[Eug]

http://news.yahoo.com/s/nm/20081212/..._madoff_arrest

NEW YORK (Reuters) – Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion "Ponzi scheme" in what may rank among the biggest fraud cases ever.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

I'm surprised that it's not mandatory that large funds such as that one aren't transparent to investors.

[turtle777]

Unfreakingbelievable.

Only in Amaraca™

-t

[The Crook]

Ponzi scheme? I thought you were talking about social security!

</right wing nut>

[dcmacdaddy]

Originally Posted by Eug 

Bernard Madoff arrested over alleged $50 billion fraud - Yahoo! News

I'm surprised that it's not mandatory that large funds such as that one aren't transparent to investors.

I think the lack of openness and transparency is part of the appeal for investors. Like with hedge funds, you lose openness and transparency in exchange for (potentially) ridiculous returns.

The investment fund managers do not get the same scrutiny as funds regulated by the SEC but their clients are subject to a lot more risk as a result. In this particular case it seems the investment manager was able to keep afloat the scheme through traditional Ponzi scheme methods (pay returns to early investors from funds received from later investors) as well as from the profits made from some legitimate investment. But, when the market collapsed the scheme had to collapse along with it.

I think the Treasury and/or SEC have already discussed requiring hedge funds to become more regulated for the sake of openness and transparency. If they do, that will help future investors but won't do a thing for those folks who lost huge sums of money this past year. As for this particular case, I think we will discover that there will be other large-scale private equity firms who will fail because of this particular scheme/scam. At this level of investing, their seems to be a lot of incestuous behavior among investors and private equity firms.

[MacTheRiverRat]

Jezzzz and people make a big deal out of 14 billion for the failing big 3. I say give everyone a bailout and lets go out in a Blaze of glory!

[macintologist]

with early investors paid off with money from later investors.

Sounds like Social Security!

[BadKosh]

This sounds like the way our politicians have been screwing us with all the taxes and STILL having 53 trillion in unsecured debt.

[OldManMac]

Originally Posted by macintologist 

Sounds like Social Security!

You can thank Ronald Reagan, one of the greatest snake oil salesman of our time, for that.

[Eug]

Hedge fund founder kills self after losing $1B in Madoff scandal

Rene-Thierry Magon de la Villehuchet - grief-stricken after becoming one of the top 10 losers in the reportedly $50 billion Ponzi scheme - slashed both wrists with a boxcutter and bled to death, cops said Tuesday.

By the time Madoff was arrested Dec. 11, Access had amassed $1.4 billion in assets in its Luxembourg-based investment fund, LUXALPHA SICAV-American Selection, which said its objective was "to provide a consistent performance" for investors, who included members of the Rothschild family.

Their only problem: Madoff held LUXALPHA's entire nest egg.


-----

Prescient? From The Dark Knight:

Lucius Fox: Lau's company has grown by 8% annually like clockwork. Their revenue stream must be off the books, maybe even illegal.

From the article in the original post: An investor in the hedge fund said it generated consistent returns, which was part of the attraction. Since 2004, annual returns averaged around 8 percent and ranged from 7.3 percent to 9 percent, but last decade returns were typically in the low-double digits, the investor said.

[Chongo]

Madoff made off with their money

[glideslope]

Originally Posted by Chongo 

Madoff made off with their money

No, actually he kept covering losses with new investments. Eventually he could not keep up. I doubt he has more than 200 million in liquidity. Most of the 50 billion is gone forever.

[turtle777]

Yeah, that money is gone. Anyone who thinks there will be massive amounts of funds just sitting out there is a hopeless optimist.

-t

[Shaddim]

Really though, it's small potatoes compared to Social Security.

[OldManMac]

Originally Posted by Shaddim 

Really though, it's small potatoes compared to Social Security.

Which worked fine, and would have continued to do so, until Ronald Reagan raided it after perpetrating the great lie of his tax cuts.

[Chongo]

Originally Posted by OldManMac 

Which worked fine, and would have continued to do so, until Ronald Reagan raided it after perpetrating the great lie of his tax cuts.

SS was a scam from day 1. 65 was picked because the actuary tables determined most people would be dead and never collect. It worked because there were 15 people for every retiree, now it 3:1

[Shaddim]

Originally Posted by OldManMac 

Which worked fine, and would have continued to do so, until Ronald Reagan raided it after perpetrating the great lie of his tax cuts.

