Yourlawyer.com (Bernard Madoff Investment fraud News)

Victims Sue SEC Over Madoff Scam

Tue, 20 Oct 2009 00:00:00 -0700

Two of Bernard Madoff’s victims have filed suit against the Securities and Exchange Commission (SEC) for alleged negligence, CNN reported.

Madoff is now spending 150 years in prison for orchestrating a massive Ponzi scam estimated to have cost duped investors an incomprehensible $65 billion. As for the SEC, the regulator has come under fire for apparently missing warnings that something was amiss with Madoff’s investment advisory business.

Since news broke of Madoff’s scheme, the SEC has been faulted for failing to detect the historic fraud since 1992 and for not fully going after tips, having inexperienced staff handle reviews, not looking into unbelievable and sustained profits, not pushing when Madoff was clearly caught in lies, and not pursuing trading records that would have pointed them to the scam.

Now, the two victims—Phyllis Molchatsky and Steven Schneider—are accusing the SEC of “failing to detect Madoff's long-running scam,” said CNN. "Through its negligent actions and inactions ... the SEC caused Madoff's scheme to continue, perpetuate and expand, eventually in billions in losses by investors, and directly caused [the two] plaintiffs to lose more than $2.4 million," read the lawsuit, quoted CNN. The lawsuit also noted that the agency had "countless opportunities" to stop Madoff's scheme "and botched all of them," said CNN.

"Instead of watching the backs of Ms. Molchatsky and Dr. Schneider and the backs of all the other investors, the SEC—through its negligence—was effectively watching Bernie Madoff's back," said one of the plaintiffs' lawyers, who is also a former SEC attorney, reported CNN. "Now it is time for the SEC to be held accountable and for the federal government to do what the law says it must do: Compensate the victims for its negligence," it added.

Also according to the lawsuit, the SEC received "at least eight complaints or submissions indicating that Madoff was operating a Ponzi scheme," between the years 1992 and 2008, reported CNN, citing the lawsuit.

According to the U.S. Attorney's office in New York—the prosecutor in the case—as of last month, 2,336 victims have reported losses in excess of 13 billion, said CNN. Madoff, who is 71 years old, is scheduled for release in late 2139.

Madoff’s scam moved money from new clients to pay bogus returns supposedly issued by a so-called split-strike conversion that is a type of stock and options trading approach, explained Bloomberg.com previously. Among other tactics, Madoff and his staff at Bernard L. Madoff Investment Securities LLC would fabricate records to cover the scam. His bogus investment firm was presented as legitimate, but was simply a front, said CNN. The scam continued because new investors’ funds were used to pay existing investors, appearing to be investment profits. Those false profits were nothing more that stolen money, noted CNN.

Meanwhile, the trustee charged with locating the stolen funds—Irving Picard—has sued Madoff’s wife, Ruth for $45 million and four of Madoff's other relatives for $198 million, according to CNN.

Madoff Trustee Seeks More From Cohmad Securities

Mon, 12 Oct 2009 00:00:00 -0700

The court-appointed trustee charged with liquidating Bernard Madoff’s business is seeking to recuperate $245 million from bogus profits in his lawsuit against Cohmad Securities Corporation, said Bloomberg.com. The figure represents an increase from $213 million, said Bloomberg.com, which noted that Cohmad Securities shared office space with Madoff.

Madoff, 71, was sentenced to 150 years in prison for running a massive Ponzi scheme that is estimated to be the largest in history and which has allegedly cost investors as much as $65 billion. Bernard L. Madoff Investment Securities is the investment firm that served as a ”front” for the scam, noted CNN previously. Irving Picard is the trustee spearheading the investigation and continues to work to determine how much Madoff stole because. Although the disgraced financier claimed to have $65 billion, the figure was based on false investment statements, said CNN in a prior report. The U.S. Attorney’s office in New York said the losses suffered by Madoff’s 2,336 victims exceeded $13 billion, at last count, said CNN recently.

According to Picard, the new figure was recently released and based on revised data he discovered as part of his ongoing investigation, said Bloomberg.com. The figure was released in an amended complaint with Manhattan’s U.S. Bankruptcy Court, according to Bloomberg.com.

It seems that Peter, Bernard’s brother and Bernard’s niece, Shana, worked for Cohmad, said Bloomberg.com and were part of what Picard described as a “vast network” involved in furthering the historic Ponzi scheme. Picard sued Cohmad this June, according to Bloomberg.com. “For over two decades, Cohmad’s primary business was recruiting an ever-expanding list of high-net-worth clients into Madoff’s Ponzi scheme,” Picard said, quoted Bloomberg.com.

Duped investors, investigators, and virtually anyone who has read about the massive financial swindle has long believed that Madoff’s family members were involved in the scam that stripped countless investors of their life savings. Recently, CNN reported that Picard planned on suing four more of Bernard’s family members for about $200 million, citing a CBS “60 Minutes” broadcast report. Picard's suits will include both of Madoff’s sons, Mark and Andrew; Bernard’s brother, Peter; and Bernard’s niece, Shana for a combined total of $198 million, said CNN previously.

Picard filed for $44.8 million against Ruth, Bernard’s wife, this July, said CNN. The amount correlates to the monies Ruth transferred from Bernard’s investment firm over six years, CNN added. According to Bloomberg.com, when Madoff’s scam finally fell apart, it was revealed that about 20 percent of Madoff’s active accounts were actually referred by Cohmad (52), said Picard. Madoff and Maurice “Sonny” Cohn, a friend and former native of Madoff, co-founded Cohmad, said Bloomberg.com.

According to Bloomberg.com, Cohn and about 24 other individuals and trusts have been sued due to allegations they received about 90 percent of their income as a result of client referrals to Madoff.

Earlier this year, the Washington Post said the Security and Exchange Commission’s (SEC) internal investigation was focusing, in part, on the relationship between Madoff’s niece, Shana Madoff, and her husband, Eric Swanson.

Madoff Report Said to Slam SEC

Mon, 31 Aug 2009 00:00:00 -0700

Issues surrounding the Securities and Exchange Commission’s (SEC) oversight of Bernard Madoff—now spending 150 years in prison for orchestrating an historic Ponzi scam—have raised serious questions for months now. According to FOX Business, the SEC’s inspector general, H. David Kotz, will be delivering a scathing report to the agency discussing its part in failing to notice or prevent Madoff’s Ponzi scheme estimated to have cost duped investors an incomprehensible $65 billion.

In December, following the now-famous arrest of the disgraced financier, Kotz initiated an investigation into how the SEC handled its dealings with Madoff, said FOX Business. Christopher Cox, former SEC chairman, requested the investigation, asking, for example, why the agency believed allegations made through the years about Madoff to be “not credible,” reported FOX Business. The SEC has come under fire for apparently missing warnings that something was amiss with Madoff’s investment advisory business.

Kotz wrote to FOX Business, via email, yesterday, saying he intends to send his report to Mary Schapiro, current SEC chairman, today. FOX Business reported that Kotz said that it is up to the agency to determine when and how it releases the report publicly; however, that should come later this week following review by Schapiro and her team.

Although Kotz would not discuss his findings, FOX Business noted that in his
January testimony to a House committee he said, “I can assure you that our investigation and review will be independent and as hard-hitting as necessary… The matters that have been brought to our attention require careful scrutiny and review… If we find that criticism of the SEC is warranted and supported by the facts, we will not hesitate to report the facts and conclusions as we find them,” quoted FOX Business.

In July, Kotz also said—in testimony before a different House Committee—that the eight-month investigation focused on the SEC’s Office of Compliance Inspections and Examinations and its Division of Enforcement, said FOX Business.

Last month we wrote that the scandal might have played a role in the departure of a key SEC official. According to Bloomberg.com, Lori Richards, director of the SEC’s Office of Compliance Inspections and Examinations, was widely criticized for missing warning signals about Madoff. Richards, who held her post since 1995, was scheduled to vacate August 7. According to Bloomberg.com, Pennsylvania Democratic Representative Ron Kanjorski, who leads the House Financial Services capital markets subcommittee, had been especially critical of Richards’ unit and its performance in regards to Madoff, accusing the SEC of ignoring Madoff red flags, such as the inability of investors to duplicate Madoff’s returns and his unusual choice of an outside auditor.

Earlier this year, former Enforcement Director Linda Thomsen resigned in February. Her resignation followed a pretty severe drubbing at the hands of a Congressional committee investigating the Madoff debacle.

Also, money manager Harry Markopolos has long claimed that he tried to warn the SEC numerous times over several years about Madoff. According to Bloomberg, Markopolos has said that SEC inspectors lack knowledge about products such as derivatives and have inadequate understanding of the businesses they are supposed to review.

Preparations for Madoff Auction Underway

Mon, 27 Jul 2009 00:00:00 -0700

As part of the ongoing Bernard Madoff financial scandal, federal marshals are inventorying possessions from Ruth and Bernard Madoff’s $7.5 million Manhattan penthouse and $3.5 million Montauk home in anticipation of an auction. Newsday reports that the contents at both well-appointed properties are being listed in detail, citing officials.

