Home » Madoff and Hanssen: you can fool some of the people

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Madoff and Hanssen: you can fool some of the people — 19 Comments

  1. Plus, I feel that Madoff was in the habit of bribing politicians, in the form of campaign contributions, to look the other way.

  2. Madoff’s two sons were supposedly in charge of the trading and back office operations at Madoff’s company, yet maintain they knew nothing of his scheme.

    If, from at least as far back as 1993, Madoff never bought a single share of stock for his clients, what were his sons and their staffs doing each day for the last 16 years?

  3. Wolla Dalbo: There were two separate Madoff operations. One, the one the sons were in charge of, was a straight-up investment business. The other was the “fund,” with all the trouble. That’s what I’m referring to here.

  4. As an aside, Robert Novak used to use Hansen as one of his best FBI sources.He was quite chagrined when he learned of his spying and wrote about their relationship.

    There is no possible way to not find a paper trail of bank transfers and offshore trusts connected to Madoff.The clearing and processing of such large amounts would have been noticed at the Treasury.

  5. Walla Dalbo — just FYI, the sons were in charge of trading division and operations of Madoff’s proprietary trading and his market making operations which is where he really got his start and is credited with reforming how stocks are traded — with firms specializing in certain stocks and “making the market” for specific stocks, i.e. serving as a clearance house by selling to all those wanting to buy the stock and buying stock from those selling (thus deriving the shares which he sold). He was also the first, or one of the first to offer incentives to firms to bring their business to him by say, paying a penny a share for every stock traded, which he made up in his business of buying and selling and essentially “making the market.” The money management operations were supposedly completely separate and apart from the above businesses.

    That was just info for anyone for the edification of anyone interested. It was not meant to, and does not redeem him in any way, shape, or form. In fact, it just adds insult to injury to victims — as does the negligence of the SEC as it continually ignored the continued warnings and detailed information provided by whistleblower Markopoulos. And insult and injury continue to be heaped upon victims as neither the court, the court-appointed receiver, nor the prosecuting team have communicated a single time with victims regarding status of the case, progress in locating assets and that which they are pursuing presently. Neither have they indicated any iota of an idea re: any kind of recovery, or when — or if — the insurance for every account supposedly provided by the SIPC can even be expected. Forms have been sent out to victims making claims, but no further information has been issued.

    One thing the court or receiver has made time for is providing the press with a list of every victim, along with personal and private home addresses of individuals. There ensued a virtual race to publish said list for all those “lookie-loos” who cared to spend their time poring over it; for lawyers trolling for clients looking to sue, and cold call brokers looking for potential clients who might have other funds to invest.

    It should be noted that while most of the press has reported that Madoff’s “money management” business was exclusive and only available to extremely wealthy individuals, that wasn’t quite true. Yes, there were quite a few INSTITUTIONAL INVESTORS (as opposed to individuals) such as banks, hedge funds, and various funds of funds that had enormous amounts of money invested with Madoff. However, while it is true that there were a handful of extremely wealthy individuals there were thousands of modest wealth: a million to several million which represented the life savings of these people. Many are elderly people who lived on the “income” they believed their money was earning, and now are penniless, with no means of support and certainly unable to return to earning a living. And here’s just one more insult added to injury: the court has announced that they intend to sue all the victims for clawbacks — money redeemed or distributed from their accounts (note that income taxes were paid on all earnings annually whether money was taken out or not). Details as to how far back the clawbacks will reach has not yet been made available. Not only have victims lost all their money, they are being asked to return monies they lived on in the belief it was earnings and which they paid taxes on, and the court can go after any and all of their property if they don’t have funds to return. There is the exception for Florida residents whose primary residents are protected even if these victims no longer have the means to maintain such homes and are forced to sell in a seriously impaired market (victims again) in order to live. Oh, life insurance is also protected. There have already been 2 suicides. Don’t be surprised if there are a few more.’

    And Bernie Madoff and his wife are still ensconced in their Manhattan penthouse, despite 2 clear efforts to hide assets for their own benefit: the first mailing of jewelry and “trinkets” worth at least $1 million, and Mrs. Madoff’s withdrawal from a co-owned company between Madoff and another individual of $15.5 million.

