Hi y'all - it seems to demonstrate to me that many white collar criminals get caught.
On Dec 13, 6:48 pm, Taylor <[email protected]> wrote: > I'm curious as to what you think this article demonstrates. > > On Dec 13, 11:45 am, ornamentalmind <[email protected]> wrote: > > > > >http://www.nytimes.com/ > > > December 13, 2008 > > Now Accused of Fraud, Wall St. Wizard Had His Skeptics > > By ALEX BERENSON and DIANA B. HENRIQUES > > For years, investors, rivals and regulators all wondered how Bernard > > L. Madoff worked his magic. > > But on Friday, less than 24 hours after this prominent Wall Street > > figure was arrested on charges connected with what authorities > > portrayed as the biggest Ponzi scheme in financial history, hard > > questions began to be raised about whether Mr. Madoff acted alone and > > why his suspected con game was not uncovered sooner. > > As investors from Palm Beach to New York to London counted their > > losses on Friday in what Mr. Madoff himself described as a $50 billion > > fraud, federal authorities took control of what remained of his firm > > and began to pore over its books. > > But some investors said they had questioned Mr. Madoff’s supposed > > investment prowess years ago, pointing to his unnaturally steady > > returns, his vague investment strategy and the obscure accounting firm > > that audited his books. > > Despite these and other red flags, hedge fund companies kept promoting > > Mr. Madoff’s funds to other funds and individuals. More recently, > > banks like Nomura, the Japanese firm, began soliciting investors for > > Mr. Madoff internationally. The Securities and Exchange Commission, > > which investigated Mr. Madoff in 1992 but cleared him of wrongdoing, > > appears to have been completely surprised by the charges of fraud. > > Now thousands, possibly tens of thousands, of investors confront > > losses that range from serious to devastating. Some families said on > > Friday that they believed they had lost all their savings. A charity > > in Massachusetts said it had lost essentially its entire endowment and > > would have to close. > > According to an affidavit sworn out by federal agents, Mr. Madoff > > himself said the fraud had totaled approximately $50 billion, a figure > > that would dwarf any previous financial fraud. > > At first, the figure seemed impossibly large. But as the reports of > > losses mounted on Friday, the $50 billion figure looked increasingly > > plausible. One hedge fund advisory firm alone, Fairfield Greenwich > > Group, said on Friday that its clients had invested $7.5 billion with > > Mr. Madoff. > > The collapse of Mr. Madoff’s firm is yet another blow in a devastating > > year for Wall Street and investors. While Mr. Madoff’s firm was not a > > hedge fund, the scope of the fraud is likely to increase pressure on > > hedge funds to accept greater regulation and transparency and protect > > their investors. > > On Thursday, the Federal Bureau of Investigation and S.E.C. said that > > Mr. Madoff’s firm, Bernard L. Madoff Investment Securities, ran a > > giant Ponzi scheme, a type of fraud in which earlier investors are > > paid off with money raised from later victims — until no money can be > > raised and the scheme collapses. > > Most Ponzi schemes collapse relatively quickly, but there is > > fragmentary evidence that Mr. Madoff’s scheme may have lasted for > > years or even decades. A Boston whistle-blower has claimed that he > > tried to alert the S.E.C. to the scheme as early as 1999, and the > > weekly newspaper Barron’s raised questions about Mr. Madoff’s returns > > and strategy in 2001, although it did not accuse him of wrongdoing. > > Investors may have been duped because Mr. Madoff sent detailed > > brokerage statements to investors whose money he managed, sometimes > > reporting hundreds of individual stock trades per month. Investors who > > asked for their money back could have it returned within days. And > > while typical Ponzi schemes promise very high returns, Mr. Madoff’s > > promised returns were relatively realistic — about 10 percent a year — > > though they were unrealistically steady. > > Mr. Madoff was not running an actual hedge fund, but instead managing > > accounts for investors inside his own securities firm. The difference, > > though seemingly minor, is crucial. Hedge funds typically hold their > > portfolios at banks and brokerage firms like JPMorgan Chase and > > Goldman Sachs. Outside auditors can check with those banks and > > brokerage firms to make sure the funds exist. > > But because he had his own securities firm, Mr. Madoff kept custody > > over his clients’ accounts and processed all their stock trades > > himself. His only check appears to have been Friehling & Horowitz, a > > tiny auditing firm based in New City, N.Y. Wealthy individuals and > > other money managers entrusted billions of dollars to funds that in > > turn invested in his firm, based on his reputation and reported > > returns. > > Victims of the scam included gray-haired grandmothers in Florida, > > investment companies in London, and charities and universities across > > the United States. The Wilpon family, the main owners of the New York > > Mets, and Yeshiva