According to Newsday, contents include a Steinway piano and silverware and that the properties and tens of millions of dollars in assets were turned over to the government when Madoff was sentenced to 150 years in prison last month. Madoff was sentenced for running a Ponzi scheme estimated to have cost investors as much as $65 billion.

"The U.S. Marshals Service of the Southern District of New York and the asset forfeiture division are conducting an itemization and appraisal of all personal property at the Madoff residence at 64th Street … that also holds true for Montauk," a spokesman for the marshals said, quoted Newsday. Judge Denny Chin signed the forfeiture order that gave the U.S. government full control over the two Madoff properties and related contents, including “clothing, fixtures, artwork, linens, and sheets”; a $10-million Palm Beach house was surrendered previously in 2009, reported Newsday and Madoff’s yacht and other boats are slated to be sold. Lawyers in France have said that a yacht there is under the control of the French courts, added Newsday. Ruth Madoff was previously removed from the New York penthouse by marshals.

The order was made in an effort to assist officials in the return of funds to the scores of victims of Madoff’s massive Ponzi scheme, said Newsday.
Speaking through her attorney immediately following Bernard’s sentencing, Ruth Madoff said, in part, that, “Lives have been upended and futures have been taken away. All those touched by this fraud feel betrayed; disbelieving the nightmare they woke to. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years,” quoted the LA Times.

Although Bernard was initially stripped of $171 billion and all of his personal property, as well as $80 million in assets Ruth claims were hers, the wife of the mastermind of what is believed to be the largest such scam in history still walked away with $2.5 million, likely more than many of Madoff’s duped investors.

Most recently, Madoff’s accountant for nearly two decades—David Friehling—was charged with securities fraud, reported USA Today, citing a federal prosecutor. The charges included aiding and abetting investment adviser fraud and four counts of filing false audit reports with the Securities and Exchange Commission SEC, the New York’s southern district acting U.S. attorney, Lev Dassin said, according to USA Today.

The SEC has come under fire for apparently missing warnings that something was amiss with Madoff’s investment advisory business and has been shamed for its inability to detect Madoff’s fraud and its role in the well-publicized investment bank collapse, which has been blamed—in part—for the current financial downturn, said the Washington Post previously.

Bernard Madoff Ponzi Scheme Linked to SEC Official's Departure

Thu, 09 Jul 2009 00:00:00 -0700

The Bernard Madoff scandal may have played a role in the coming departure of a key Securities and Exchange Commission (SEC) official. According to Bloomberg.com, Lori Richards, director of the SEC's Office of Compliance Inspections and Examinations, was widely criticized for missing warning signals about Madoff. Richards will be leaving her post - which she has held since 1995 - on August 7.

Madoff was recently sentenced to 150 years in prison for running a Ponzi scheme that is estimated to have cost investors as much as $65 billion. The SEC has come under fire for apparently missing warnings that something was amiss with Madoff's investment advisory business. Richards' department was responsible for overseeing money managers like Madoff.

Richards' office only inspected Madoff's business - Bernard L. Madoff Investment Securities LLC - in 2004 and 2005 when it was registered as a brokerage, Bloomberg.com said. It never conducted an inspection of the money-management side of Madoff’s business after he registered it with the SEC in September 2006

According to Bloomberg.com, Pennsylvania Democratic Rep. Ron Kanjorski had been especially critical of Richards' unit and its performance in regards to Madoff. Kanjorski, who leads the House Financial Services capital markets subcommittee, has accused the SEC of ignoring Madoff red flags, such as the inability of investors to duplicate Madoff’s returns and his unusual choice of an outside auditor.

As we've reported previously, money manager Harry Markopolos had also claimed he tried to warn the SEC numerous times over several years about Madoff. According to Bloomberg, Markopolos has said that SEC inspectors lack knowledge about products such as derivatives and have inadequate understanding of the businesses they are supposed to review.

Richards is not the only SEC official who has announced a resignation in the wake of the Madoff scandal. Former Enforcement Director Linda Thomsen resigned in February, following a pretty severe drubbing at the hands of a Congressional committee investigating the Madoff debacle. Former SEC Commissioner Edward Fleischman told Bloomberg.com that Richards' coming departure "allows the newly cleansed and baptized SEC to say, ‘If there was anything wrong done on our part, those people are gone.’”

Multiple Madoff Warnings at SEC

Thu, 02 Jul 2009 00:00:00 -0700

A Securities and Exchange Commission (SEC) investigator claims to have warned her superiors in 2004 about concerns she had with Bernard Madoff's financial management firm, said the Washington Post. Attorney Genevievette Walker-Lightfoot, with the SEC's Office of Compliance Inspections and Examinations, was told to work on another issue, said the Post, citing SEC documents and its sources. Walker-Lightfoot worked at the American Stock Exchange, gaining proficiency in “specialized trading strategies,” the Post added.

Walker-Lightfoot was assigned to examine Madoff's relationship with various hedge funds when the SEC was concerned he was allowing those funds to trade before his, enabling an unethical lead, said the Post. She sent emails to a supervisor about her concerns with the disgraced financer’s activities and developed some questions to ask his firm, reported the Post, which said some questions confronted some of Madoff’s actions, which were later connected to his historic Ponzi scheme. For instance, Walker-Lightfoot discovered a number of variations such as Madoff’s inconsistent settling practices, something counter to what Madoff, himself, documented he was doing.

Madoff has been in custody since he pleaded guilty on March 12, 2009, to an 11-count information charging securities, investment advisor, mail, and wire fraud; three counts of money laundering; perjury; false statements; false filings with the SEC; and theft from an employee benefit plan. Madoff was just sentence to 150 years in prison for swindling scores of investors out of about $65 billion and was mandated—to start with—to return $170,799,000,000, representing total proceeds of and property involved in some of the related crimes. Madoff was divested of his interest in all property, including real estate, investments, cars and boats, in partial satisfaction of the judgment.

Because the SEC was consumed with issues surrounding mutual funds, Walker-Lightfoot was forced to concentrate on nonMadoff issues, said the Post, citing documents and sources familiar with the investigation. The Post also reported that Walker-Lightfoot's supervisors on the case were Mark Donohue, a branch chief in her department at the time, and his boss, Eric Swanson, the department’s assistant director.

Of note, Swanson later married Madoff's niece, Shana, said the Post. That relationship is under review by the SEC’s inspector general, who is looking at the agency’s handling of the scandal, reported the Post. Madoff also allegedly bragged about his tight relationship with SEC regulators, saying, "my niece just married one," quoted the Post.

The SEC has been shamed for its inability to detect Madoff's fraud and its role in the well-publicized investment bank collapse, which has been blamed—in part—for the current financial downturn, the Post pointed out. The SEC has since accused Madoff of “fabricating his strategy, generating false account statements and trade confirmations, and lying to investigators,” said the Post.

Over two-decades, the SEC allegedly investigated Madoff's business five times, never finding the massive fraud even after Walker-Lightfoot expressed concerns and that others apparently stepped forward, noted the Post. For instance, in 2007, the SEC looked at Madoff’s activities after it received warnings from a former Madoff rival—Harry Markopolos—that Madoff was likely spearheading a Ponzi scheme, said the Post.

When sentencing Madoff this week, Judge Denny Chin said, "Objectively speaking, the fraud was staggering … the breach of trust was massive," the crimes were an extraordinarily evil." Although Bernard has been initially stripped of $171 billion and all of his personal property, as well as $80 million in assets Ruth claims were hers, Ruth walks away with $2.5 million, likely more than many of Madoff’s duped investors.

Madoff To Spend Rest of Life In Prison; Ruth Says Bernie Betrayed Her

Mon, 29 Jun 2009 00:00:00 -0700

After months of waiting, media outlets worldwide report that disgraced financier and Ponzi scheme mastermind, Bernard Madoff, has been sentenced to 150 years in prison for swindling scores of investors out of about $65 billion. Lev L. Dassin, the Acting U.S. Attorney for the Southern District of New York, and Joseph M. Demarest, Jr., the Assistant Director-in-Charge of the New York Field Office of the Federal Bureau of Investigation (FBI), announced that Madoff was sentenced in Manhattan federal court.

U.S. District Judge Denny Chin, in sentencing Madoff, stated, "Objectively speaking, the fraud was staggering"; "the breach of trust was massive." Chin described Madoff's crimes as "extraordinarily evil" and said Madoff's was "not merely a bloodless crime that takes place on paper but one that takes a staggering human toll. No other white collar case is comparable in terms of the scope, duration and enormity of the fraud and the degree of the betrayal."

The sentence mandates the convicted 71-year-old Ponzi schemer forfeit—to start with—$170,799,000,000, representing total proceeds of and property involved in some of the related crimes. Chin entered the preliminary forfeiture order Friday, completely divesting Madoff of his interest in all property, including real estate, investments, cars and boats, in partial satisfaction of the judgment. Chin also extended the time for ruling on an order of restitution for 90 days from the date of sentencing.

Madoff has been in custody since he pleaded guilty on March 12, 2009, to an 11-count information charging securities, investment advisor, mail, and wire fraud; three counts of money laundering; perjury; false statements; false filings with the U.S. Securities and Exchange Commission (SEC); and theft from an employee benefit plan.

