Mad about Madoff

[Clove]

Disgraced financier Bernard Madoff awaits trial at home

By Pallavi Gogoi and Matt Krantz, USA TODAY
Bernard Madoff was ordered held on home detention in his $7 million Manhattan apartment Wednesday as furor grew over how the disgraced money manager was able to build an alleged $50 billion Ponzi scheme without being caught.
Federal District Judge Gabriel Gorenstein said Madoff, 70, must wear electronic monitoring, observe a 7 p.m-to-9 a.m. curfew and restrict his travel as conditions of his $10 million bail. He and wife Ruth were told to surrender their passports, and they put up their apartment, as well as homes in Montauk, Long Island, and Palm Beach, Fla., to guarantee the bail. The terms had to be changed after Madoff's sons, Mark and Andrew, who turned their father over to prosecutors last Thursday, refused to co-sign his bond.

Madoff is charged with a scheme in which prosecutors say he used money from new investors to pay off existing shareholders, creating the illusion of a very successful performance that won him fame on Wall Street.

The key question now is if anyone else knew about the alleged fraud. Many of Madoff's top officers at his closely held firm were family members. His brother Peter was director of trading and chief compliance officer, and his two sons were directors of proprietary trading. In an e-mailed response, an attorney for the sons, Martin Flumenbaum, says they weren't involved with the asset-management business, at the center of the investigation, and were victims themselves.

"They were shocked to learn of his (Madoff's) actions and contacted the authorities immediately upon being told that he had been defrauding the firm's clients," Flumenbaum said.

Meanwhile, more investigations were launched. Rep. Paul Kanjorski, D-Pa., chairman of the House Financial Services Subcommittee, called for an inquiry early next month.

The Securities and Exchange Commission is looking into one of its former lawyers, Eric Swanson, who was involved in investigating Madoff's firm in 1999 and in 2004. In 2007, Swanson married Shana Madoff, the firm's compliance lawyer and Madoff's niece. Swanson left the SEC in 2006. A spokesman at his current firm, BATS Trading, didn't respond to calls for comment.

The SEC says it will examine whether the relationship at all affected the regulation of the firm. The investigation "will look at whether it had any effect" on the SEC's oversight of Madoff's firm, says the agency's inspector general, David Kotz. Sen. Chuck Grassley of Iowa, the top Republican on the Senate Finance Committee, Wednesday asked Kotz to keep him updated on the probe.

http://www.usatoday.com/money/markets/2008-12-17-bernard-madoff-disgraced-fraud_N.htm

Hey! One of my inlaws is in jail over a Ponsi scheme. Good times, small world.

[Gan]

Kudos for his sons in standing up for what's right.

[NocturnalRob]

they're not. no way they could be left out of this. he's taking the blame (at 70) so they can get away unscathed.

[Gan]

cynic

:whistle:

[Clove]

His daughter is married to a former SEC investigator. There's no way his family is involved in this....

[Keller]

I'm ashamed to be an attorney after this.

What kind of dipshits did so little due diligence as to not catch false financials?

There will be more than just his family involved in covering this up, that's my prediction.

[Clove]

I'm ashamed to be an attorney after this.This is what it took?

[Parkbandit]

they're not. no way they could be left out of this. he's taking the blame (at 70) so they can get away unscathed.


How do you know this? I don't know a lot about the case or even if the sons are in the business and have access to the information that is needed.. but if my Dad was accused of doing this, I would have zero idea about it.

Just because they are relatives doesn't mean they automatically are implicated in his scheme.

[Parkbandit]

This is what it took?

:rofl:

I imagine the number of good and honest lawyers are about the same percentages as good and honest politicians. Unfortunately, it's how our system is set up that allows for it in both cases.

[NocturnalRob]

How do you know this? I don't know a lot about the case or even if the sons are in the business and have access to the information that is needed.. but if my Dad was accused of doing this, I would have zero idea about it.

Just because they are relatives doesn't mean they automatically are implicated in his scheme.

did you read the article?


his two sons were directors of proprietary trading

there's no way

[ClydeR]

I'm ashamed to be an attorney after this.

What kind of dipshits did so little due diligence as to not catch false financials?

Out of curiosity, what do attorneys have to do with investigating financial statements? I thought that was accountants.

[Clove]

Out of curiosity, what do attorneys have to do with investigating financial statements? I thought that was accountants.We do. He's a tax attorney.

[Keller]

:rofl:

I imagine the number of good and honest lawyers are about the same percentages as good and honest politicians. Unfortunately, it's how our system is set up that allows for it in both cases.

How many lawyers do you know?