Several politicians have shortened it's life, but it was never sustainable.

[stumblinmike]

Now if we had privatized it, like the President wanted, we would have "mad" money...

[Eug]

Madoff stuff on eBay

A Bernard Madoff disaster-recovery kit is among the items up for auction on eBay Inc.'s Web site as sellers look to turn a quick buck after the money manager was accused of masterminding a US$50-billion Ponzi scheme.

A flashlight and backpack, as well as the employee emergency kit, are among items on eBay carrying insignia of Bernard L. Madoff Investment Securities LLC. Bids for the flashlight, currently at US$100, began last week for US$20.

"Own this notorious piece of Wall Street history," wrote "emom1013," who is auctioning a black fleece vest bearing the logo of the New York-based investment firm. Bidding on the item, which the seller claims was among those given to Madoff's employees as a holiday gift last year, climbed to US$103 from US$50 in three days.

Now we know how they're going to pay back that $50 billion. It's all going to be recovered through bake sales and logo'd memorabilia.

I like this too:

Some entrepreneurs are hawking original merchandise. T-shirts with a picture of Madoff framed by the slogan "Trust Me" are selling on eBay for US$27.95. Another shirt, for US$34.99, matches Madoff's image with the words "Weekend at Bernie's," a reference to the 1989 movie.






Madoff Confessed $50 Billion Fraud Before FBI Arrest

Madoff’s sons, Andrew and Mark, turned him in to U.S. authorities on the night of Dec. 10 after his confession, according to Martin Flumbenbaum, an attorney for the brothers.

“Mark and Andrew Madoff are not involved in the firm’s asset management business, and neither had any knowledge of the fraud before their father informed them of it on Wednesday,” according to a statement by Flumenbaum of Paul, Weiss, Rifkind, Wharton & Garrison in New York.

Also, it seems his own employees got very, very suspicious shortly before he admitted it:

On Dec. 9, Madoff told a Senior Employee No. 1 that he wanted to pay bonuses in December, or two months earlier than usual. The next day, Madoff got a visit at his offices from the employees. They said he appeared “under great stress” in prior weeks, according to the documents.

Madoff told the visitors that “he had recently made profits through business operations, and that now was a good time to distribute it,” according to the FBI complaint.

When the workers challenged that explanation, Madoff said he “wasn’t sure he would be able to hold it together” at the office and preferred to meet at his apartment, Senior Employee No. 2 told investigators.

[Shaddim]

Originally Posted by stumblinmike 

Now if we had privatized it, like the President wanted, we would have "mad" money...

or just flush the whole damned thing. I'm just glad I got out of that trap long ago.

[Andrew Stephens]

Tit of the year award.

Now caught mailing millions of dollars worth of jewellery to relatives, while under house arrest on bail.

Monkey fiddler of the highest order!

[Eug]

Heh. His sons turned him in yet again.

http://www.bloomberg.com/apps/news?p...mRQ64&refer=us

The sons of Bernard Madoff, who is accused of running a $50 billion Ponzi scheme, told prosecutors last week their father violated a court-ordered asset freeze by mailing them jewelry, watches and other items, his lawyer said.

[Eug]

It would seem that Madoff's own family has lost millions.

http://business.theglobeandmail.com/...Story/Business

You'd think the former hedge fund bigwig, charged with sending droves of wealthy people into the (relative) poorhouse, would have run into the supportive arms of family.

But solace can't be found there: Mr. Madoff duped them, too, recent reports say.

He lost $3-million (U.S) of his sister's cash in the Ponzi scheme, according to the New York Post.

[ort888]

Sondra Wiener, 74, is struggling to sell her 3,409-square-foot Florida home and is unable to pay her country club fee - which costs from $35,000 to $115,000 - in order to stay in the neighbourhood, the newspaper says.

"Yes, my family's a victim. More so than anybody else," her son David Wiener said. "It's very painful."


It must be painful. I can only imagine what it must be like to not be able to come up with $100,000 for my country club dues.

[Dakar V]

The shame, the shame.

[Eug]

Yeah, I agree they still live a luxurious life and hard to feel sorry for his family, but it's still a good illustration of just how far Madoff would go to prop up his scheme, when he would bilk his own sister of $3 mil.

[Dakar V]

Hey, that's greed. Not surprised someone this greedy would turn on his own family.