When Judge Chin issued the maximum sentence, those in the packed courtroom applauded; Madoff allegedly did not react. Chin denied Madoff’s lawyer’s request for a more lenient sentence, reported the Associated Press (AP).

Prior to imposing sentence, Chin heard from nine victims before asking Madoff if he had anything to say, reported the AP, which said Madoff spoke for about ten minutes, often referring to his crimes as a “problem,” “an error of judgment,” and “a tragic mistake,” it quoted. The AP added that Madoff claimed he and his wife, Ruth, are tormented and said Ruth, “cries herself to sleep every night, knowing all the pain and suffering I have caused. That’s something I live with, as well,” it quoted. Looking at the victims, Madoff said, “I will turn and face you…. I’m sorry. I know that doesn’t help you.”

Ruth Madoff spoke through her attorney, claiming she was also duped, said the AP. Her statement, in part said, reported the LA Times that, "Lives have been upended and futures have been taken away. All those touched by this fraud feel betrayed; disbelieving the nightmare they woke to. I am embarrassed and ashamed. Like everyone else, I feel betrayed and confused. The man who committed this horrible fraud is not the man whom I have known for all these years.”

Bloomberg.com said, at his sentencing, Madoff stated Ruth would issue a statement, noting that her silence since his December arrest was on attorney advice. No Madoff family was in attendance today, said Bloomberg.com. Chin told CNBC, said the LA Times, that he did not receive any letters requesting leniency form Madoff's friends or family.

And, although Bernard has been initially stripped of $171 billion and all of his personal property, as well as $80 million in assets Ruth claims were hers, the wife of the mastermind of what is believed to be the largest such scam in history still walks away with $2.5 million, likely more than many of Madoff’s duped investors.

Madoff Investor Group Wants to Have Releases Voided

Thu, 25 Jun 2009 00:00:00 -0700

A group of Bernard Madoff's victims who waived some of their rights in order to receive accelerated payments from the trustee liquidating his assets are having second thoughts. According to Bloomberg.com, they are asking a federal bankruptcy judge to invalidate the releases they signed so that they can seek more money if it is found that the trustee miscalculated their claims.

According to Bloomberg.com, this is the same group of Madoff victims who sued the trustee earlier this month in an attempt to force him to recalculate reimbursements. As we reported previously, trustee Irving Picard is currently calculating an investor’s loss as the difference between the total amount a customer paid into the scam and the total amount withdrawn before it collapsed. This group has argued that investors should receive credit for the full value of the securities shown on the last account statements they received before Madoff’s arrest. If they win, the amount due to each defrauded Madoff investor will substantially increase.

But a recalculation won't help Madoff's investors who sought accelerated payments, most of whom did so because they were in dire financial circumstances, Bloomberg.com said. In order to qualify for those accelerated payments, they had to sign releases barring them from seeking more money if Picard recalculated losses. They are asking that the released they signed be voided.

Madoff pleaded guilty to 11 criminal charges last March, including securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission. At the time of his plea, Madoff publicly admitted he had run a Ponzi scheme.

Madoff is being detained at the Manhattan Correctional Center in New York City, where he is awaiting sentencing scheduled for later this month. He faces as much as 150 years in prison. However, it was recently learned that Madoff’s defense attorney has written the judge scheduled for the sentencing, urging a 12-year-sentence. According to the Associated Press, attorney Ira Sorkin wrote that such a sentence - which many of Madoff’s defrauded clients would likely consider too lenient - would acknowledge Madoff’s voluntary surrender late last year.

SEC Charges Cohmad Securities, 4 Individuals in Connection with Madoff Ponzi Scheme

Tue, 23 Jun 2009 00:00:00 -0700

Federal securities regulators have charged Cohmad Securities Corp. and three of its officials with helping admitted swindler Bernard Madoff raise money from investors that was used to fuel his $65 billion Ponzi scheme. In a separate case, the Securities and Exchange Commission (SEC) also charged California-based investment adviser Stanley Chais - who ran three feeder funds that funneled money to Madoff - with securities fraud.

Madoff pleaded guilty to 11 criminal charges last March, including securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission. At the time of his plea, Madoff publicly admitted he had run a Ponzi scheme.

Madoff is being detained at the Manhattan Correctional Center in New York City, where he is awaiting sentencing scheduled for later this month. He faces as much as 150 years in prison. However, it was recently learned that Madoff's defense attorney has written the judge scheduled for the sentencing, urging a 12-year-sentence. According to the Associated Press, attorney Ira Sorkin wrote that such a sentence - which many of Madoff's defrauded clients would likely consider too lenient - would acknowledge Madoff's voluntary surrender late last year.

According to a press release issued by the SEC, it has charged Cohmad Securities Corporation, its chairman Maurice J. Cohn, chief operating officer Marcia B. Cohn, and registered representative Robert M. Jaffe for actively marketing investment opportunities with Madoff while knowingly or recklessly disregarding facts indicating that Madoff was operating a fraud. The complaint alleges that while bringing investors to Madoff, the Cohmad defendants ignored and even participated in many suspicious practices that the SEC says clearly indicated Madoff was engaged in fraud.

The SEC's complaint against Stanley Chais alleges that for the last 40 years, he has held himself out as an "investing wizard" who managed hundreds of millions of dollars of investor funds in three partnerships, the Lambeth, Popham and Brighton Companies. In reality, the SEC claims Chais was an unsophisticated investor who did nothing more than turn all of the Funds' assets over to Madoff, while charging the Funds more than $250 million in fees for his purported "services." Although Madoff managed all of the funds' assets, many of the his investors had never heard of Madoff before the collapse of his Ponzi scheme, and had not known that Chais invested with Madoff until Chais informed them after Madoff's arrest. The SEC also alleges that Chais ignored red flags indicating that Madoff's reported returns were false.

Finally, the SEC complaint alleges that Chais also opened and exercised control over approximately 60 other accounts at Madoff's firm on behalf of his family members and related entities. Taking all of these accounts collectively, between 1995 and 2008, Chais and his family members and related entities withdrew more than $500 million more than they actually invested with Madoff, the SEC said.

Both SEC complaints seek injunctions, financial penalties and court orders requiring Cohmad, the Cohns, Jaffe and Chais to disgorge their allegedly ill-gotten gains. Both complaints were filed in U.S. District Court for the Southern District of New York.

Madoff Bankruptcies Consolidated

Wed, 10 Jun 2009 00:00:00 -0700

Bankruptcy cases involving Bernard Madoff will be consolidated in an attempt to save money and increase the chances that stolen assets will be recovered, Bloomberg.com is reporting. The decision means that one trustee will oversee Madoff's personal bankruptcy, as well as another bankruptcy proceeding involving the admitted swindler's business brought by the Securities Investor Protection Corp. (SIPC).

Madoff pleaded guilty to 11 criminal charges last March, including securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission. At the time of his plea, Madoff publicly admitted he had run a Ponzi scheme. Madoff is being detained at the Manhattan Correctional Center in New York City, where he is awaiting sentencing scheduled for later this month. He faces as much as 150 years in prison.

Before his arrest late last year, Madoff told his investors that his fund held more than $64 billion, but in reality, he only had a fraction of that amount. As we reported previously, Madoff never made a single trade on behalf of his investors.

In agreeing to consolidate the Madoff cases, Judge Burton Lifland of U.S. Bankruptcy Court in Manhattan said a common trustee would "maximize" the odds of asset recovery and avoid duplication of efforts, Bloomberg.com said. The judge also said that Madoff's creditors would benefit from the consolidation "because SPIC is underwriting the costs of the recovery."

Following Madoff's arrest, the SIPC appointed Irving Picard as trustee, and charged him with locating and liquidating assets from Madoff's investment business in an attempt to recover some funds for his defrauded investors. In recent months, Picard has filed several claw back lawsuits seeking total of $10.1 billion in profits withdrawn by Madoff investors that he claims should have known of the fraud. Picard also is seeking about $735 million from Madoff customers outside of court.

Picard had backed the consolidation, the Associated Press said. At yesterday's hearing, the trustee's attorney said that Madoff's personal holdings and those of his firm, Bernard L. Madoff Investment Securities, were "hopelessly intertwined."

According to Bloomberg.com, Picard said he expected the total amount of assets recovered for Madoff's victims could increase by $235 million to $1.2 billion by next week. In addition to monies recovered through Picard's liquidation efforts, some Madoff investors could be eligible for up to $500,000 in reimbursement from the SIPC.

So far, Picard has received roughly 9,000 claims from cheated Madoff investors.

Madoff Investors Seek Change to Loss Calculation

Mon, 08 Jun 2009 00:00:00 -0700

A group of Bernard Madoff's burned investors wants a change made to the way fraud losses from his scam are calculated. According to The New York Times, the change they are seeking - to receive credit for the full value of the securities shown on the last account statements they received before Madoff's arrest - could substantially increase the price tag for his Ponzi scam.

Madoff pleaded guilty to 11 criminal charges last March, including securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission. At the time of his plea, Madoff publicly admitted he had run a Ponzi scheme. Madoff is being detained at the Manhattan Correctional Center in New York City, where he is awaiting sentencing scheduled for later this month. He faces as much as 150 years in prison.