You know how you know you're a good attorney? When NO one outside of the law has heard of you. It generally means you do good, honest work and don't fuck up.

[Keller]

Out of curiosity, what do attorneys have to do with investigating financial statements? I thought that was accountants.

Every good attorney should ask every conceivable question.

That's what "thinking like an attorney" means. You don't ever accept things as they are presented.

[Clove]

How many lawyers do you know?

You know how you know you're a good attorney? When NO one outside of the law has heard of you. It generally means you do good, honest work and don't fuck up.You know how you know when an attorney is lying?

[NocturnalRob]

his lips are moving.

zing!

[ClydeR]

Every good attorney should ask every conceivable question.

That's what "thinking like an attorney" means. You don't ever accept things as they are presented.

Whose attorney should have realized there was fraud?

Attorneys for Mr. Madoff? Very Doubtful. They were surely entitled to believe what he told them, and even if they realized there was fraud, they couldn't rat out their own client.

Attorneys for Mr. Madoff's company? Maybe. Attorneys don't duplicate the work of auditors. An attorney who represents to his clients that he is checking the accuracy of financial statements--something for which most attorneys are untrained--is setting himself up for a malpractice suit when fraud that the attorney was looking for is later discovered by someone who knows how to detect it.

Attorneys for the SEC? I don't know enough about the SEC to have an opinion. Somebody at the SEC should have investigated, but I'm not sure it should have been the SEC's legal staff.

Attorneys for the investors who gave money to Mr. Madoff? No. Unless a client approached them with concerns, those attorneys don't have any business attempting to verify financial statements, and they had little hope of catching a fraud that the SEC missed.

[Keller]

Attorneys for Mr. Madoff? Very Doubtful. They were surely entitled to believe what he told them, and even if they realized there was fraud, they couldn't rat out their own client.

Wrong. See the NY Rules of Professional Conduct.


Attorneys for Mr. Madoff's company? Maybe. Attorneys don't duplicate the work of auditors. An attorney who represents to his clients that he is checking the accuracy of financial statements--something for which most attorneys are untrained--is setting himself up for a malpractice suit when fraud that the attorney was looking for is later discovered by someone who knows how to detect it.

I meant they should know whether the company actually bought the securities. They are, afterall, executing the documents. 50B in fraudulent investments, to me, indicates the involvement of some inside counsel.


Attorneys for the SEC? I don't know enough about the SEC to have an opinion. Somebody at the SEC should have investigated, but I'm not sure it should have been the SEC's legal staff.

I don't know enough about the SEC, but I'd wager they have the resources and authority.


Attorneys for the investors who gave money to Mr. Madoff? No. Unless a client approached them with concerns, those attorneys don't have any business attempting to verify financial statements, and they had little hope of catching a fraud that the SEC missed.

This is where you are absolutely wrong. It is precisely the job of the attorney to make sure everything is on the up-and-up. Sure, when you're dealing with Cravath or Skadden, you assume things are kosher ( :) ), but you're not entitled to assume that. It's just the real pressure of our e-society. There are only so many billable hours in a day.

For example, in our practice, when we write opinions on client transactions, especially intercompany transactions, we require execution documents and board minutes. We don't just take it on their word that they really did sell that 6 billion dollar intercompany note for 5.4billion to trigger a 600M loss and we SURELY don't take it at their word that the current value of that note is 5.4B, entitling them to a 600M loss. We require third party documentation for that.

[Clove]

The clients' attorneys should have insisted on due diligences and should have examined the results closely.

[ClydeR]

Wrong. See the NY Rules of Professional Conduct.

I'll take your word for it. I was under the impression that if a client confesses a crime to his attorney--and we don't have any information that Madoff made a confession to his attorney--then the attorney cannot rat on him. That's how it works on Law and Order on the teevee.


This is where you are absolutely wrong. It is precisely the job of the attorney to make sure everything is on the up-and-up. Sure, when you're dealing with Cravath or Skadden, you assume things are kosher ( :) ), but you're not entitled to assume that. It's just the real pressure of our e-society. There are only so many billable hours in a day.

For example, in our practice, when we write opinions on client transactions, especially intercompany transactions, we require execution documents and board minutes. We don't just take it on their word that they really did sell that 6 billion dollar intercompany note for 5.4billion to trigger a 600M loss and we SURELY don't take it at their word that the current value of that note is 5.4B, entitling them to a 600M loss. We require third party documentation for that.

You mean you rely on corporate resolutions and auditor reports? I'm sure that attorneys representing large institutional investors with the Madoff companies had copies of those two items but still failed to detect the fraud. Furthermore, most of the investors were individuals with smaller amounts to invest, like $1 million or less. Even if such investors consulted their attorney, it was likely in the context of updating an estate plan. In such a situation, the attorney would hardly undertake an independent investigation to determine if the Madoff company was issuing false financial statements.

