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Madoff trustee: No securities bought for customers in 13 years

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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:20 PM
Original message
Madoff trustee: No securities bought for customers in 13 years
Source: Market Watch

NEW YORK (MarketWatch) -- The trustee liquidating Bernard Madoff's investment firm says his investigation has found no evidence that any securities were purchased on behalf of customers in at least 13 years.

Speaking at a meeting Friday morning of Madoff's customers, the trustee, Irving Picard, said the firm's customers can recover up to the $500,000 they're entitled to under the Securities Investor Protection Act. Customers who've lost more than that amount can also share in assets recovered by the trustee.

. . .

Picard said he and his staff are sorting through 7,000 boxes found at a Queens warehouse that sheltered Madoff's records and files at the firm's offices "under the watchful eye of the FBI."

Read more: http://www.marketwatch.com/news/story/madoff-trustee-no...




So the clients can only file a claim for their original investment. Those above ten percent returns for the last thirteen years were fake and cannot be part of the request for reimbursement.

He made it all up.
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Taverner Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:23 PM
Response to Original message
1. Wow...just fucking wow
I'm speechless
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MineralMan Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:24 PM
Response to Original message
2. A Classic Ponzi Scheme...
Why do I think there are lots more of these out there, just waiting to be discovered?
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MannyGoldstein Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:42 PM
Response to Reply #2
11. Because Secrecy + Leverage Is The Perfect Recipe For A Ponzi Scheme?
I agree with you - there are probably dozens of these out there.
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MineralMan Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:26 PM
Response to Original message
3. Madoff, Petters, Stanford...
How many more names will be be hearing soon? The Justice Department's gonna be really busy, it looks like to me. Better hire more perp-walkers. Maybe I'll apply.
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Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 07:30 PM
Response to Reply #3
20. Plus 52,000 possible tax evaders...
Don't forget the UBS scandal - there should be pressure put on Congress to demand a criminal investigation of UBS itself. Particularly of UBS employees who may have conspired to defraud the US government by setting up UBS account to allow tax evasion. They could start with Phil Gramm.
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hugo_from_TN Donating Member (895 posts) Send PM | Profile | Ignore Fri Feb-20-09 12:27 PM
Response to Original message
4. I'm assuming they'll be going after anyone who cashed out
earnings since they are all fraudulent. It will probably take quite a while to see how much of people's initial investment can be recovered.
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Stephanie Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:30 PM
Response to Reply #4
6. Would they be liable to pay back earnings above their initial investment?
I assume those "earnings" were lifted directly from the pockets of subsequent Madoff clients.
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:34 PM
Response to Reply #6
8. They have already stated they would "clawback" all withdrawals

which were based on erroneous earnings.

Many people will be getting an request to give back money.
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hugo_from_TN Donating Member (895 posts) Send PM | Profile | Ignore Fri Feb-20-09 12:38 PM
Response to Reply #8
9. It will be more than a 'request'
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Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 07:55 PM
Response to Reply #8
21. It gets complicated...
Edited on Fri Feb-20-09 08:08 PM by Baby Snooks
One of our more interesting con artists in Houston who ran a Ponzi scheme offered "commissions" to investors who brought in new investors which quite a few of our more prominent "pillars of the community" did. When it came time to "divvy it up" of course the commissions were deducted along with any actual returns. Some in fact "owed" money.

Joanne King Herring, then Joanne King Herring Davis, whose claim to fame is "Charlie Wilson's War," stopped payment on two checks totalling almost $500,000. She lost the money which was "put into the pot" and she got very little of it back.

Most people in Ponzi schemes get little back because only the more recent "investors" can prove they actually lost money. Most get back the investment and a nice return long before the scheme collapses when not enough comes in to pay the investors. Which in some cases they can be expected to give back. It gets complicated. And it gets messy.

The lady can protesteth too much along with the gentleman and end up being accused of knowingly participating. So most don't protesteth too much and in fact shut up upon advice of attorneys and take what they can get and move on. Justice for the guilty who did know and did participate and usually get nothing back but denied justice for the innocent, albeit foolish, innocent although they usually get something back.

What is amazing is that he was able to run a Ponzi scheme for so long. He did have equities. About $500 million, I believe, which may have been a ruse for the curious. "Some of our equities are held through an account set up through ABC Bank in Manhattan." The equities and another $500 million in cash was seized. There may be more from accounts set up by his London office. So some may get something back beyond the fund although my understanding is if you take from the fund it is deducted from your share of any distributed assets. In all likelihood few will get anything from either except the more recent investors.

In the Ponzi scheme here the investors were getting as much as 35% initial return. Stupidity, as they say, is not a defense. And all the players in a Ponzi scheme can be charged. There was Ponzi scheme that was very popular around the country in the 1980s called The Airplane Game and when authorities broke up the local schemes, often quite a few were charged. Not just the person who started it. It was "penny ante" in most cases with most only putting up $1,000 but in some cases it was $10,000 and quite a few lost their savings being foolish.

