December 12, 2008

Madoff's Alleged $50 Billion Fraud Hits Other Investors

by Jon Stempel and Christian Plumb

NEW YORK (Reuters) - Investors scrambled to assess potential losses from an alleged $50 billion fraud by Bernard Madoff, a day after the arrest of the prominent Wall Street trader.

Prosecutors and regulators accused the 70-year-old, who was chairman of the Nasdaq Stock Market in the early 1990s, of masterminding a fraud of epic proportions through his investment advisory business, which managed at least one hedge fund.

Hundreds of people, investing with him through the firm's clients, entrusted Madoff with billions of dollars, industry experts said.

"Madoff's investors included captains of industry, corporations -- some of which are publicly traded -- that used Madoff almost as a high-yielding cash management account, endowments, universities, foundations and, importantly, many high-profile funds of funds," said Douglas Kass, who heads hedge fund Seabreeze Partners Management. . . .

Federal agents arrested Madoff at his apartment on Thursday after prosecutors said he told senior employees that his money management operations were "all just one big lie" and "basically, a giant Ponzi scheme."

A Ponzi scheme is an illegal investment vehicle that pays off old investors with money from new ones, and is dependent on a constant stream of new investment. Because the invested capital is not earning a sufficient return on its own, such schemes eventually collapse under their own weight.

Madoff is the founder of Bernard L. Madoff Investment Securities LLC, a market-making firm he launched in 1960. His separate investment advisory business had $17.1 billion of assets under management. . . .


William Greider, "Paulson Bailout Plan a Historic Swindle," Nation, September 19, 2008

[All of the key players in the current financial crisis are Zionist Jews from a very small political/ethnic community in New York City.--Christopher Bollyn, "Who is Bernard Madoff, the man behind the $50 billion fraud?,", December 12, 2008]

[I have a cted as a professional consultant to major EC and US financial institutions on corporate and institutional credit risk and the idea that anyone in HSBC or Santander could authorise large investment without the internal checks and controls being employed is almost impossible. To try and believe that EVERY institution that invested in Madoff circumvented their internal control procedures IS impossible.

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, without any evidence having been presented and financial fraud being demonstrated in a court of law.--Muhammad Rafeeq, "The Madoff Double-Bluff,", December 18, 2008]

James Petras, "Bernard Madoff: Wall Street Swindler Strikes Powerful Blows for Social Justice,", December 19, 2008

[All the agencies have to some extent or another a revolving door [where government employees rotate out to the private sector and earn more money]. But at the SEC, what you rotate into is an enormous salary leap. SEC managers may make $200,000. That same person may make $2 million as a starting salary on the outside and can move up from there. Now, when he leaves, I'm not sure he's worth $2 million as lawyers, but he takes his Rolodex with him and that Rolodex is gold. The system maintains itself, because those that stay know their turn will come if they play the game. They see a director or associate director move on $2 million job with a Wall Street law firm. Then, the departed employee calls back to his former colleagues and says, "you know I really don't think there is much of a case against so-and-so, I'd like for you to take a look at it." And the case goes away; the system goes on in perpetuity.--Matt Renner, "SEC Whistleblower Speaks on Madoff Fraud,", December 22, 2008]

[ . . . the Madoff investigation is similar to the 9-11 investigation: evidence of a larger conspiracy is being avoided and ignored. After three months of investigation, it is outrageous that charges of conspiracy were not included in Madoff's plea. He must have had conspirators in his office, in his family, and at his banks. It is simply not possible that he carried out this huge fraud all by himself and managed to keep it concealed from his family and business partners for 20 years. That is not believable.--Christopher Bollyn, "Is the Prosecutor Protecting Madoff's Fellow Conspirators?,", March 17, 2008]

[Infected by the "greed is good" virus that has ravaged political discourse for nearly three decades, American financial regulation has now become so corrupt and incompetent that it would embarrass a Third World kleptocracy. What is news - at least to those who lack independent sources of information - is that top American editors and reporters now seem no more willing to tackle wealthy and well-connected crooks than their avowedly venal and cowed peers in, say, Jakarta or Harare--Martin Wolf, "How the Wall Street Journal and the New York Times Buried the Madoff Scandal for at Least Four Years,", April 23, 2009]

Michael Moore, "Bernie Madoff, Scapegoat," Huffington Post, May 1, 2009

back button