The Madoff affair

Vanity Fair has followed the Madoff story tenaciously.

The size and extent of the damage caused by the Bernie Madoff (yes, ironically, it really is pronounced ‘Made-off’) Ponzi scheme is so great that we have decided to give it its own page, rather than mingling it with the news of the rest of the economic and financial woes of the world. And now that everyone refers to Ponzi in the same breath as Madoff, this is great background on the Montreal link:
Carlo Ponzi not only lived in this city as a young man, but it was here that he had his first taste of the swindle that would eventually carry his name. He became as infamous in his day as Bernard Madoff is in ours ….

HSBC’s victory likely to cut jackpot for Madoff investors
Victims may have smaller pot from which to recover losses
(Gulf News) A courtroom win by HSBC Holdings may reduce the $100 billion (Dh367.2 billion) trustee Irving Picard is seeking on behalf of Bernard Madoff’s clients, undercutting bets traders have made on victims’ claims.
US District Judge Jed Rakoff last week threw out almost $9 billion in damages that Picard demanded from HSBC and feeder funds, saying the trustee was free to pursue $2 billion in bankruptcy claims. Picard has no right to sue on behalf of customers or the Madoff estate, using common-law claims against parties, “who allegedly violated a duty to Madoff Securities’ customers by failing to detect Madoff’s fraud,” Rakoff ruled.
29 July
Madoff trustee collects $1bn from hedge fund
(FT) Tremont Group and its parent company Mass Mutual have agreed to pay more than $1bn to settle a lawsuit brought by the trustee responsible for collecting money for Bernard Madoff’s victims
17 June
Madoff Claims Lure Banks
Some of the world’s biggest banks are jumping into a multibillion-dollar market that buys up victims’ claims in the Bernard Madoff Ponzi scheme, including two banks that have been sued in connection with the fraud.
The buyers of claims offer defrauded investors who want immediate cash a fraction of what they are owed, intending to profit by collecting a larger payout when the settlement is made final, which can take years.

2010

12 December
Madoff’s Elder Son Found Dead in Suicide
Mark Madoff, the older of Bernard L. Madoff’s two sons, hanged himself in his Manhattan apartment on Saturday, the second anniversary of his father’s arrest. A person who spoke with Mark Madoff frequently in the last few weeks said he had been in “an increasingly fragile state of mind” and had expressed both continuing bitterness toward his father and concern about a series of lawsuits that were filed against him and his family.
10 December

Madoff Trustee Seeks $19.6 Billion From Austrian Banker
A prominent Austrian banker who portrayed herself for two years as one of Bernard L. Madoff’s biggest victims was accused on Friday of conspiring for 23 years to funnel more than $9 billion into his immense global Ponzi scheme.
24 June
In Madoff Case, Action Is Mainly Civil, Not Criminal
Given the slow pace of the investigation, it is questionable whether the government will ever be able to show that there was anything more than a few willing enablers, claiming not to have understood the depth of the fraud, who helped keep a multibillion-dollar Ponzi scheme running for years.
8 June 2010
Unrepentant Madoff a hero to his fellow inmates, magazine finds
Ponzi schemer Bernard Madoff, serving a 150-year sentence for masterminding Wall Street’s biggest fraud, has total contempt for his victims and is considered a hero by his fellow inmates, New York magazine said yesterday. Bernie Madoff, Free at Last – In prison he doesn’t have to hide his lack of conscience. In fact, he’s a hero for it.
31 October 2009
Lapses Kept Scheme Alive, Madoff Told Investigators
Nobody was more surprised that the Securities and Exchange Commission did not discover Bernard L. Madoff’s enormous Ponzi scheme years ago than Mr. Madoff himself.