Before his arrest late last year, Madoff told his investors that his fund held more than $64 billion, but in reality, he only had a fraction of that amount. As we reported previously, Madoff never made a single trade on behalf of his investors. But they received statements every month reflecting fake trades - and false profits - Madoff supposedly made for them.

According to the New York Times, some Madoff investors have filed a lawsuit asking a federal bankruptcy judge to calculate their losses based on the value of their last Madoff statements. Right now, the trustee in the case is calculating an investor's loss as the difference between the total amount a customer paid into the scam and the total amount withdrawn before it collapsed, the Times said.

If the judge grants the request, losses to investors could reach as high as the $64 billion Madoff claimed to have had in his funds. An attorney for the investors involved in this lawsuit told The New York Times that such a recalculation could be of particular help to elderly people who had been investing with Madoff for decades. Many of these victims - who lost their entire savings, and are too old to return to work - will not be eligible for reimbursement from the Securities Investor Protection Corporation (SIPC), a government-chartered agency financed by the brokerage industry, under the current method of calculation. That's because often their withdrawals over time were more than their original investment. If their final account balances were taken into account, many would end up being eligible for SIPC reimbursement, the attorney said.

As we've reported previously, Madoff's victims may be eligible to receive as much as $500,000 from the SIPC, as well as a share of any monies the Madoff trustee is able to recover from a liquidation of his assets. So far the trustee has been able to recover about $1 billion. But most experts in these types of frauds say victims rarely recover more than pennies on the dollar.

NJ Bill Introduced to Ease Tax Burden on Madoff, Other Scam Victims

Thu, 04 Jun 2009 00:00:00 -0700

A bill has been introduced in the New Jersey Senate that could provide some relief to the victims of Bernard Madoff's Ponzi scheme and similar scams. According to a report on NJ.com, the proposed law would enable the victims of such swindlers to get back the taxes they paid on earnings later discovered to be false.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 billion, but in reality, he only had a fraction of that amount.

Most of Madoff's investors were under the impression that their accounts were earning excellent returns. But in reality, the earnings Madoff reported on their monthly statements were just an illusion. It's now know that Madoff never invested a cent that anyone entrusted to him.

The sponsor of the New Jersey legislation, Senate President Richard Codey, (D-Essex) told NJ.com that he did not want the bill characterized as the "Bernard Madoff" bill. Rather, Codey said the aim of the bill is to provide relief to people who - like Madoff's investors - paid taxes on money they never actually received.

According to NJ.com, if passed the law would allow scam victims to amend past tax returns, reducing their taxable income by the amount of any income they reported receiving from the fraudulent scheme. Such individuals could get back the taxes they paid in the three years before the fraud is discovered. The measure covers fraud discovered in 2008, 2009 and 2010, said NJ.com. Victims would be eligible for the "theft-loss deduction" if they can get a similar outcome at the federal level.

New Jersey is just the latest state to try to offer relief to the victims of Madoff-type scams. Yesterday, we reported that New York issued tax guidelines that would allow scam victims to write-off off their losses as “theft."

And in March, the IRS said it would allow Ponzi scheme victims to claim some of their losses as deductions on their tax returns. Under the new guidance, the losses are classified as theft losses rather than capital losses, giving most victims a bigger deduction. In addition, a special limitation that sometimes reduces deductions by 10 percent won’t apply. The IRS guidance also says defrauded investors can claim theft losses not only for amounts originally invested, but also for fictitious income.

Madoff Trustee Strikes Deal with Banco Santander

Wed, 27 May 2009 00:00:00 -0700

The Bernard Madoff trustee has reached a deal with Spain's largest bank regarding investments two of its hedge funds made with the admitted Ponzi schemer. According to a Bloomberg.com, Banco Santander will pay $235 million to trustee Irving Picard to avoid a lawsuit. Picard has recently been filing claw back lawsuits against individuals and funds for billions of dollars in false profits they supposedly made as a result of their Madoff investments.

The two hedge funds were operated by Santander’s Optimal Investment Services unit, Bloomberg.com said. Santander said that its agreement with Picard did not imply any wrongdoing on its part.

As we reported previously, losses for Banco Santander’s clients were among the highest of any bank linked to Madoff’s investment advisory business. As a result of its Madoff's investments, the bank's clients lost more than $3.1 billion. Yet just weeks before Madoff’s Ponzi scheme collapsed, managers at Banco Santander’s Optimal hedge fund investment arm were praising Madoff’s supposedly “impeccable” market timing. The massive losses prompted some Santander clients to file a class action lawsuit against the bank in Miami, charging it did not perform enough due diligence in regards to its Madoff investments.

Since the lawsuit was filed, Banco Santander has offered a compensation deal to its clients. According to Bloomberg.com, a little more than 90% have accepted the offer.

Picard was hired by the Securities Investor Protection Corp. (SIPC) to liquidate Madoff's assets in order to recover some of the $65 billion his investors lost to his scam. So far, Picard has been able to collect $1.22 billion as a result of his efforts. According to Bloomberg.com, Picard has also filed several claw back lawsuits seeking total of $10.1 billion in profits withdrawn by Madoff investors that he claims should have known of the fraud. Picard also is seeking about $735 million from Madoff customers outside of court. In spite of these efforts, most experts expect Madoff's former investors will only recover pennies on the dollar.

According to Bloomberg, the SIPC is apparently very happy with the Santander deal. "This settlement is the result of extensive factual research, diligent legal scholarship and practical craftsmanship by the trustee and his attorneys,” SIPC President Stephen Harbeck said in a statement. “It is a road map for similar recoveries that will benefit the victims of Bernard Madoff’s crimes.”

In addition to the asset liquidation, some investors might be able to recover up to $500,000 each from the SIPC, which acts essentially as an insurance fund for victims of securities fraud. However, third-party investors - those whose Madoff investments were made through other entities - might not be eligible for the full SIPC benefit. Those investors could choose to sue the third party, and some hedge funds have already been named in such lawsuits.

On March 12, Madoff pleaded guilty to 11 fraud counts. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Madoff faces up to 150 years in prison, and is scheduled for sentencing next month.

Madoff Associate Says He Would Help Prosecutors

Thu, 21 May 2009 00:00:00 -0700

In response to a recent lawsuit filed in connection with the ongoing and massive Bernard Madoff Ponzi Scheme scandal, philanthropist and investment advisor Stanley Chais has indicated a willingness to cooperate with investigators. Bloomberg.com reported that Chais's lawyer said he would assist in the event a criminal probe is initiated concerning his investments with the disgraced financier.

The Madoff Ponzi scandal has made history as being the largest such fraud scheme of its kind. Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in fact, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Madoff faces a potential 150 years in prison and continues to refuse to cooperate with authorities.

Recently, Irving Picard, the trustee working to recover Madoff’s assets, filed a lawsuit for more than $1 billion over allegations that prominent money manager, Chais—and his family—knew they were involved in a Ponzi scheme and, worse, profited from the scheme for three decades, said USA Today in an earlier report. Chais and his family, “knew or should have known” Madoff was running a Ponzi scheme,” reported USA Today, citing legal documents. The case alleges that Chais and his family were what USA Today described as “prime beneficiaries” in Madoff’s plot for over 30 years and that they should return the fraudulently-obtained money for future distribution to Madoff’s scammed victims.

Chais is one of eight Madoff investors being looked at by prosecutors, said Bloomberg.com, citing the Wall Street Journal. According to Chais’ attorney, the investor, “had absolutely no knowledge of the Madoff Ponzi scheme as evidenced by the staggering personal losses” he, his family, and his foundation endured, quoted Bloomberg.com.

Picard—who represents the Securities Investor Protection Corporation—is seeking the money from Chais and a number of family trusts in the lawsuit, saying, via a statement issued on his behalf that the funds are “what was, in fact, other investors’ money,” quoted USA Today previously. The action against Chais is the first instance of Picard accusing an alleged Madoff victim of benefiting from the Ponzi scam. Picard also sent a number of so-called “clawback” letters to corporations and individual investors seeking over $735 million in false profits that represent stolen property, explained Newsday previously. The letters were sent to investors who withdrew in excess of original investments with Madoff.

According to Picard’s complaint, Chais received “implausibly high” returns and should have been aware he was involved in a fraud, reported Bloomberg.com. The complaint also stated that Chais representatives asked for fictitious losses.

Earlier this month, USA Today, said that according to the complaint, “Either an utter lack of volatility over twelve years or implausibly high rates of return over the same period suggests misconduct…. That the same investment manager purported to accomplish both at the same time should have removed all doubt,” quoted USA Today.

Madoff Prosecutors Taking A Look at Some of His Investors

Mon, 18 May 2009 00:00:00 -0700

U.S. prosecutors on the Bernard Madoff Ponzi scheme case have reportedly set their sites on some of his investors. According to The Wall Street Journal, eight such investors are among Madoff's friends, family and associates now being scrutinized by a criminal investigation.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 billion, but in reality, he only had a fraction of that amount.

