he’s not able to go out for his nosh.

Green_Bear · February 16, 2009, 6:32am

MADOFF WALL OF SILENCE - KEPT MUM ON FEARS
By JAMES DORAN, Post Wire Services
nypost.com/seven/02152009/ne … 155259.htm

Senior executives at some of Wall Street’s biggest firms were convinced Bernard Madoff was a fraud as early as 2005 - yet none alerted authorities, documents filed with the Securities and Exchange Commission reveal.
Leon Gross, the former managing director in charge of worldwide equity derivatives research for Citigroup, told friends and colleagues on Wall Street in 2005 that he thought Madoff was being less than honest about the returns he could make for investors but did nothing to prevent the fraud.
Likewise, Joanne Hill, Goldman Sachs’ global head of equity derivatives research, believed there was something wrong with Madoff’s investment scheme because the returns he boasted in marketing materials seemed too good to be true.
Like Gross, Hill did not alert her superiors or regulatory authorities. She did, however, tell friends and colleagues about her suspicions.
Bud Haslett, of Write Capital Management, an investment firm, also suspected something fishy. But he told no one of his concerns.

elgreco · February 17, 2009, 7:36pm

Allen Stanford in a spot of bother too…

business.timesonline.co.uk/tol/business/markets/article5754370.ece

Thing_Fish · February 17, 2009, 8:44pm

^ out for a duck

Green_Bear · February 18, 2009, 8:53pm

jabaar · February 19, 2009, 10:48pm

Found in Virginia and served with supoena
bloomberg.com/apps/news?pid= … refer=home

Can we ask our Garda Comissioner to outsource the Michael Lynn search to these boys???

yoganmahew · February 25, 2009, 8:33pm

And another one. $1.3 bn this time
ftalphaville.ft.com/blog/2009/02 … ket-fraud/

Another scam… CFTC charges individuals over $1.3bn commodity market fraud
Posted by Sam Jones on Feb 25 19:25.

From the CFTC:

CFTC Charges New York Residents with Operating $1.3 Billion Investment Scam

Stephen Walsh and Paul Greenwood Allegedly Misappropriated Over $553 Million from Commodity Pool Participants

Washington, DC - The U.S. Commodity Futures Trading Commission (CFTC) today charged Stephen Walsh of Sands Point, New York, and Paul Greenwood of North Salem, New York, with misappropriating at least $553 million from commodity pool participants in connection with entities they owned and controlled, such as Westridge Capital Management, Inc., WG Trading Investors, LP, and WGIA, LLC. The defendants’ alleged misappropriation was uncovered during an audit by the National Futures Association.

Green_Bear · February 27, 2009, 12:34am

“Assessing the Madoff Ponzi Scheme and Regulatory Failures”

Green_Bear · February 28, 2009, 9:10am

Financiers Used “Hotline” to SEC Examiners
Tuesday 24 February 2009, by: Matt Renner, t r u t h o u t | Report
truthout.org/022409J

Washington, DC - In a hearing which exposed failures by the government’s financial police, Congressman Stephen Lynch (D-Massachusetts) highlighted the existence of a “hotline,” which he said could be used by Wall Street firms to call off government inspectors. The existence of a “hotline” has been confirmed by the Securities and Exchange Commission (SEC), though its purpose has been disputed.
The SEC - the federal agency tasked with policing the financial industry - has come under heavy criticism for incompetence and negligence in its role as the regulator of the giant Wall Street firms, the collapse of which has already cost taxpayers billions of dollars and continues to threaten the world economy. The most prominent example of SEC failure is the decades-long $50 billion Ponzi scheme - likely the largest financial fraud in history - orchestrated by Bernard Madoff. The fraud was identified by money manager and private investigator Harry Markopolos, the star witness at the February 4 hearing before the House Subcommittee on Capital Markets, Insurance, and Government Sponsored Enterprises.

Green_Bear · February 28, 2009, 9:12am

and yet another ponzi scheme washes up

Pension, college funds mull damage from WG Trading fraud
Thu Feb 26, 2009 By Martha Graybow
reuters.com/article/newsOne/ … M620090226

NEW YORK (Reuters) - Public pension plans and universities are trying to track down their money after the arrests of two highflying fund managers for allegedly stealing up to $550 million from clients, the latest big fraud case to rock the investment world.
New York money managers Paul Greenwood and Stephen Walsh, whose fund operation catered to large investors, are accused of looting client accounts to buy expensive homes, horses, rare books and collectibles including an $80,000 teddy bear, according to court documents.
The two were arrested in New York on Wednesday and charged with criminal conspiracy and fraud. They have not yet formally responded to the charges in court, and are free on bail.

dowtchaboy · February 28, 2009, 2:25pm

You know I never trusted him in Glenroe either. What was he called ? George Manning - too smooth by half…