The Madoff confession: just aiming to please
Here’s a link to Madoff’s confession in full.
It’s a fascinating document, both for what it says and what it doesn’t say. Madoff is very careful to implicate only himself in the fraud. In his description of how it was done, he explains some of the many machinations he says he performed to hide and deceive, and to create the appearance of a bona fide operation, as well as to separate the Ponzi scheme from his more conventional (and legal) operations.
The only problem, of course, is that the man is a consummate liar.
But taking his confession at face value for the moment, one of its more interesting aspects is his allegation that he began the Ponzi scheme in order to please his clients during a period of declining investment returns in the recession of the early 90s. Madoff says that clients were expecting good earnings, and he didn’t want to disappoint them [emphasis mine]:
While I never promised a specific rate of return to any client, I felt compelled to satisfy my clients’ expectations, at any cost. I therefore claimed that I employed an investment strategy I had developed, called a “split strike conversion strategy,” to falsely give the appearance to clients that I had achieved the results I believed they expected.
So, the clients made him do it! Madoff casts himself as a people-pleaser, just giving the folks what they wanted.
And perhaps that is exactly the way he justified his criminal acts to himself. Talk about passing the buck!
Goniff.
http://www.merriam-webster.com/dictionary/goniff
He didn’t charge a fee,which is unlike any other asset manager.He just did it for the pleasure of generating commissions via his broker-dealer.He was selfless! So, if he wasn’t in it for the performance fees, then he’s got no reason to bring up the idea of failure of live up to client expectations.He could simply state after one year that” I’m not all that good at money management, so here’s your money back” and he still collected a year’s worth of brokerage commissions.
Bernie’s a sociopath.
Since he never placed any trades on behalf of these accounts, just how was he interested in pleasing his clients? He began the enterprise as a fraud.
The Madoff and Stanford cases interdigitate wonderfully with the agenda of the capitalist- demonizing Democrats. The far greater crimes are occurring and will occur in D.C., all in the name of fairness.
I have casual acquaintance with someone who banked with Stanford. He’s lost several millions. His answer to why he went with Stanford was that friends were well-satisfied with their Stanford CDs, yielding several hundred basis points more than other banks’. Duh! That’s due diligence? The investors in these schemes should blame themselves, sad though their consequences may be. These guys have always been out there and will always be. Many of them are politicians.
But it’ll all be academic soon. Read Henninger in today’s (online) WSJ. The truly huge thieving is in Washington, and I suspect a majority of Madoff’s investors voted for Obonga.
Passing the buck, yes…and the bucks, right up to the end. So an investment strategy where you lose money is bad… and so (can be) one where you make money.
The first bank of my mattress tends to look pretty good, sometimes.
So that’s why he did it! (sarcasm)
I’m so tired of the whys of criminals, from Madoff, murderers, thugs, all the way down to petty thievery. And, I’m so waiting for the day when this hair-splitting the excuses for these crimes becomes a luxury we can no longer afford.
http://www.weeklystandard.com/weblogs/TWSFP/2009/03/madoffs_political_contribution.asp
I’m not usually an identity politics person. This is the game Democrats would play on Republicans….
But I would like to see the dominant drive-by legacy press do what I know they will do….. ignore this news.
anybody notice how many of the recent problems can be casted into games of musical chairs?
what happened in the housing game? the bundles were made and pushed through the system because there was no other way to avoid standing once CRA/Acorn forced you into the game creating it at the same time.
the game would run till a burb happened that would stop or stall the music and wham… musical chairs/hot potatoe… those standing when the music stopped toppled over. so the states bailout amounts to a mulligan respin… not an end to the game.
bernie is a pip. his confession comes from being caught, not from out of the blue. which means its a tactical play of some sort. the behavior is bizarre if you decide to pay attention, especially with a more legally savvy type older gentleman. normally such never do anything like that, they clam up, then they later can deal. so why the confession… and even more, why construct it as neo points out “Madoff is very careful to implicate only himself in the fraud”?
we all can agree that this isnt from some epiphany or contrite repentance, and tactically its not legally good. so whatever the reason, it has to be worse than what he would get for confessing or letting it play out and bargain.