[Keller]

I don't remember the exact rule, but it's basically that if you know your client is committing a crime that will result in serious bodily harm or substantial percuniary harm, then you have an affirmative duty to report it.

[NocturnalRob]

fuckin' madoff. my clients are getting decimated.

[Gan]

It will be interesting to see who's still standing when the dust settles.

[Stretch]

Yeah, screw bullshit systems that are doomed to eventually fail because eventually there won't be enough people at the bottom to pay the people at the top. Fucking scams.

Oh, wait, that's where 6.2% of most of my salary is going to go for the next 30 years.

[Allereli]

December 19, 2008, 12:19 pm
Madoff: As Consistent a Golfer as He Was an Investor
By Catherine Rampell
They say you can tell a lot about a businessman from his golf game. Perhaps golf partners should have paid more attention to Bernard Madoff’s handicap.

CNBC found records of Mr. Madoff’s golf scores from the Golf Handicap and Information Network. Between 1998 and 2000 Mr. Madoff registered 20 scores from games played at the Palm Beach Country Club, Atlantic Golf Club and Fresh Meadow Country Club. The score report is below.

http://graphics8.nytimes.com/images/2008/12/19/business/madoff.480.1.jpg
Screen grab from ghin.com.
Note how eerily consistent he was, even after not playing for an entire year from 1999 to 2000. The CNBC reporter Darren Rovell notes that Mr. Madoff’s handicap was a 12 — which is about the same return Mr. Madoff guaranteed investors.

Does this mean he cheated in these games? Not necessarily; perhaps he just didn’t report his less impressive scores to the association. Which also might not be entirely out of character, I suppose.


http://economix.blogs.nytimes.com/2008/12/19/madoff-as-consistent-a-golfer-as-he-was-an-investor/?hp

[NocturnalRob]

sentencing today. anyone care to wager on the o/u?

[Parkbandit]

Whatever the sentence, it's life for him.

[NocturnalRob]

mistrial? hung jury? I SEE A HOLE IN YOUR LOGIC, SIR!

[Parkbandit]

mistrial? hung jury? I SEE A HOLE IN YOUR LOGIC, SIR!

Huh? You realize he's already plead guilty, right? There was no trial or a need for a jury.

[NocturnalRob]

You realize he's already plead guilty, right?
...NO MOAR ITALICS FOR YOU

also, lrn2pasttense

[TheEschaton]

This is where you are absolutely wrong. It is precisely the job of the attorney to make sure everything is on the up-and-up. Sure, when you're dealing with Cravath or Skadden, you assume things are kosher ( :) ), but you're not entitled to assume that. It's just the real pressure of our e-society. There are only so many billable hours in a day.


I know this quote is half a year old, but it's precisely when I see the names "Cravath" and "Skadden" that I automatically distrust everything that is said. Those lawyers are scumbags who hide behind the veneer of zealous advocacy. They're one step short of breaking kneecaps for their clients....and that's not a good thing. If anyone would lie or coverup for their clients, it would be attorneys from these firms.

-TheE-

[Keller]

A century and a half.

Not bad.

[Jorddyn]

A century and a half.

Not bad.

I'm annoyed they're letting his wife keep $2.5MM. I know in the grand scheme of, well, the grand scheme that it's not significant, but it could fully repay a couple of old grannies their losses.

I also hope they start after his family. I can't understand how no one else in the business realized there was NO trading going on. It's just not logical.

[Allereli]

I'm annoyed they're letting his wife keep $2.5MM. I know in the grand scheme of, well, the grand scheme that it's not significant, but it could fully repay a couple of old grannies their losses.

I also hope they start after his family. I can't understand how no one else in the business realized there was NO trading going on. It's just not logical.

http://dealbook.blogs.nytimes.com/2009/06/29/ruth-madoff-finally-breaks-her-silence/

His wife made a statement, claims ignorance, but didn't she help hide money and mail out jewels?

[Tisket]

http://dealbook.blogs.nytimes.com/2009/06/29/ruth-madoff-finally-breaks-her-silence/


With Bernard L. Madoff now sentenced to 150 years in prison, his wife, Ruth, said Monday that she felt “embarrassed and ashamed” and “betrayed and confused” by his crimes.

Yeah, she's sorry and all, just not enough to give the money back.

Oh well, some of his victims might gain a little comfort in the knowledge that there is sure to be more than one person at the prison who'll want to have sex with a multi-billionaire.