Because Madoff's Ponzi scheme went on for decades, it is suspected that he was far from the only person in his circle who knew of the swindle. It's been known that several people close to Madoff - including key employees, as well as his wife, sons and brother - were among those close to him caught up in the probe. But today's Wall Street Journal article is the first to acknowledge that some of his investors are also under scrutiny.

The Journal says eight such investors are in the spotlight. They include philanthropists Jeffry Picower and Stanley Chais, as well as Madoff's close friend, Carl Shapiro. According to The Wall Street Journal, there is allegedly evidence that both Picower and Chais told Madoff what return they wanted on their investments with him, and their accounts would eventually reflect those returns. Prosecutors are also trying to determine if Shapiro, one of Madoff''s oldest and closest friends, knew Madoff's funds were a fraud. Shapiro gave Madoff financial backing to start his business in the 1960s, the Journal said.

Prosecutors are also said to be taking a look at Frank Avellino, a Florida accountant who ran an investment fund that channeled client money to Madoff; Noel Levine, a real-estate investor who had an office next to Madoff's fraudulent business; and Robert Jaffe, a Palm Beach investor and Shapiro's son-in-law. According to the Journal, Jaffe recruited investors for Madoff.

So far, no investor has actually been charged with criminal wrongdoing, the Journal said. However, as we reported previously, both Picower and Chais have been sued by the trustee liquidating Madoff's assets. The trustee claims that both sought and received better returns than thousands of other Madoff investors. According to The Wall Street Journal, those suits allege that Chaise received returns as high as 300% from his Madoff investments, while Picower saw returns of more than 100% in 14 instances, reaching as high as 950%.

Ezra Merkin Sued by Bernard Madoff Trustee

Fri, 08 May 2009 00:00:00 -0700

The Bernard Madoff trustee has filed a lawsuit against Ezra Merkin, one of several so-called middlemen who recruited investors for Madoff's funds. Those funds turned out to be a huge Ponzi scheme that bilked Madoff's clients out of billions of dollars.

Merkin told investors that he personally managed three hedge funds - Ascot Partners, Ariel Fund and Gabriel Capital. But according to charges filed against Merkin by the New York Attorney General last month, Merkin turned virtually all of this money over to third-party money managers, including Madoff. According to the complaint, Madoff typically did not disclose to investors, or actively obscured from them, that Madoff was actually managing some or all of the funds they invested.

Though acting primarily as a marketer and a middleman, Merkin pocketed hundreds of millions of dollars in management and incentive fees from his investors, the Attorney General's complaint claimed.

The New York Attorney General also claims that Merkin kept a total of $2.4 billion of investors’ funds in Madoff even though he knew of irregularities and other glaring red-flags related to Madoff’s investments. According to the complaint, at least two of Merkin’s most trusted colleagues repeatedly told him that Madoff’s returns were too good to be true— one warning that it could be a Ponzi scheme.

Now Madoff trustee Irving Picard is also charging that Merkin knew Madoff was running a scam. According to Picard's lawsuit, Merkin withdrew more than $500 million in "nonexistent principal" from Bernard L. Madoff Investment Securities in the years before Madoff confessed his scam last December.

The lawsuit also claims that Merkin "'earned' tens of millions of dollars in management and performance fees, even though he knew or should have known that (the firm) was engaged in fraud."

Picard's lawsuit seeks return of the money Merkin withdrew from Madoff's fund. If recovered, the money would be used to repay Madoff's investors some of the what they lost to his scam.

Picard has been charged with locating and liquidating Madoff's assets in a bid to recover funds for defrauded investors. So far, he has located just over $1 billion - only a fraction of what Madoff's clients lost to his scheme. Experts have said previously that victims of frauds like the Madoff Ponzi scheme usually only recover pennies on the dollar.

Madoff Ponzi Scheme Prompts Calls to Regulate Financial Planners

Thu, 30 Apr 2009 00:00:00 -0700

In the wake of the Bernard Madoff Ponzi scheme debacle, a group of financial planning organizations is calling for stricter oversight of money managers. The coalition, made up of the National Association of Personal Financial Advisors, the Financial Planning Association and the Certified Financial Planner Board of Standards Inc., is advocating for the formation of a national oversight board to set standards and enforce fiduciary duty for financial planners.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

The Madoff scandal, along with some smaller Ponzi schemes and the global banking meltdown, has hurt the reputation of financial planners, the coalition said. The group also pointed out that the current patchwork regulation of financial advisers and lack of clarity around the qualifications of financial advisers creates confusion for investors.

According to The Wall Street Journal, the group, which goes by the moniker the Financial Planning Coalition, said they've been holding exploratory meetings with lawmakers, regulators and consumer organizations. They're aiming to influence decisions about financial industry reform, the Journal said.

The regulatory organization the coalition seeks would set ethical and competency standards for financial planners. It would also create rules requiring financial planners to put their clients' interests first. As proposed by the coalition, the regulatory board would oversee individuals who provide financial planning services - not financial planning firms. The organization would be overseen by the Securities and Exchange Commission (SEC), and it would not replace existing regulators, such as states and the SEC, the Journal said.

According to Bloomberg.com, the group is trying to prevent the Financial Industry Regulatory Authority (FINRA), a non- governmental body that oversees almost 5,000 brokerage firms, from taking on the oversight of financial planners. The group points out that because FINRA is charged with weighing suitability of financial products, it has inherent conflicts of interest because brokers sell products.

Almost $7M More Found in Madoff Funds

Wed, 29 Apr 2009 00:00:00 -0700

Irving Picard, the special trustee investigating Bernard Madoff’s bogus financial schemes has found close to $7 million in six Madoff accounts at Bank of New York Mellon Corporation, reports Newsday, citing bankruptcy court papers. According to the article, the accounts range in size from 5,372 to $6.5 million.

Picard is requesting that the newly found funds be transferred for future disbursement to defrauded investors injured in Madoff’s historic $65-billion Ponzi scheme. The new-found money from the Bank of New York accounts brings the estimated total of funds recovered to somewhere between $950 million and $1 billion, said Newsday, and will be used to repay investors duped by Madoff.

On March 12, Madoff pleaded guilty to 11 fraud counts in what is believed to be the largest Ponzi scheme in history. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Since his guilty plea, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison.

This recent recovery is considered small when compared to other recoveries and the estimated losses; however, said Newsday, an anonymous source close to the investigation said some other “additional discoveries” totaling over $100 million should be announced shortly. The source also said additional lawsuits are being considered and could increase recoveries to about $2 billion by year-end.

Most recently, Boston’s Castor Pollux Securities LLC agreed to buy out the remaining, legitimate Madoff business for a cost of $25.5 million over four years. Castor Pollux won the business in an auction that ended Monday evening, said Newsday. The money from the sale will be used to repay investors in the same way as other asset sales, such as Madoff’s New York Mets season tickets, Newsday explained.

"The auction yielded a higher and better offer for the market-making business," Picard said in a statement. "The additional consideration that we will receive as a result of the auction will benefit Madoff victims," quoted Newsday. Picard has also brought legal actions against offshore investment funds in the hopes of recouping about $405 million withdrawn by the funds from Madoff accounts just prior to Madoff’s scheme falling apart and making headlines, said Newsday. Picard also sent a number of so-called "clawback" letters to corporations and individual investors seeking over $735 million in false profits that represent stolen property, explained Newsday.

Last week, the Madoff debacle spawned two more lawsuits. The Wall Street Journal reported in a prior piece that two funds and their fund managers were separately sued over allegations that the managers breached “their fiduciary duties in entrusting client money” with Madoff. Just prior, a federal judge blocked Madoff’s assets from being moved into bankruptcy, reported CNN, saying that the court found probable cause that the “assets should be forfeited to the government.” Earlier this month, investors petitioned a federal judge to rescind an order preventing forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) indicated they intend to seek forfeiture and disgorgement of Madoff’s assets in both the criminal and civil cases. But, according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff’s customers and what rules would govern such distribution. The five investors were seeking nearly $64 million.

JPMorgan Hit with Madoff Lawsuit

Mon, 27 Apr 2009 00:00:00 -0700

JPMorgan Chase is facing a lawsuit over its dealings with admitted Ponzi schemer Bernard Madoff. According to Bloomberg.com, the lawsuit alleges that JPMorgan learned that Madoff was running a scam last fall, but kept quiet to protect its own interests.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Lots of banks had dealings with Madoff, including JPMorgan. As we reported in January, in 2006, JPMorgan had started offering investors a way to leverage their bets on the future performance of two Fairfield Greenwich Group hedge funds that invested with Madoff. To protect itself from the resulting risk, the bank put $250 million of its own money into those funds. Last fall, JPMorgan began taking its own money out the hedge funds, but never let its investors know.

According to Bloomberg.com, Madoff himself had a checking account with JPMorgan. In fact, just a month ago the bank agreed to transfer $2.4 million in a Madoff account to the trustee liquidating his assets. According to The New York Times, Madoff has admitted moving millions of dollars through his checking accounts to give the illusion of active investing, when in fact he purchased no securities at all for his thousands of clients.

The Madoff lawsuit against JPMorgan was filed by MLSMK Investments Co., a Palm Beach, Florida- based partnership that deposited $12.8 million with JPMorgan from October to December. The lawsuit claims that in the same time period, JPMorgan allowed its brokers to trade with Madoff’s market-making business, which he used to generate legitimate trading volume that satisfied regulator audits and inquiries.