If it sounds too good to be true, it is. Everyone at Enron knew it. But they sure liked the paychecks and the bonuses. So they convince themselves it was all legitmate. Even though, well, it was too good to be true. As most found out when they went to look for other jobs and found the "prevailing wage" for their skills was about half of what it was at Enron.
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Riverman Donating Member (759 posts) Send PM | Profile | Ignore Fri Feb-20-09 12:30 PM
Response to Original message
5. Where Did Madoff keep those billions? In banks? Which ones?
What bankers took in his deposits and knew he had billions taken from investors, and did not question his horded bounty? Did not report him? Names? Who must be prosecuted and sent to federal prison for life? Or, better yet, hung in a public square broadcast on primetime TV and blasted all over the internet! Who?
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:42 PM
Response to Reply #5
10. It appears money never accumulated to very much

As fast as Madoff could reel in new customers, money flowed out to pay interest to old customers and of course pay expenses and support Madoff's lifestyle.
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Riverman Donating Member (759 posts) Send PM | Profile | Ignore Fri Feb-20-09 12:50 PM
Response to Reply #10
12. However much, the cash had to flow thru some financial institutions?
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Robbien Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 01:03 PM
Response to Reply #12
14. Update: New article out saying auditors found trail of secret offshore bank accounts
Two suspect entries in excess of $5 billion in the books of confessed fraudster Bernard Madoff have given investigators hope they may be on the trail of some of the money he allegedly stole in what has been called the world's largest financial fraud.

One trail involves secret accounts set up in Switzerland and at an obscure bank in Africa, investigators and lawyers in the case told ABC News.

The investigators and lawyers also tell ABC News that Madoff may have used the name of a dead client, Norman Levy, as well as the prominent Picower Foundation to disguise transfers of more than $10 billion to secret accounts he set up overseas.

http://abcnews.go.com/Blotter/story?id=6916429&page=1


Madoff skimming 10% off the top for his own use?
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alcibiades_mystery Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:32 PM
Response to Original message
7. Am I the only one who finds this hilarious?
:shrug:
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MineralMan Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 12:52 PM
Response to Reply #7
13. No, probably not....but,
you're probably not directly damaged by these Ponzi schemers...yet...

I imagine that those hurt by them are not laughing too much. Where's your money invested? Are you sure it's there?
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alcibiades_mystery Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 01:16 PM
Response to Reply #13
17. I'll tell ya something
I grew up poor. If I ever manage to get my hands on even $500,000, I can assure you that I would not lose it.

I'm sorry, but most of these people are greedy fucking idiots. As is the case in almost any financial fraud, you're dealing with two counter-parties with the same exact vice: greed. That one is a thief and one a credulous sucker doesn't change the fact that they're all greedy, chasing after revenue and damned if they care how it comes about.

I suppose I could make an exception for the second order suckers who only paid into these feeder funds, supposedly not knowing that the money was all going into Madoff. But at some point, you ask for the detailed records if you're not a greedy sucker. Any poor person'll tell you at least THAT. You don't hand over $10 million and then just cash checks without wondering where the fuck it is coming from and how.

Not if you've ever been hungry you don't.
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damntexdem Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 01:04 PM
Response to Original message
15. Well, no wonder they got in trouble! Didn't they realize that 13 was unlucky?
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pjt7 Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 01:14 PM
Response to Reply #15
16. give the SEC a break
it was only 13years, since he traded 1 stock.

That's hard to find when you're being payed to look the other way.

Or maybe the SEC was handcuffed when WTC7 got demolished & their entire NYC office was blown to smithereens.
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RedEarth Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 03:41 PM
Response to Original message
18. Article from Jan 16, 2009 ,,, Madoff's fund may not have made a single trade
BOSTON (Reuters) - Bernie Madoff's investment fund may never have executed a single trade, industry officials say, suggesting detailed statements mailed to investors each month may have been an elaborate mirage in a $50 billion fraud.

An industry-run regulator for brokerage firms said on Thursday there was no record of Madoff's investment fund placing trades through his brokerage operation.

That means Madoff either placed trades through other brokerage firms, a move industry officials consider unlikely, or he was not executing trades at all.

http://www.reuters.com/article/newsOne/idUSTRE50F0BY200...
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aquart Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 04:50 PM
Response to Reply #18
19. People received statements, didn't they?
Who or what was generating the statements?

I get little bulletins on my mutuals all the time. Adorable little booklets. What was in the Madoff booklets?
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Baby Snooks Donating Member (1000+ posts) Send PM | Profile | Ignore Fri Feb-20-09 08:27 PM
Response to Reply #19
22. He designed a computer program...
Edited on Fri Feb-20-09 08:31 PM by Baby Snooks
The computer program calculated everything so to even the assuming eye the rate of interest/dividend payable to the individual investor seemed legitimate. Most had money market and hedge fund investments which explained the higher interest. Bernie Madoff had a reputation for higher than average returns. They were not really that outrageous. Just too consistent in what has been a volatile market which should have alarmed the investors. Instead it lulled them into believing he was simply the best on Wall Street. He was certainly the best con artist.

The fraud is in the representation he held equities on behalf of the investors but the real fraud is if at some point he did and then sold them and didn't disclose it. Apparently everyone was very happy with him. If at some point an investor wanted to transfer their equity account, he would have had to transfer from what the firm itself held or bought them, as indicated on those statements, and then transferred them.

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