    His civil prosecution proceeded very quietly in which Mr. Madoff made a plea agreement with the SEC:

    “The agreement with the SEC says the agency’s civil fraud allegations cannot be contested by Madoff and that possible civil fines and restitution will be decided “at a later time.”
    The allegations, as laid out in the SEC’s civil lawsuit filed on Dec. 11, are that Madoff committed a $50 billion fraud and told his sons his investment business was a sham. Madoff told them he had “absolutely nothing,” that “it’s all just one big lie,” and was “basically, a giant Ponzi scheme,” according to the SEC suit.”

    (Source: numerous news outlets, reference following being only one such source:)

    http://www.nbcnewyork.com/news/us_world/Madoff-Cops-Civil-Plea-to-50-Billion-Fraud-.html

    Not even a slap on the hand! And still living in home sweet home.

    NOTE: I did not even get into the enormous losses accrued by charitable foundations, medical research grants, school grants, hospitals, and on and on. The impact is expected to be astronomical in terms of the future of medical research. For more detail: http://online.wsj.com/article/SB123439995182175299.html

    And all this as our current administration — only 1 mo. old has already spent 1 trillion dollars (w/ interest — more than the cost of the entire Iraq War, the War in Afghanistan, and Katrina) packed with pork, a $400 billion dollar bill being voted upon today with approximately 9,000 earmarks, and in light of President Obama’s speech last night indicating that this is just a basic warm-up in spending if he has his way in completely re-making life in the United States. The bail-out funds for banks and auto cos. and mortgage aid not included in the above totals.

    Somehow I’m just missing that “hope” thing. The “change” I get — and I don’t like it much.

  6. This blows the theory that Madoff was an honest guy gone bad in the last couple of years as the market began to tank. It makes it more likely that he is some sort of economic sociopath.

    does it? when a person has a resturant, and they do business with certain people and make them ‘partners’, what can happen to a good person or an average person then?

    the process is tongue in cheek shown in good fellas… where they strip the business and run it to the ground illegally and take all the profits, keep it afloat as long as it can, and leave the guy who got involved with the wrong people to take the blame, and the punishments.

    there was a report that maddoffs customers didnt just include very wealthy jewish scions… but that his customers were also russian mafia, and drug cartels.

    you can find informatino if you search…

    Markopolos testified that madoff was working with these organizations… as well as signalling in newspapers.

    but given the lefts inability to see anything nefarious from other left, the point is lost in the morass.

    the other problem is that the tin hatters are running interference… (that is that they all have tales that smoke screen things. so that if you try to have a serious discussion of the facts, all thsi mish mosh stuff comes in.. then people like lee can just write it off out of hand as they do not really think much as to things)

    you can go nuts going through their stuff… because its a mish mosh of the truth and fact, with lies and false conclusions… its like digging through a new york waste disposal plant to get to a 1 carat diamond… not worth it.

    there is a large click of these people… they have been preying on the wealthy for decades… Micheal Steinhardt ran a hedge fund way back and CNBC praised him as a financial genius… but later he admitted that he was son of Sol “red” steinheard who was a player in the genovese ogganizations. dad spent several years in sing sing.

    hedge funds are or were a great vehicle for illegal action… and if run the same as the restaurant tiny thing could yeild BILLIONS… as is evidenced..

    these peopel were all connected.. steihnhardt jr, marty peretz, marc rich (i met his wife a few times), and ivan boesky (remember milken?)… look up the story of bayuo group, which was a prior record hedge fund fraud.

    many things in the banking and investment world gets swept under the rug since confidence of custoemrs is paramount. so they never report how much is lost to robgery or fruad.. they never tell you about the scames that are caught (if they can help it) and so forth. its why CRA was able to intimidate them… banking is an image business.

    if you start in the 70s.. carter era.. and work forward, you will see a remarkable pattern of abuse and things that pop up… fade and repop as if the alst time didnt happen.

    we all forget the testimony of fat tony who talked about the ‘feeder’ who worked with milken on investers overseas services. until madoff this was the biggest ponzi scheme, and it had all manner of illegal organizaions working it.

    after all, its a big pile of money that they can work on one end, while the political wing works on the other end to do things to loosten it up and keep it going.

    Madoff successfully lobbied the SEC to enact a rule that allowed market makers such as himself to engage in naked short selling. At the SEC, this rule was called “The Madoff Exception.”

    some think that his job was to use naked short selling to move the numbers for those who were laundering their money and investing elswehre.. which is a major reason why this is more complex than just a ponzi schem… and why we dont know too much since such over a regular ponzi scheme would shock people. (but such orgs have worked banks since banks existed).

    so madoff relied on feeders.. a network of those who were to feed customers of certain types to him. the fact that they gathered so many of one religion and purpose, should hint that it wasnt just greed that motivated them, since one could find as many if not many more targets outside this smaller subset.

    some ‘feeders’ were fairfield geenwich group.. [does philip taub ring a bell?]

    robert jaffe was another feeder… (jaffe ran money and got in trouble doing sofor the anguilo brothers connected to the genovese family).