According to The New York Times, MLSMK Investments' lawsuit claims that JPMorgan had indications that something odd was going on with Madoff's accounts. For instance, the average balance in his checking accounts at JPMorgan Chase ran into the billions of dollars between 2006 and the middle of 2008, as nervous customers moved money from seemingly riskier investments and deposited it with Madoff. Then in September 2008, the cash balance “began to drop precipitously,” sometimes hovering near zero until Madoff could transfer fresh funds in his London affiliate. According to the Times, attorneys representing MLSMK said that the erratic activity in Madoff's accounts should have "raised alarms" at JPMorgan.

JPMorgan, according to the complaint, “began to grow suspicious of Madoff’s results and embarked on a due diligence investigation of Madoff’s operations,” Bloomberg.com said. According to the lawsuit, that investigation determined it wasn’t plausible for Madoff to be generating the returns he claimed. According to the MLSMK complaint, JPMorgan's decision last fall to begin liquidating its position in the Madoff-linked hedge funds was prompted by its due diligence investigation.

According to Bloomberg.com, the MLSMK lawsuit charges JPMorgan with racketeering, negligence and breach-of-duty. It seeks $12.8 million in compensatory damages plus punitive damages.

Two More Madoff Lawsuits

Wed, 22 Apr 2009 00:00:00 -0700

The Bernard Madoff Ponzi scheme debacle has spawned two more lawsuits. The Wall Street Journal reported that two funds and their fund managers have been separately sued over allegations that the managers breached “their fiduciary duties in entrusting client money” with Madoff.

Meridian Capital Partners and its investment manager, Meridian Diversified Fund Management LLC, were sued Monday in Manhattan’s U.S. District Court; on Friday, in U.S. District Court in White Plains, N.Y., fund managers J.P. Jeanneret Associates Inc. and Ivy Asset Management Corp. and Ivy's parent Bank of New York Mellon Corp. (BK) were sued, reported the Journal.

According to the Journal, the Meridian lawsuit claims that six-to-eight percent of Meridian client funds were invested in Madoff-managed investments. "This was contrary to the duties Meridian Diversified had made regarding its processes for selecting fund managers…. As a result of defendants' breaches of fiduciary duty and false statements, investors made additional investments in the funds and/or held shares they would have redeemed," quoted the Journal, citing the lawsuit. That complaint is looking to gain class-action status clients who invested in that fund from January 2, 2008 to December 11, 2008, as well as a “sub-class of employee benefit plans invested during that period, said the Journal.

The J.P. Jeanneret lawsuit claims that both J.P. Jeanneret and Ivy Asset Management “failed to conduct minimal due diligence regarding Madoff's investment strategy, failed to follow a sustainable investment strategy, and failed to conduct ongoing due diligence in order to identify and avoid massive fraud,” said the Journal. This case concerns alleged Madoff investments in the Jeanneret Associates-managed Income-Plus Investment Fund. That lawsuit is also seeking class-action status.

"During the class period, defendant Jeanneret Associates Inc. neglected its professional and fiduciary duties to manage the capital that plaintiff and other members of the proposed class invested in the fund…. Instead, Jeanneret Associates blindly entrusted a substantial part of plaintiff's capital to Madoff and BMIS, who used that capital in a massive Ponzi scheme," said the lawsuit, quoted the Journal.

Earlier this week, a federal judge blocked Madoff’s assets from being moved into bankruptcy, reported CNN, saying that the court found probable cause that the “assets should be forfeited to the government.” Earlier this month, investors petitioned a federal judge to rescind an order preventing forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) indicated they intend to seek forfeiture and disgorgement of Madoff’s assets in both the criminal and civil cases. But, according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff’s customers and what rules would govern such distribution. The five investors were seeking nearly $64 million.

On March 12, Madoff pleaded guilty to 11 fraud counts in what is believed to be the largest Ponzi scheme in history. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Since his guilty plea, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison.

Madoff Bankruptcy Blocked

Tue, 21 Apr 2009 00:00:00 -0700

A federal judge just blocked the assets of Bernard Madoff from being moved into bankruptcy, reports CNN. It seems the court found probable cause that the “assets should be forfeited to the government,” said CNN.

Earlier this month, investors petitioned a federal judge to rescind an order that prevented a forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) indicated they intend to seek forfeiture and disgorgement of Madoff’s assets in both the criminal and civil cases. But, according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff’s customers and what rules would govern any such distribution. The five investors were seeking nearly $64 million.

In a prior move, another federal judge allowed investors to proceed with the filing, saying that the proceedings were the investors best recourse for monetary recovery, said CNN. In addition to the SEC blocking the proceedings, the trustee handling Madoff’s liquidation and the U.S. Attorney’s office sought blockage, noted CNN.

Most recently, Irving Picard, the trustee brought in to liquidate Bernard L. Madoff’s Investment Securities LLC sued Kingate Management Ltd. for some $255 million transferred to the firm prior to the alleged Ponzi scheme’s demise, reported Bloomberg News in an earlier report. Reuters reported that the transactions occurred last October and November. Bloomberg News explained that Picard was appointed as trustee under the Securities Investor Protection Act to conduct an investigation into Madoff’s activities and assets. Picard has, to date, recovered about $1 billion, said Bloomberg News.

In previous Madoff news, said Bloomberg, Picard sued Banque Jacob Safra (Gibraltar) Ltd. and Vizcaya Partners Ltd. in an attempt to recover $150 million, it withdrew from Madoff’s money-management business, said Reuters. Bloomberg said, according to information in the complaint, Kingate Global invested $963.5 million with Madoff from March 1994 to December 11 and Kingate Euro invested $767.4 million with Madoff starting January 1996, via 155 wire transfers to a JPMorgan Chase & Co. account.

Last week, court appointed liquidators in the United Kingdom sued Peter Madoff, Bernard Madoff’s brother, for recovery of a vintage Aston Martin, reported the Wall Street Journal. The car was purchased with monies derived from Madoff’s U.K. business, London-based Madoff Securities International Limited (MSIL). Just prior, a filing was made in New York for a personal involuntary bankruptcy for Bernard Madoff in an attempt to recover personal assets of Madoff and his relatives, said BizJournals. According to The Wall Street Journal, the filing said investors’ claims are based on breach of contract, conversion, and fraud. The filing also states that because of Madoff’s guilty plea in his criminal case, the claims are not disputed.

On March 12, Madoff pleaded guilty to 11 fraud counts in what is believed to be the largest Ponzi scheme in history. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Since his guilty plea, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison.

Madoff Trustee Sues Fund for Return of Money

Mon, 20 Apr 2009 00:00:00 -0700

Irving Picard, the trustee brought in to liquidate Bernard L. Madoff’s Investment Securities LLC has sued Kingate Management Ltd. for $255 million transferred to the firm just prior to the alleged Ponzi scheme fell apart, reports Bloomberg News. Reuters reported that the transactions occurred last October and November.

Bloomberg News explained that Picard was appointed as trustee under the Securities Investor Protection Act to conduct an investigation into Madoff’s activities and assets. Picard has, to date, recovered about $1 billion, said Bloomberg News.

The complaint, which was just filed in Manhattan’s U.S. Bankruptcy Court, states “transfers of $100 million to Kingate Global Fund Ltd. and $155 million to Kingate Euro Fund Ltd. from Madoff firm accounts in October and November were improper,” said Bloomberg News. “This complaint seeks the return of the Kingate Global transfers and the Kingate Euro transfers…. Both the Kingate Global transfers and the Kingate Euro transfers are and continue to be customer property,” Bloomberg News quoted.

The complaint names Bank of Bermuda Ltd., which, said Bloomberg News, is a unit of HSBC Holding Plc, as a defendant. It seems Bank of Bermuda wired the money from Madoff to Kingate, said Bloomberg News, citing court documents.

On March 12, Madoff pleaded guilty to 11 fraud counts in what is believed to be the largest Ponzi scheme in history. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Since his guilty plea, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison.

In previous Madoff news, said Bloomberg, Picard sued Banque Jacob Safra (Gibraltar) Ltd. and Vizcaya Partners Ltd. in an attempt to recover $150 million, it withdrew from Madoff’s money-management business, said Reuters. Bloomberg said, according to information in the complaint, Kingate Global invested $963.5 million with Madoff from March 1994 to December 11 and Kingate Euro invested $767.4 million with Madoff starting January 1996, via 155 wire transfers to a JPMorgan Chase & Co. account.

Last week, court appointed liquidators in the United Kingdom sued Peter Madoff, Bernard Madoff’s brother, for recovery of a vintage Aston Martin, reported the Wall Street Journal. The car was purchased with monies derived from Madoff’s U.K. business, London-based Madoff Securities International Limited (MSIL). Just prior, a filing was made in New York for a personal involuntary bankruptcy for Bernard Madoff in an attempt to recover personal assets of Madoff and his relatives, said BizJournals. According to The Wall Street Journal, the filing said investors’ claims are based on breach of contract, conversion, and fraud. The filing also states that because of Madoff’s guilty plea in his criminal case, the claims are not disputed.