they wont get any money back, i will tell you that… or not much of it. his keepers, the ones he is afraid of, have it or used it to effect change.
there is only one kind of thing that i can think of for doing the confession and the way it played out. the people he was dealing with would kill his whole family and others if they thought for an instant that he wasnt willing to take the complete fall.
saying he was the only person responsible for handling 14,000 accounts, and so cleverly that it really would take some pretty good help. no?
if his family members are really guilty such a confession serves to purpose to deflect the state. so that cant be the reason why its not the reason to do it. too feeble and means nothing toward that end.
bernie is smart, but i would bet he had the help of a smarter group of people from his client pool.
if you think about it no one else is really out of character… his wife acts like a greedy wife who really thinks she recieved property as a gift and its hers… (he confesses, she wont go down without a fight).
the kids are quiet as is the uncle (? cant remember the relationship sorry).
it was a statement that he was going to take the fall and that no one was going to discuss the real way things worked. ever. something you dont have to do if you plead guilty. you plead guilty you dont have to divulge anything.
in fact the whole thing goes away fast, and your family can go about their business… no?
he takes the fall, the family walks, the handlers shrug and say they knew it couldnt last forever, and the complicit victims will have sore spots for a long time.
funny how people are angry at the smart, obviously you dont have to be smart to make a lot of money, but being smart does sometimes help you hang on to it, but being honest helps you more.
oh.. i forgot..
the part no one i have heard paying attention to is the army of well knowleged people you would need to generate the NUMBERS…
the dummies that were hired and wont be prosecuted were just the local force that did the busy looking work and made it look like a real organization, but all they had to do was fulfill the numbers.
neo started to almost have it when she speculated in the earlier piece and i thought you were going to get it too.
you touched down on the complexity of balancing out the situation…. but you never thought that he could have been fed the numbers and a state player could have backed any decline to maintain the fraud if it was compromized.
however when the stock market fell and the market of the potential state players dived, such backing and extension no longer was possible to such a high value… or to such an uncertain near future..
so it ended… and madoff in fear confessed that he and he alone did it… and plead guilty so that there is and will never be a way for anyone to know who juggled those numbers so well… because one man couldnt do it… even a genius one man… but an expert department could… and if i wasnt local, well then it doesnt exist but for the results of the numbers.
numbers are hard to make look good to people who have worked with them all their lives.. what got others suspicious wasnt actual numbers, it was their memory and how the performance was just a little too good… (which is interesting, since he could hide it better if it was more marginal above performance of the market. and he still would have a huge amount of customers thanks to all those ‘innocent’ feeders). i only know of one criminal organization that runs such complicated and obtuse scams… and fancy that it was one that maddoff was reported to ahve worked for.
dealbook.blogs.nytimes.com/2009/02/04/live-blogging-the-houses-madoff-hearing/
12:01 p.m. | The Russian mob: Representative Gary L. Ackerman of New York asks if there were any threats that Mr. Markopolos received when he was investigating and asked him to explain Mr. Madoff’s connections to the Russian mob. Mr. Markopolos said that the offshore funds he identified often take a large percentage of “dirty money.” If anyone in the Russian mob were listening to the hearing, Mr. Markopolos said he was trying to protect them from harm as well.
11:27 a.m. | “Modern Greek hero”: Representative Jackie Speier calls Mr. Markopolos “a modern Greek hero” and asks why he was so afraid for his life. He responds that the Russian mob and Latin American drug cartels were investors with Mr. Madoff and if he was responsible for wiping out their investors, “I would not be long for this world,” Mr. Markopolos said.
“the Russian mob and Latin American drug cartels were investors with Mr. Madoff”
That is the reason why Madoff was wearing a bullet-proof vest during the past three months.
But Madoff won’t have long for this world, anyhow. I strongly believe that some narco-tycoon, maybe with a connection with MS-13, will infiltrate the prison where Madoff ends up and “offs” him then and there.