    Sonja Kohn was another… who moved to bank medici of austria, and then fed russian olilgarchs and mafiosi to madoff.

    so… this isnt as clear cut as a mad capitalist alone taking advantage of the wealthy.

    he is way too happy… he is smiling like a man who has been repreived from literal hell, and is in a BETTER situation now… after all, until it all fell apart, he coudl nto get out, he couldnt betray orhis family would be bothered, he couldnt quit, tell or literally do anything other than keep doing it till they couldnt do it any more.

    [which means leaving him in his penthouse keeps him away from having an accident in prison that is convenient anyone remember what ahppened to Roberto Calvi the accountant for the vatican. what about central banker Andrei Kozlov?]

    i dont know if any of this is it… but when you look at others who are caught… they are not so happy… he has an out… or the bad he gets now is much better in some way than where he was..

    if he WAS influenced and controlled by others, then he has his out ticket!!! he will squawk if they press too hard.. so they will work him for the info.. come up with some angle… and try to make it go away silently like milken… (milken was pretty silent pretty fast after the initial noise).

    he is not going to fry much because he worked over powerful people all over at the behest of others.

    the money was used for active measures and to line other peoples pockets who were in the scam. he didnt get to keep it… lived very well, but not well enough for 50 billion…

    Wealthy Latin Americans appear to be among the big losers in the $50 billion Ponzi scheme orchestrated by financier Bernard Madoff, although many in the region are reluctant to step forward due to the private nature of Latin American fortunes, worries about security, and concerns about tipping off local tax authorities.
    online.wsj.com/article/SB123051003837638329.html

    they mention a feeder:Other investors appear to have been introduced to the scheme through their friendship with Andrés Piedrahita, a socially prominent, Colombian-born banker living in Madrid and London. Mr. Piedrahita, is a son-in-law of Walter Noel, founder of the Fairfield Greenwich Group, which may have lost $7.5 billion it had invested with Mr. Madoff.

    In Brazil, no investors have yet stepped forward to declare losses, even though local fund managers said some wealthy Brazilians invested alongside Mr. Madoff. Lawyers say the likely reason for investors’ silence in Brazil is that they invested overseas without declaring that money to Brazil’s tax authorities, a relatively common practice in Brazil due to heavy regulation and high tax rates.

    he played with some really dirty people… so most are just going to pretend they werent involved.. so when it boils down, the OTHER targets who were not part of he negative area, are the ones who are crowing.

    and socialist appointees do abysmal jobs
    “Unfortunately, the SEC staff lacks the financial expertise” and understanding of the complex securities traded in the marketplace to investigate frauds”, testified Markopolos. “A fraud that should have been stopped at $7 billion in 2000 has now grown to $50 billion. We need a highly trained finance team that is highly incentivized to look for frauds. Derivatives are too complicated otherwise. They had no idea how to do the math.”

    Some quotes from Markopolos’ testimony to Congress:

    About the SEC: “3,500 chickens and we need to get some foxes in there.”

    Markopolos said he feared for his life because Russian mob and Latin America drug cartels invested with Madoff. Markopolos said “I would not be long for this world,” in regards to Madoff.

    Markopolos said he went to the Wall Street Journal to tell his story, and that newsreporters had his story ready, but that editors respected Madoff and did not want to anger him.

    Markopolos said that the SEC didn’t have the ability or willingness to go after fraud funds such as Madoff’s and Arthur Nadel’s.

    Markopolos mentioned that the feeder funds that sent Madoff money did not do due diligence in checking on Madoff’s investments.

    Markopolos called the NASD “a corrupt organization.”

    Markopolos says he knows of 12 more feeder funds that invested with Madoff but have not been announced yet.

    it all smacks of a business taken over by the negative customers it shouldnt have tried to serve… or a business that decided and was created in the milken era with the same people as one of MANY fronts designed to suck money from the wealthy and use it for political actions (self funded active measures), and preventions of such things as funding weapons to isreal even if the states refuse to help them.. (as has foiled previous bs).

    we wont know till all the principals are dead and if the freedom of information act is still aruond then… given the connections to connections that is easy to trace… something more fishy than just a scam was going on… he had protection of the kind that no one who gets talked to continues to ask questions. (this may be the temptation that made him get into bed with them.. they told him they have people all over in high places that will help facilitate things…)

    i have typed too much… and fear again, too long.