Earlier this month, investors petitioned a federal judge to rescind an order that prevented a forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) indicated they intend to seek forfeiture and disgorgement of Madoff’s assets in both the criminal and civil cases. But, according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff’s customers and what rules would govern any such distribution.

British Liquidators Target Bernard Madoffs Brother, Peter

Wed, 15 Apr 2009 00:00:00 -0700

Court appointed liquidators in the United Kingdom have sued Bernard Madoff’s brother Peter, for recovery of a vintage Aston Martin, reports the Wall Street Journal. The car was purchased with monies derived from Madoff’s U.K. business, London-based Madoff Securities International Limited (MSIL).

According to lawsuit documents, the British arm of Madoff’s business wired £135,000—$201,353—to Aston Martin in 2008 for the purchase of a car for Peter Madoff and his wife, said the Journal. The complaint states the transfers were “not legitimately reimbursed,” said the South Florida Business Journals (BizJournals). The lawsuit was filed in the U.S. Bankruptcy Court in West Palm Beach, Florida, noted the Journal, which pointed out that Peter—who was a director, manager, and shareholder of the British operation—lives in Florida. The lawsuit, in addition to seeking recovery of the Aston Martin, is also looking to recover other losses, which include punitive damages, said BizJournals.

The lawsuit, explained BizJournals, was filed for bankruptcy recognition and includes a lawsuit to recover the 1964 Aston Martin DB2/4 and also stated that Peter Madoff used accounts with MSIL to buy the high-end luxury car. BizJournals added that the car is kept at Peter Madoff’s home, which is located at 200 Algoma Road, in Palm Beach, Florida.

The British petition is a Chapter 15 filing and, in effect, seeks recognition of bankruptcies in foreign jurisdictions, explained BizJournals. The complaint also states that MSIL traded for the personal accounts of Bernard Madoff and members of his immediate family; Madoff used MSIL’s assets and bank accounts to buy items such as luxury yachts and automobiles, and furnishings for himself and Madoff family members, to name just a few, said BizJournals.

On March 12, Madoff pleaded guilty to 11 fraud counts in what is believed to be the largest Ponzi scheme in history. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Since his guilty plea, Madoff has been held at the Manhattan Correctional Center and faces a June sentencing and up to 150 years in prison.

Meanwhile, On Monday, a filing was made in New York for a personal involuntary bankruptcy for Bernard Madoff in an attempt to recover personal assets of Madoff and his relatives, said BizJournals. According to The Wall Street Journal, the filing says investors’ claims are based on breach of contract, conversion, and fraud. The filing also states that because of Madoff’s guilty plea in his criminal case, the claims are not disputed. The investors claim Madoff owes them a total of $64 million, which is based on the balances contained in the last statements they received from Bernard L. Madoff Investment Securities LLC, the Journal said. If the claim is granted, Madoff’s assets will be subject to liquidation under Chapter 7 bankruptcy.

Earlier this month, the investors petitioned a federal judge to rescind an order that prevented a forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) indicated they intend to seek forfeiture and disgorgement of Madoff’s assets in both the criminal and civil cases. But, according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff’s customers and what rules would govern any such distribution.

Madoff Investors File Petition for Forced Bankruptcy

Tue, 14 Apr 2009 00:00:00 -0700

Investors defrauded by Bernard Madoff have filed an involuntary bankruptcy petition against the admitted swindler. If granted, Madoff's assets will be subject to liquidation under Chapter 7 bankruptcy.

According to The Wall Street Journal, petitioning creditors include Blumenthal & Associates Florida General Partnership, Martin Rappaport Charitable Remainder Unitrust, Martin Rappaport, Marc Cherno and Steven Morganstern.

Earlier this month, the investors petitioned a federal judge to rescind an order that prevented a forced bankruptcy. Federal prosecutors and the Securities and Exchange Commission (SEC) have indicated they intend to seek forfeiture and disgorgement of Madoff’s assets in both the criminal and civil cases. But according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff’s customers and what rules would govern any such distribution.

“Under these circumstances, considerations of efficiency and fairness to victims dictate coordinated proceedings in the bankruptcy court,” the petition said.

Both the SEC and the Department of Justice tried to block the bid, insisting that forced bankruptcy was not needed to insure that Madoff’s victims could collect from his assets. But U.S. District Judge Louis Stanton in New York granted the request to allow a forced bankruptcy. In explaining his decision, Judge Stanton said the bankruptcy filing might better enable creditors to access Madoff assets that are not “proceeds of his fraud." Bankruptcy law provides a “familiar, comprehensive” set of statutes for investors seeking “his personal assets other than those criminally forfeitable,” Stanton said.

Investors wasted no time, and filed their claim against Madoff with the U.S. Bankruptcy Court in Manhattan yesterday. According to The Wall Street Journal, the filing says investors' claims are based on breach of contract, conversion and fraud. It also says that because of Madoff's guilty plea in his criminal case, the claims are not disputed. The investors claim Madoff owes them a total of $64 million. That amount was based on the balances contained in the last statements they received from Bernard L. Madoff Investment Securities LLC, the Journal said.

On March 12, Madoff pleaded guilty to 11 fraud counts. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount.

Since his guilty plea, Madoff has been held at the Manhattan Correctional Center. He faces a June sentencing and faces as much as 150 years in prison.

Judge Refuses to Block Investor-Forced Bankruptcy in Madoff Case

Mon, 13 Apr 2009 00:00:00 -0700

Last week, the Securities and Exchange Commission (SEC) and the Justice Department (DOJ) asked a federal judge to block an attempt to force notorious Ponzi scammer Bernard Madoff into bankruptcy. Now, Bloomberg.com is reporting that Madoff might be forced into personal bankruptcy in a move to protect his investors and ensure his assets are returned to the victims of his fraud, citing a federal judge.

Last week, the SEC and DOJ argued that forced bankruptcy was not needed to protect Madoff’s victims from collecting from his assets, saying that bankruptcy would be a wasted legal move. But, victims are concerned if bankruptcy is not forced, they will lose any chance of collecting their lost funds, said Bloomberg.com in an earlier report.

Despite SEC and DOJ objections, U.S. District Judge Louis Stanton in New York granted the request by Madoff’s victims, reversing his December ruling, said Bloomberg.com. The ruling does not mean that Madoff is being forced into bankruptcy, only that investors may force the move. “The concern that appointment of a bankruptcy trustee will increase administrative costs or delay recovery by victims is speculative and outweighed by the benefits to Mr. Madoff’s victims,” the judge said in a “four-page opinion,” quoted Bloomberg.

According to the judge, the bankruptcy filing might better enable creditors to access Madoff assets that are not “proceeds of his fraud,” said Bloomberg, citing Stanton, who also said that the filing might help investors who became caught up in the Ponzi scheme via feeder funds, explaining that the law, provides a “familiar, comprehensive” set of statutes for investors seeking “his personal assets other than those criminally forfeitable,” Stanton said.

Meanwhile, the trustee charged with recovering money for defrauded investors has sued one of those investors. According to a prior Wall Street Journal article, the so-called “claw back” lawsuit seeks to recover false profits from an investor who withdrew money from Madoff’s funds before his Ponzi scheme was revealed. It is likely that many other claw back lawsuits will be filed. Under the bankruptcy code, trustees may sue investors for any fictional profits and principal they withdrew in the six years before a fraud was exposed. The claw backs are permitted because in schemes like Madoff’s, such withdrawals are paid using other investors’ money.

On March 12, Madoff pleaded guilty to 11 fraud counts. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount.

Madoff faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to a prior Los Angeles Times report, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began. Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.

Madoff Trustee Files First Claw Back Lawsuit

Sat, 11 Apr 2009 00:00:00 -0700

The trustee charged with recovering money for defrauded Bernard Madoff investors has sued one of those investors. According to The Wall Street Journal, the so-called "claw back" lawsuit seeks to recover false profits from an investor who withdrew money from Madoff's funds before his Ponzi scheme was revealed. It is likely that many other claw back lawsuits will be filed before the entire sad affair is finally put to rest.

Under the bankruptcy code, trustees may sue investors for any fictional profits and principal they withdrew in the six years before a fraud was exposed. The claw backs are permitted because in scheme's like Madoff's, such withdrawals are paid using other investors' money.

The lawsuit was filed in bankruptcy court in Manhattan against Vizcaya Partners Ltd., a Madoff investor based in the British Virgin Islands, and the investor's bank, Gibraltar-based Banque Jacob Safra Ltd, The Wall Street Journal said. The lawsuit is seeking to recover about $150 million that was withdrawn just six weeks before Madoff confessed his Ponzi scheme.

According to Newsday, the Madoff trustee is asking the bankruptcy court to wipe out the transfer and put the $150 million into the larger of recovered assets that will be used to repay Madoff victims - including Vizcaya. Picard said the transfer is a "preference" payment that shouldn't be allowed since it took place within 90 days of Madoff's fraud admission.

On March 12, Madoff pleaded guilty to 11 fraud counts. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount. Madoff faces up to 150 years in prison.