So in other words, Truth, basically anyone who’s Jewish, right? Do they also drink the blood of Christian babies at Passover? Or are you even aware that “Protocols of the Elders of Zion” was fabricated by a Russian journalist? You may possibly be Semitic yourself (from the line of Ishmael rather than Isaac, of course), or you may be of another ethnic background entirely, but your out-and-out hatred of the Jews would make Heinrich Himmler proud.
Want to talk about world-class criminals? Let’s start with Hajj Amin al-Husseini, the Mufti of Jerusalem, who wanted to help Hitler murder Jews and went so far as to help sponsor the establishment of a Waffen-SS division (the Handschar division, if you keep track of those things) to accomplish the job.
Next on the list is Yasir Arafat, who sponsored numerous murderous acts against Israelis, really too many to mention here.
Moving right along, we have the entire leadership of HAMAS. They’ve perfected the suicide bombing and the indiscriminate rocket attack.
For a blast from the past, there’s Sabri al-Banna, better known by his nom de guerre, Abu Nidal. Nice guy, liked his boys to shoot up airports like those in Rome and Vienna. The only good thing Saddam Hussein ever did was to have this murderous creep killed.
Need I go on, Troof? I can, there’s much, much more. Perhaps you wonder why Arab and Muslim countries suck (with a few exceptions). Take a look in the mirror, big boy. That’s the biggest reason right there. You keep blaming other people, especially the Jews, for every failing of your own, and you keep falling farther behind. What was that report from the UN a few years back? That more books are published and translated in one year in Spain than in the entire Arab world. Remember that, Truth? Says a lot about your state of education and literacy. I guess you’d rather spend your money on AK-47s and plastic explosives. Yeah, that’ll help you build a strong civil society. Or maybe you like living in filth, wiping your behind with your hand, and taking indecent liberties with little boys and livestock. Fine. But go out in the middle of the Empty Quarter to do it, and don’t bother the rest of us, and for damned sure don’t try to force us to do the same things you do.
Bernie Madoff is almost certainly a sociopath, and he happens to be Jewish. But that’s a coincidence. For every Madoff, there’s hundreds or thousands more of fundamentally decent Jewish people who give far more to the communities and countries that they live in than they take from them. Jewish culture has traditionally emphasized education. Maybe that’s why they’re so “clever”, eh? Arab society, on the other hand, is sociopathic in the true clinical sense of the term.
Hey, Neo, did you remove “Truth”‘s posting? My little rejoinder to it just went up, and I noticed his was gone. Oh, well.
on another quick note…
now the chicoms are warnig us like putin that we should not commit economic suicide by becomeing socialist.. (communist).
China’s premier didn’t say it in so many words, but the implied warning to Washington was blunt: Don’t devalue the dollar through reckless spending.
“Of course we are concerned about the safety of our assets. To be honest, I’m a little bit worried,” Wen said at a news conference Friday after the closing of China’s annual legislative session. “I would like to call on the United States to honor its words, stay a credible nation and ensure the safety of Chinese assets.”
bernie maddoff is the exception, not the rule (and an exceptional exception he is!).
but the truth is that they are using it to create such hatred to get the kind of power that was possible last century because they think that because THEY are the despots, its going to be differnt.
oh the outcome will be the same, but jsut look different in specifics, the point that jonah goldberg was making. dont look for goosteps to know, look to the core, which always is the same.
now that the chicoms get it, they dont want to lose it (unlike their russian foils, they are not so uncaring as to the prols… after all, if they were as brutal, they could have easily solved the overpopulation problem!!! what they havent done thats in their perview is important too)
sorry last line is missing..
we dont want the world to look at the US the way we are looking at bernie maddoff do we?
after all, there is nothing to stop the world from teaming up to get back at the state form of bernie, is there?
and if the chinese get fed up and dump our trillion currency..
i hope you dont live in the city like i do…
cause you, like me, would be most likely a dead man.
waltj: Yes, I did remove it, as I usually do any bigoted remarks.
http://www.cbsnews.com/stories/2009/03/12/business/main4862910.shtml
How Madoff Pulled It Off
46 Percent Annual Gains With No Risk? Bernard Madoff Convinced Investors He Was Making All The Right Moves
Is Bernie Madoff Battling Cancer?
extratv.warnerbros.com/2009/03/is_bernie_madoff_battling_canc.php
Bernie Madoff took his last steps of freedom into a New York courtroom today, but is the con man carrying a deadly secret?