  7. Bernie Madoff is, so far, the most successful of a long line of scam artists. Stanford Financial and a couple of others recently outed were pikers compared to Madoff. We have these things happen over and over again. Back in the 60s I remember a scam that many of my fellow airline pilots invested in. The scammer was ostensibly buying commercial real estate, upgrading it, depreciating it, and then selling it at a profit. He was paying his “partners” 7-10% (a big return in those days) on their money. When he couldn’t find any new investors, the whole thing fell apart. Many were financially ruined by that just as occurred in the Madoff case. There have been many others since those days, a few pointed out by Artfldgr.

    As Martin Feldstein was fond of pointing out, no government can protect its citizens against their own greed. The acid test should always be if it is too good to be true, it probably is. We also need to remember that no one, repeat, no one cares about our financial welfare as much as we do. Therefore, we have to do our homework if we are going to invest. The only way to stop these people is either to shut down free markets or for every investor to do, as they say, due diligence.

    I saw a cartoon in which a policeman was asking Madoff where he got the idea for his scam and the cartoon Madoff answered, “Social Security.” Not such an inappropriate answer, heh.

    Madoff is no different than any conmmon criminal who sets out to burglarize someone’s home. He just does it in a more refined style. Possibly a thorough shaming, such as putting Madoff in stocks at the corner of Broad and Wall for a month followed by a 40 year prison sentence, would act as some deterent to those who might want to start follow in his footsteps.

  8. Nobody knows–except Madoff himself, and whomever his accomplices (if he had any) might be.

    This is the question I repeatedly asked about all this myth of Home Mortgagees crises.

    In fact Maddoff case I was talking to a friend about it, he reply to me, that the money went to those share holders, the people who invested with Maddoff he paid them high interest rate comparing to other money institutions like banks and others that mean all the group share the blame about those billions missing.

    But what we told by those who invested with him now the lost every thing and their money and their saving. Did any one asked each of them how long he did investing with Maddoff and how much he paid him for those periods.

    So if we calculate who much he paid those people we will found then its big portion went to them and other portion of course Madoff himself have it in some sort.

  9. Hi –

    Financial sociopath, not an economic sociopath.

    I think we need to reserve that term for the 111th Congress, if not the 110th, 109th, 108th and at least the 107th as well…

  10. Assistant Village Idiot Says:
    Artfldgr, who is going to be following this so we can keep up with it?

    i dont know how to answer.

    on one aspect, i throw up my hands and say.. i have no idea!!

    but on another angle, the answer (as usual) is NOT what people would think, nor is the solution.

    want to know why people die when someone runs a red light? because an arbitrary rule was not followed. now imagine that there were absolutely no traffic lights. one type of accident would get traded for another.

    but if we are to use this analogy usefully, we should apply it..

    what is the purpose of the arbitrary rules? the presumption is to facilitate a more productive end.

    after all, we ahve all seen what happens when a traffic light goes out, or rules are ignored as a mistake OR for gain (as they just disovered a hit and run in ny may be a murder).

    so again, the thing boils down to culture and morals. if you compare accidents of this nature in teh past with today, you will find that when they had better manners and no arbitrary rules, people had to be more concerned. they looked out.

    the remember caveat emptor…

    but as the culture was stripped from them. they become more sociopathic, mor willing to take a shortcut and break a rule. when this happens the rule becomes an artificial advantage as it impinges on some and not others.

    if we all follow the rule, and the traffic light is good, then we can move faster through the intersections… we can move faster to an end result. but we can NEVER shift or move and gain a free lunch… we go faster with fewer accidents but they are larger and more detrimental.

    want to have smaller accidents? remove the rules that create a false sense of security and trust. the person going through the intersection that would be hit, would not be hit if they paid attention to things that the rules are not intended to replace.

    a guideline is not a programatical replacement that you switch out your responsiblities now that you have a new module put in.

    just because a traffic light exists, one does not just blindly drive through the intersections imagining that the rules, the overseer (real principals), and all that are always perfect.

    if there were no oversight rules over madoff, people with a lot of money would not have put that money in without due dilligence and reporting.

    which is the OTHER hidden side of the coin, besides the dynamic above.