The new exhibits consist of 6,157 pages of interviews, letters, e-mail messages, telephone records and other background material gathered during Mr. Kotz’s 10-month investigation of how the commission handled, and mishandled, numerous tips and warnings it received about Mr. Madoff over the years. His full report,released last month, found the agency had received six substantive complaints since 1992 — and botched the investigation of every one of them. He found no evidence of any bribery, collusion or deliberate sabotage of those investigations.
27 September
(Reuters) – Epic swindler Bernard Madoff’s two sons, his brother and a niece will be sued this week for $198 million, the trustee winding down the Madoff firm told CBS News’ “60 Minutes” broadcast on Sunday. New York lawyers Picard and Sheehan said the latest lawsuit to recover money for defrauded investors under the Securities Investor Protection Act would accuse the family members of negligence and breach of fiduciary duty. The lawsuits to be filed in U.S. bankruptcy court in New York would also accuse them of profiting personally in the tens of millions of dollars while working at the firm. Only $1.5 billion has been recovered so far and the estimates for the actual money that was lost in the fraud have varied from $13 billion to $64.8 billion. More
3 August
Series of errors allowed Madoff to keep trading
(The Independent) A searing internal report from Wall Street’s top regulator, the Securities and Exchange Commission, says that the 2006 failure was just one in a catastrophic series of errors that the agency made in its dealings with Madoff. It could have discovered the fraud and shut him down as early as 1992, but staff were dazzled by his Wall Street credentials and fearful of his power, the report concludes.
10 July
Already Burned, Madoff Victims Now Face “Clawbacks”
Court-appointed trustee Irving Picard has recovered about $1.2 billion of $13.2 billion in estimated net losses so far, The Wall Street Journal reports. He is now looking to victims who pulled out their money in previous years for the rest. To this end, he has filed so-called “clawback” suits.
3 July
Weekend Opinionator: Did Madoff Get More Than He Deserved? A selection of thoughtful commentary about the appropriateness of the sentence of 150 years.
1 July
Robert Scheer: The Root of Madoff’s Evil
(Truthdig) Madoff, sentenced Monday to 150 years in prison for bilking investors of billions, should be exhibit A in why the dark world of totally unregulated private money managers and hedge funds should be opened to the light of systematic government supervision. Instead, he is being treated as an aberrant menace, with the danger removed once the devil incarnate, as his victims describe him, is locked up and the key thrown away.
For goodness’ sake this was not some sort of weird outsider who flipped out, but rather a key developer of the modern system of electronic trading and a founder and chairman of Nasdaq. Madoff often was called upon to help write the rules on financial regulation and therefore became quite expert at subverting them.
30 June   
Madoff behind bars, investigation grinds forward
(AP) A person close to the investigation tells The Associated Press no more arrests are imminent, but 10 people are expected to face charges by the time investigators are done.
29 June
Madoff sentence underscores global crisis toll
BASEL/NEW YORK, June 29 (Reuters) – In a grim reminder of the toll the financial crisis has taken on investors, disgraced financier Bernard Madoff was sentenced to 150 years for defrauding investors in a $65 billion investment fraud. Meanwhile, the world’s central bankers meeting in Switzerland said on Monday that to prevent another global credit crisis, financial products should be sold to consumers only when certified as safe.
Madoff gets 150 years for massive investment fraud
NEW YORK (Reuters) – Bernard Madoff was sentenced on Monday to 150 years in prison — the maximum penalty the judge could give him for “extraordinarily evil” crimes in Wall Street’s biggest and most brazen investment fraud.
18 May
Trustee Sues Hedge Funds Over Losses to Madoff
(NYT) The hedge fund family that topped the list of losers in Bernard L. Madoff’s Ponzi scheme, with more than $7 billion sunk in the immense fraud, has been sued by the trustee overseeing the search for assets in the case. The three funds were all managed and promoted by the Fairfield Greenwich Group, an investment advisory business run by Walter M. Noel Jr., Jeffrey H. Tucker and Andres Piedrahita, Mr. Noel’s son-in-law.