The Swindler of the Century may be stricken with prostate cancer. The disease is apparently so advanced, that left untreated, it could lead to Madoff’s death.
The “Most Hated Man in America” spent a final night in luxury with wife Ruth before today’s courthouse chaos. “Extra” is also uncovering Ruth Madoff’s secrets! FOX Business Network’s Tracy Byrnes reveals to “Extra” she loves to puff Marlboro Lights, enjoys white wine, and lives the jet-setting lifestyle to the fullest.
Bernie and the Missus were high school sweethearts and grew up in the same neighborhood in Queens. Over 50 years later, they own a swanky Manhattan penthouse, mansions in the Hamptons and Palm Beach, and a private jet.
It is reported in the weeks leading up to Madoff’s arrest, he was still raking in as much as $10 million an hour – that’s $173 thousand a minute! Madoff pled guilty to eleven charges, including securities fraud, money laundering and making a false filing to the Securities and Exchange Commission. This is the the largest investor fraud ever committed by a single person, amounting to almost $65 billion.
Judge Dennis Chin accepted the guilty pleas and ordered Madoff to jail, where the 70-year-old awaits formal sentencing on June 16.
“Artfldgr Says:
March 13th, 2009 at 3:33 pm ”
Interesting… I guess he has accepted jail because, he figures, he has nothing else to lose…
I just found out that the CPA who performed the fake audit of Madoff’s books was charged with enough crimes to generate a sentence of up to 105 years. The proves me right that the “loner” theory put out at the beginning of these threads (especially by you Neo) is dead wrong. Madoff had lots of enablers starting with his wife, his lawyer sons and a host of others. The FBI has already proven that the entire trading department generated fake trading tickets and that no trades were executed for over 18 years. The brokers and other intemediaries who made sales commissions from investors have already been proven to be liars having claimed that they performed “due diligence” on investigating the validity of Madoff’s fund when they did nothing of the kind.I predict that there will be at least 30 convictions before this thing plays out. Maybe we should start a betting pool!
Jim: as I said before, it’s not that I don’t think Madoff might have had confederates who were in on the details of the Ponzi scheme. I just don’t think he absolutely did, and I will wait to see what is proven and what is not.
I read about the charging of the auditor/accountant, and what I read made it clear that the authorities have no evidence that he was in on what Madoff was actually doing. What is clear is that he did not audit him at all—he faked the audit, no doubt at Madoff’s behest. The crimes he is charged with are connected with that.
But it does not mean he was taken into Madoff’s confidence about what Madoff was actually doing, or that he helped him actively generate false records of transactions to send to clients.
I certainly would not be surprised, however, if it comes out later that he did those things as well.
Here is an article about it [emphasis mine]:
Prosecutors said Friehling essentially rubber-stamped Madoff’s books for 17 years, serving as Madoff’s auditor from 1991 through 2008 while he worked as the sole practitioner at Friehling & Horowitz.
He was paid a tidy sum by Madoff: Prosecutors said he made between $12,000 and $14,500 a month from 2004 to 2007. That amounts to $144,000 to $174,000 a year….
He did little or no testing, no verification of the ‘facts’ he certified,” said Joseph M. Demarest, head of New York’s FBI office. “His job was not merely to rubber-stamp statements he didn’t verify.”…
Acting U.S. Attorney Lev L. Dassin said in a release that Friehling is not charged with knowing about Madoff’s Ponzi scheme. However, Dassin said: “Mr. Friehling’s deception helped foster the illusion that Mr. Madoff legitimately invested his clients’ money….
The SEC said Friehling did not meaningfully audit Madoff’s business or confirm that securities purportedly held by Madoff’s company on behalf of its customers even existed.