    and that is trust and the picking up of a responsibility coming from an age of merit, means we are too trusting of a declining competency.

    the traffic light only works if we all USE THE RULE correctly…

    but if merit is not there any more, or as much. or someone decided to cheat like a parasite, and so on… then we are going to use the rules and tools wrongly, with the outcomes being wrong.

    no new tool will make a bernie maddoff go away… because he LOVES The tools.

    the tools/laws, change a fixed landscape where things move slowly, into a jumble where advantage can be found like insects in a freshly plowed field.

    to a rule breakin opportunist, each new rule creates a lag between its instiution its effect, and the changes that will happen.

    the market is divesting because the markets are all people waiting to see how the new land will lay and what advantages will bet her.

    it is assumed that the plow will destroy the advantages allready in existence.

    so the new rules are going to allow a larger bernie madoff to be in our futures.

    thats because in order for us to get thorugh the traffic lights faster, we have to choose not to do the dilligence we should over our own interests. (the constant message we dont have to is also not good)

    if they dont teach capitalism they sure arent teaching caveat emptor. the reason is easy… it makes capitalism look like a crooked cheat becasue it shifts trust into areas in which the rules say dont trust.

    it allows us to drive thorugh the intersection blindly and not have an accident happen except rarely and usually to other people. bit if there were no light, we could not blindly ride through, things would be slower, and there would be more small collisions distributed among the people.

    the one thing you cant do is avoid all accidents.

    i sure hope i gave a meaningful anser… but i am even more sure tha occam, baklava, fredhjr, and a few others could rewrite it better than i have. i am long on great ideas, not so good at transfering them. my not being allowed to attend formal things due to being the wrong cog has left me with this deficit… not to mention personal style and other things lean that way too… double whammy.

    but i never see things the way other people do because for me i see things ni all these ways, not one way… when i see a flower, i dont just see the beauty that some others see (i say some becasue if i photo it, i can then get others to see beuty in the same place that they couldnt see standing next to me). but i also see the physics and all the way up to the macro level an beyond.. to me it spans femto to feet… systemic integrations… mollecular arangements, simple rules to complex outcomes. fibonaci numbers, set theory, toploligical realms, search sets, biological symbolisim and absract6ions…

    but do you think i can actually answer trutfully when i am contemplating a flower and somone says “penny for your thouhgts?”

    not at all… they say i ruin it…

    but for me… i dont see the lone singer acapela… i see a complete full blown long running complicated and interconnected opera…

    but then again… people like the lone singer on american idol more than they like Carmen…

    I guess Pucchini ruins it too. 🙂

    [i am also way way way too abstract – its a powerful tool for doing two things. one is to fnid out incredible new insights and relationships, the other is to confuse otehr people over basic things that they thought have been setteld and have little complexity]

  11. JMS,
    great reference..

    [to those that say i am too long… if you read and have read what i linked to, i would not have to type paragraphs and post long things.. i could just say a name… Donald W Shimoda!!! and thats all i would need to do!!! its your ignorance that makes you suffer, and causes other who would know what i was refering to, to have to live through it for your benifit which you cast down as not having the solid wisdom of a downy commerical in size and form.

    GREAT comment JMS!!

    [anyone want to bet that the typical leftist will just pass over it… ]

  12. Allen Stanford’s school of serial swindlers use name dropping, stamped passports, falsified tax returns, and donations to St. Jude’s to gain trust and power over private companies with aspirations to go public. According to SEC files, Sydney Trip Camper botched a deal with the Ahkoy family’s Datec and was fired from Elandia Inc. by Allen Stanford. With help from his new partner in crime, Sydney Camper went on to his next victim in Los Angeles and ruined this private company by forming a shell holding company, opening secret bank accounts, and using all THEIR assets to get OTHER people to loan HIM money = PONZI SCHEME!!!! In true Stanford form, Sydney Camper moved on to InZon and Ed Berkhof is orchestrating a new scam with FMC Telecom. Frank Cassidy, owner of FMC Telecom, is either his new fellow fraudster or Mr. Cassidy has fallen victim to Ed Berkhof’s new scheme. The FBI and SEC are investigating Allen Stanford, James M. Davis and their den of thieves including Sidney D. Trip Camper III and Ed Berkhof.

  13. Artfldgr, jms

    Holy shit! So I’m not the only one who sees that connection. I totally wasn’t expecting to find anything when searching the two names together, but sure enough… It’s comforting to know I’m not alone.

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