7 May
NY Trustee in Madoff scandal sues hedge fund manager for more than $500 million
5 May
Bernie Madoff’s Secretary Spills His Secrets
(Vanity Fair June 2009) Bernie Madoff was a sexist, egomaniacal, short-tempered control freak—yet everybody loved him. That is according to his secretary of more than 20 years, Eleanor Squillari, who co-authored a 9,000-word article in the June issue of Vanity Fair.
April 2009
Madoff’s World
(Vanity Fair) Among Bernard Madoff’s many dupes were his closest friends, including two tycoons he loved as surrogate fathers: the late Norman F. Levy—whose girlfriend, supermodel Carmen Dell’Orefice, would lose her life savings—and the prominent philanthropist Carl J. Shapiro. Amid the sobs, screams, and curses in Aspen, Palm Beach, and New York, with victims sharing their stories, the author gets behind Madoff’s affable façade, to reveal his most intimate betrayals.
Greenwich Mean Time
(Vanity Fair) Walter and Monica Noel, their five attractive daughters, and their well-connected sons-in-law were flying ever higher on the profits of their Fairfield Greenwich Group, a feeder fund for Bernie Madoff. Then the family watched their world crumble as the accusations began.
4 February
Harry Markopoulos Accuses SEC Of Colluding In Madoff Scheme
The public remains enthralled as the depth and complexity of Bernie Madoff’s $50 billion ponzi scheme continues to be revealed yet Harry Markopoulos knew about it from the start. So why didn’t anybody listen?
9 February
Madoff scandal: Taken
by John Gray, Canadian Business magazine
More than a dozen Canadian companies and wealthy families appear on a list of investors defrauded by Bernard Madoff’s alleged US$50-billion Ponzi scheme. The names appear on a 163-page list of individuals and companies who invested with Madoff.
Madoff has allegedly confessed that his entire investment business was a fraud where old investors were paid — not from profits made by legitimate trades in stocks or bonds — but by handing over money provided by new investors. Madoff, 70, is currently free on US$10-million bail.
Officials from the U.S Securities and Exchange Commission were pummelled for their handling of the Madoff case during Congressional hearings into the matter held yesterday. Harry Markopolos, a former investment manager, testified that the SEC repeatedly brushed him off when he tried to warn the securities regulator about Madoff’s suspicious conduct. “I gift-wrapped and delivered the largest Ponzi scheme in history to the SEC, and somehow, they couldn’t be bothered to conduct a thorough and proper investigation because they were too busy on matters of higher priority,” Markopolos told the U.S. House Financial Services Subcommittee. “If a $50-billion Ponzi scheme doesn’t make the SEC’s priority list, then I want to know who sets their priorities.” Congressmen praised Markopolos and went on to condemn representatives of the SEC for their failure to act.
27 January 2009
Madoff in Manhattan
(Vanity Fair online) Bernard Madoff’s scam was global, but his center of gravity was Manhattan’s Upper East Side. Speaking to longtime residents of the tony enclave, including many who lost millions with Madoff, the author explores the thorny issues of class and religion that the scandal has brought to the surface.
20 December 2008
Madoff: The man who sold the world
(The Independent) Could there be a more appropriately awful end to the most awful year for American capitalism since the Great Depression? The scam operated by Bernard Madoff, once a man above all suspicion on Wall Street, is not only one of the largest frauds – maybe the largest – in US history. It is also a perfect metaphor for the ills and excesses that have brought the country’s financial system and economy to their present wretched pass.
Since Mr Madoff’s arrest on 11 December the list of those duped by the unfailingly lavish returns offered to investors in the Madoff Investment Fund has grown steadily longer. As befits this globalised age, the victims come from every continent. They include not just some of the world’s largest banks and hedge funds, but also private individuals and smaller organisations, among them charities run by celebrities such as Steven Spielberg – even it appears, the pension fund of our own Hampshire County Council, on the hook for £7m.