The SEC said Friehling instead pretended to conduct minimal audit procedures of certain accounts to make it seem he was conducting an audit and then failed to document his purported findings and conclusions as he was required to do….
And how about this? Friehling invested with Madoff, and quite a bit of his money seems to have remained invested with Madoff—he only took about a third of it out over the years. Would he have put money in and left most of it there if he had known it was a Ponzi scheme? Of course, it’s a conflict of interest for him to have been auditing Madoff and also investing with him.
Friehling is unquestionably a crook. And he unquestionably knew there was something very wrong with the Madoff operation. But I’m not at all sure he was ever even allowed to look at the books and find out what it was.
Neo, Friehling had to know there was billions of dollars involved as the general size of Madoff’s operations was obvious to almost anyone even remotely connected to the business. Friehling also had to know that he was facing decades in prison for selling his signature for something he knew was fraudulent. It is unusual for an accountant to sell his life for less than a couple of hundred thousand a year on what is probably his only client. The IRS is sure to do a “lifestyle audit” of him to show that his expenditures were way more than his stated income. Madoff could have been paying him under the table by putting money into an offshore account for him (more on how the money was transferred later). And how is it that a multi-billion dollar firm can go for decades without a single IRS audit? If the IRS did an audit, they should have been able to expose him then. I still can’t believe that there were seven SEC investigations without anyone finding anything. Other accountanting people on Madoff’s staff would have had to be in on this namely his controller (who actually prepares the financial statements for the auditor to look at), the staff accountants reporting to the controller, the firm’s treasurer who would have managed the bank accounts, borrowed money, set up trading accounts (that never existed) and arranged for wire transfers of billions to accounts all over the world. We already know that the entire trading department was in on it since they created thousands of fake trades, and the systems department had to also help. Most of these people would have had to coordinate and communicate with each other to perpetrate this fraud. I understand that all of these people were very well paid. It is not easy for someone to give up a high paying job and risk jail time to do the right thing and squeal on their boss. Madoff ate out frequently with his wife and went to many social events all over the world. He was simply never in the office long enough to do most of the management work involved. I have committed to a number of at least 30 convictions but I am being conservative in my estimate.
While massive fraud committed by a large group of co-conspiritators is rare, there is precedent for this. The Equity Funding scandal by an insurance company in California took place from about 1964 to 1973 and involved about 100 people. There was actually a movie about this. It is considered as a major fraud involving the largest number of participants. Most internal control experts recommend segregation of duties to prevent fraud since collaboration involving more than two or three people is rare. This is why the Madoff case could prove to be a fascinating study for psychologists, fraud experts and ethicists. Major frauds involving the teamwork and cooperation of dozens are rare, but they do happen. The question is, how did the general business and ethical environment contribute to this horror. The participants were not “useful idiots” who had no idea of the mangitude of their crimes. If that were true, none would be getting long jail sentences. You don’t send auditors to jail for over 100 years on some minor violation that anyone could have done. Friehling did’t sign his name without knowing that he was helping to make a major fraud worth billions. He had to know that his audit opinion was a key element in this whole operation. Banks, funds and other investors relied on the phony audited reports to decide to invest. Indeed, without Friehling’s willing participation, Madoff couldn’t pull this thing off. Any accountant would know this. I have discussed this event with four other CPAs and many other financial experts and they are unanomous that Friehling’s participation was key to this fraud and that he knew more, much more, than most people think.
A fascinating story in the Financial Times on December 24 laid down a gantlet no one has yet picked up.
The second graf of this story reads: “But it was the SEC’s decision in the 1990s not to take a stand on the controversial issue of ‘payment for order flow’ that helped fuel the rise of Bernard Madoff Investment Securities, the successful broker-dealer operation two floors above Mr Madoff’s private fund operation in Manhattan.”
That way of putting it implies a government-centered way of looking at the world that I don’t share. There are lots of parties other than the SEC who missed this and shouldhave gotten it — like the folks responsible for due diligence at the various institutions than invested in Madoff’s operations.
STILL … I do think the whole idea of payment-for-order-flow stinks. If the Madoff meltdown does help finally discredit it, that will be some slender silver lining.