University both confirmed that they had invested > > with Mr. Madoff, and a Jewish charity in Massachusetts said it would > > lay off its five employees and close after losing nearly all of its $7 > > million endowment. Other investors included prominent Jewish families > > in New York and Florida. > > On Friday afternoon, investors and lawyers for investors with Mr. > > Madoff packed Judge Louis L. Stanton’s courtroom at federal court in > > Manhattan, hoping to question lawyers for Mr. Madoff and the S.E.C. > > But a deputy for Judge Stanton canceled the hearing, leaving investors > > with few answers. Several investors said they were planning to file > > lawsuits against the firm in the hope of recovering some money. > > Based on the vagueness of the complaints against Mr. Madoff, his > > confession, as detailed in court filings, seems to have taken the > > F.B.I. and S.E.C. by surprise. Investigators have not explained when > > they believe the fraud began, how much money was ultimately lost and > > whether Mr. Madoff lost investors’ money in the markets, spent it, or > > both. It is not even clear whether Mr. Madoff actually made any of the > > trades he reported to investors. > > The F.B.I. and S.E.C. have also not said whether they believe Mr. > > Madoff acted alone. According to the authorities, Mr. Madoff told > > F.B.I. agents that the scheme was his alone. He worked closely with > > his brother, sons and other family members, many of whom have retained > > lawyers. > > Also likely to face very difficult questions are the hedge funds, > > investment advisers and banks that raised money for Mr. Madoff. At > > least some big investment advisers steered clients away from putting > > money with Mr. Madoff, believing the returns could not be real. > > Robert Rosenkranz, principal of Acorn Partners, which helps wealthy > > clients choose money managers, said the steadiness of the returns that > > Mr. Madoff reported did not make sense, and the size of his auditor > > raised further concerns. > > “Our due diligence, which got into both account statements of his > > customers, and the audited statements of Madoff Securities, which he > > filed with the S.E.C., made it seem highly likely that the account > > statements themselves were just pieces of paper that were generated in > > connection with some sort of fraudulent activity,” Mr. Rosenkranz > > said. > > Simon Fludgate, head of operational due diligence for Aksia, another > > advisory firm that told clients not to invest with Mr. Madoff, said > > the secrecy of his strategy also raised red flags. And Mr. Madoff’s > > stock holdings, which he disclosed each quarter with the Securities > > and Exchange Commission, appeared to be too small to support the size > > of the fund he claimed. Mr. Madoff’s promoters sometimes tried to > > explain the discrepancy by explaining that he sold all his shares at > > the end of each quarter and put his holdings in cash. > > “There were no smoking guns, but too many things that didn’t add up,” > > Mr. Fludgate said. > > However, the S.E.C. had already investigated Mr. Madoff and two > > accountants who raised money for him in 1992, believing they might > > have found a Ponzi scheme. “We went into this thing just thinking it > > might be a huge catastrophe,” an S.E.C. official told The Wall Street > > Journal in December 1992. > > Instead, Mr. Madoff turned out to have delivered the returns that the > > investment advisers had promised their clients. It is not clear > > whether the results of the 1992 inquiry discouraged the S.E.C. from > > examining Mr. Madoff again, even when new red flags surfaced. Lawyers > > at the S.E.C. did not return calls. > > Meanwhile, Fairfield Greenwich Group, whose clients have $7.5 billion > > invested with the Madoff firm, said it was “shocked and appalled by > > this news.” > > “We had no indication that we and many other firms and private > > investors were the victims of such a highly sophisticated, massive > > fraudulent scheme.” > > At the court hearing, an individual investor, who declined to give his > > name to avoid embarrassment, expressed a similar sentiment. > > “Nobody knows where their money is and whether it is protected,” the > > investor said. > > “The returns were just amazing and we trusted this guy for decades — > > if you wanted to take money out, you always got your check in a few > > days. That’s why we were all so stunned.” > > Zachery Kouwe and Stephanie Strom contributed reporting. > > > On Dec 12, 6:29 pm, ornamentalmind <[email protected]> wrote: > > > > clog, your analogy and anecdotal experience are similar to the local > > > of where you live….way out in the country. > > > > On Dec 12, 12:47 pm, Clogtowner <[email protected]> wrote: > > > > > Hi y'all - if he's talking about toasters and the like, I still > > > > disagree. Try buying a toaster in Europe or many other places. The > > > > ultimate example of Govt. > > ... > > read more »- Hide quoted text - > > - Show quoted text - --~--~---------~--~----~------------~-------~--~----~ You received this message because you are subscribed to the Google Groups "Memphis Freethought Alliance" group. 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