“It’s Kristallnacht Two!” An Ethnic Cleansing in America
(Counterpunch) Call any Jewish friend across the few days and the degrees of separation from someone financially devastated by Bernie Madoff are often only one or two.
… In terms of financial and psychological impact, Bernard Maddow’s $50 billion heist certainly ranks as a major ethnic cleansing here in America, a hugely traumatic event for American Jewry. Of course Madoff had clients of every creed and nation, but he made a specialty of trolling for Jewish money.
19 December
The Madoff Economy, Paul Krugman
The revelation that Bernard Madoff — brilliant investor (or so almost everyone thought), philanthropist, pillar of the community — was a phony has shocked the world, and understandably so. The scale of his alleged $50 billion Ponzi scheme is hard to comprehend. Yet surely I’m not the only person to ask the obvious question: How different, really, is Mr. Madoff’s tale from the story of the investment industry as a whole?
Madoff Scheme Kept Rippling Outward, Across Borders
Whatever else Mr. Madoff’s game was, it was certainly this: The first worldwide Ponzi scheme — a fraud that lasted longer, reached wider and cut deeper than any similar scheme in history, entirely eclipsing the puny regional ambitions of Charles Ponzi, the Boston swindler who gave his name to the scheme nearly a century ago.
18 December
Madoff Exposes Double Standard for Ponzi Schemes: Jonathan Weil
Dec. 18 (Bloomberg) — Bernard Madoff’s amazing Ponzi scheme has put him in a league of his own, for now. He shouldn’t be alone for long.
It’s unclear why the SEC failed to stop Madoff, whether because of corruption, a lack of smarts, a dearth of interest, or some combination. We can say with confidence, though, that many other huge frauds are still operating freely today — and that the government might not be inclined to intervene, even when it knows all about them. After all, Madoff’s scheme — at least in spirit, if not in its nefarious intent — wasn’t much different than the business models at some of the nation’s largest failed financial institutions.
The Madoff scandal gets weirder and weirder
According to the Wall Street Journal, the SEC discovered in 2006 that Madoff had misled the agency about how he managed customers’ money. Moreover, investor Henry Markopolos spent the past decade trying to convince the agency that Madoff’s returns were too good to be true. Markopolos and his friends tried to replicate his returns using complex mathematical models and could not.
Barron’s reported that no one understood how Madoff made money and that the investors were pressured to never reveal that they had money with him. Ever hear of an asset manager who did not want rich people to brag about how well they did with them? But people did not need to try that hard to figure out that Madoff is a crook. All they needed was common sense.
17 December
Madoff Will Be Home For Christmas
Alleged Ponzi scamster is put under house arrest as investor lawsuits begin to pile up.
(Forbes) Alleged Ponzi scheme con artist Bernard L. Madoff has lost his reputation, and now his homes are at stake as well. Madoff had to sign over his house in the Hamptoms, his Upper East Side apartment and Palm Beach digs on Wednesday to post bond to stay out of custody before he’s brought to trial.
16 December
12 December
List of potential victims grows in Madoff case
(MSNBC) Hundreds or even thousands of people may have lost money in scheme
Madoff Scandal Hits Philanthropies and Institutions
The arrest of financier Bernard Madoff on 11 December on investment fraud charges has sent waves crashing into scientific institutions and philanthropies that invested in Madoff-backed schemes. Madoff contributed widely to and served on boards of various Jewish and Israeli charities and institutions, many of which invested in his hedge fund. Prosecutors say Madoff’s fund was a $50 billion scam.
Bernard Madoff arrested over alleged $50 billion fraud
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.
Credit crunch unmasks former Nasdaq chair
(Business Week/MSNBC) For years there were whispers on Wall Street about Bernard Madoff’s hedge fund. The cynics said the returns were too good, too steady and Madoff’s operation always looked too slim for the tens of billions of dollars it was managing. But given Madoff’s more than four decades of experience as trader and past service as chairman of the Nasdaq stock market, the wealthy kept giving him their money.