The Madoff trustee has so far recovered about $1 billion in assets that will eventually be divided among the Ponzi schemer's victims. Unfortunately, most experts believe Madoff's victims will only recover pennies on the dollar.

In addition to the asset liquidation, some investors might be able to recover up to $500,000 each through the Securities Investor Protection Corp. (SIPC). The SIPC, which acts essentially as an insurance fund for victims of securities fraud, sent out 8,000 claim forms to Madoff investors who might be eligible for recovery in early January. However, third-party investors - those whose Madoff investments were made through other entities - might not be eligible for the full SIPC benefit. Those investors could choose to sue the third party, and some hedge funds have already been named in such lawsuits.

SEC Tries to Block Madoff Forced Bankruptcy Bid

Thu, 09 Apr 2009 00:00:00 -0700

In a move that scammed Bernard Madoff investors have found disappointing, both the Securities and Exchange Commission (SEC) and the Justice Department (DOJ) have asked a federal judge to block an attempt to force Bernard Madoff into bankruptcy, the Wall Street Journal reported. The two groups argued that forced bankruptcy is not needed to protect Madoff’s victims from collecting from his assets, Bloomberg News said.

Bloomberg reported that the two groups said that bankruptcy would be a wasted legal move; however, victims are concerned that if bankruptcy is not forced, they will lose any chance of collecting their lost funds. The SEC said that once Madoff’s assets are recovered, they would be distributed to victims and creditors, reported Bloomberg.

“The SEC can state unequivocally that it will cooperate fully with the DOJ and the Securities Investor Protection Corporation to ensure than any Madoff assets it recovers will be distributed to Madoff’s victims and creditors,” SEC attorney Alexander Vasilescu wrote in a brief filed in Manhattan federal court, quoted Bloomberg News.

On March 12, Madoff pleaded guilty to 11 fraud counts. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $65 billion, but in reality, he only had a fraction of that amount.

Madoff faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to a prior Los Angeles Times report, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began. Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.

According to acting Manhattan U.S. attorney, Lev Dassin, in a letter “joining the SEC’s opposition,” he said that the bankruptcy request was “premised on a fundamental misunderstanding of forfeiture and bankruptcy law,” adding that forced bankruptcy could adversely affect what is recovered, reported Bloomberg News. A judge’s approval must be obtained to force bankruptcy.

Some of the creditors petitioning the Madoff bankruptcy include, said Bloomberg News, Blumenthal & Associates ($30.2 million claim) and Martin Rappaport ($20.8 million and a trust claiming another $8.3 million). A judge must approve the petitioners’ request before the victims may formally seek to force Madoff into bankruptcy. An attorney representing the group said, “The bankruptcy court has well-established mechanisms to gather and return assets. We’re not confident that the SEC or the Justice Department can do as well,” quoted Bloomberg News.

But, according to the Wall Street Journal, prosecutors wrote in a letter that, “they intend ‘to maximize recovery for victims of the Madoff fraud by distributing forfeited property to those victims.’" According to prosecutors, if the motion was granted, it could minimize recovery because “forfeited funds” would "unnecessarily be used to pay the fees of a bankruptcy trustee."

Madoff's Legitimate Business to be Sold

Wed, 08 Apr 2009 00:00:00 -0700

The remains of white-collar criminal mastermind Bernard Madoff’s legitimate business is scheduled to be approved for sale on April 28. Newsday reported that a federal bankruptcy judge ordered the move, which was implemented to ensure that a competitor does not come forward against the $15.5-million deal made in March by Castor Pollux Securities Llc.

Judge Burton Lifland set an April 22 deadline for competitive bids, said Newsday, adding that the business is being sold by special bankruptcy trustee Irving Picard in order to raise money to pay investors who lost money to Madoff.

On March 12, Madoff pleaded guilty to 11 fraud counts. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Madoff faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to a prior Los Angeles Times report, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began. Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.

To date, Picard and his staff have found a little over $1 billion in funds, said Newsday. Lifland approved Picard's hiring of attorneys in Gibraltar and “acting under the authority of the Securities Investor Protection Corp.,” Picard also requested attorneys in Luxembourg, said Newsday. About $75 million was recently found in Gibralter and it is believed that upwards of $2 billion may be in Luxembourg bank accounts; accounts in the Caribbean and in Ireland are also being looked at, Newsday reported.

Meanwhile, federal prosecutors are working to seize assets that Madoff and Ruth, his wife, have in their possession, said Newsday, all in the hopes of returning some of the lost funds back to investors.

In a related action, hedge fund manager Ezra Merkin is facing civil fraud charges based on a complaint filed by New York State Attorney General Andrew Cuomo. Investors, including several prominent charities and non-profits, entrusted millions to Merkin, who allegedly steered the money to Madoff without their permission in exchange for $470 million in management and incentive fees.

Newsday noted that French creditors owed money by Madoff took possession of his yacht “Bull” and other creditors might place liens on another yacht and apartment elsewhere in France, thus complicating similar U.S. attempts with the addition of international law and diplomatic protocols.

Earlier last month, Madoff’s attorneys claimed a Manhattan penthouse, $45 million in municipal bonds, and another $17 million held in a Wachovia account that belonged to Ruth, and had no connection to the fraud. Advocates for Madoff’s investors have decried this move, pointing out that Ruth was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud. Most recently, Ruth Madoff declared her $9.4 million Palm Beach, Florida mansion her primary residence in an effort to protect the property from seizure, but ultimately, the property, which was vacant—as well as a luxury yacht—was among some assets seized by U.S. Marshalls.

Attention Shifting to Ruth Madoff

Tue, 07 Apr 2009 00:00:00 -0700

Attention in the ongoing Bernard Madoff investment scam is shifting to Ruth Madoff, wife of the financial criminal behind the historic Ponzi scheme.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the NASDAQ stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Most recently, Ruth Madoff declared her $9.4 million Palm Beach, Florida mansion her primary residence in an effort to protect the property from seizure, but ultimately, the property, which was vacant—as well as a luxury yacht—was among some assets seized by U.S. Marshalls. Many of Madoff’s investors lost their entire savings to his fraud and although about $1 billion worth of assets has been located, this represents a mere fraction of what investors have lost.

Ruth also withdrew more than $15 million from an account at Cohmad Securities, an investment introduction business part-owned by Bernard Madoff which recruited investors for Madoff’s main fund, just days before her husband’s arrest, said the NY Times in an earlier article. Ruth also mailed $1 million in jewelry to relatives after Bernard’s fraud became public, the Times said

CBS News is now reporting that some of those in the Madoff’s circle are saying that Ruth might have been more involved in her husband’s monumental Ponzi scheme that she has admitted. According to CBS News contributor Lucinda Franks, “Ruth Madoff has more than one face…. One of my sources knew a woman who was bemoaning the fact that she couldn't get into Bernie's funds…. Ruth told her, 'Call him. You can get into the fund.' So she called Bernie, and said, 'Ruth told me I should mention her name.' And Bernie said, 'You're in. How much do you want to invest?’”

According to Franks, "I don't think Ruth's worries are about money right now. Her husband salted away money all over the world in her name, and this is what investigators are trying to get back now," said CBS News.

Madoff faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to a prior Los Angeles Times report, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began. Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.

Earlier last month, Madoff’s attorneys claimed a Manhattan penthouse, $45 million in municipal bonds, and another $17 million held in a Wachovia account belonged to Ruth Madoff, and had no connection to the fraud. Advocates for Madoff’s investors have decried this move, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

Ruth Madoff has not yet been charged with a crime.

Ezra Merkin Latest Madoff Middleman to Face Fraud Charges

Mon, 06 Apr 2009 00:00:00 -0700

Hedge fund manager Ezra Merkin now faces civil fraud changes over the Bernard Madoff Ponzi scheme. According to a complaint filed by New York Attorney General Andrew Cuomo, investors, including several prominent charities and non-profits, entrusted millions to Merkin, who allegedly steered the money to Madoff without their permission, in exchange for $470 million in management and incentive fees.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Merkin is one of several so-called 'Madoff middlemen" who have been under scrutiny since his fraud was discovered. According to The Wall Street Journal, Merkin's sales pitches for his three funds - Ascot Partners LP with Ascot Fund Ltd., Gabriel Capital Corp. and Ariel Fund Ltd. - included promises that he actively managed the money.

But according to the Attorney General's complaint, Merkin turned virtually all of this money over to third-party money managers, including Madoff. Though acting primarily as a marketer and a middleman, Merkin pocketed hundreds of millions of dollars in management and incentive fees from his investors, the complaint says.

Cuomo's complaint charges that Merkin kept a total of $2.4 billion of investors’ funds in Madoff even though he knew of irregularities and other glaring red-flags related to Madoff’s investments. According to the complaint at least two of Merkin’s most trusted colleagues repeatedly told him that Madoff’s returns were too good to be true— one warning that it could be a Ponzi scheme.

According to the Attorney General's office, charities and non-profit organizations were particularly susceptible to and victimized by Merkin’s deceptive tactics. Over 10 percent of the assets managed by Merkin belonged to non-profit organizations. Merkin collected his customary fees from nonprofits that invested with him, but typically did not disclose, or actively obscured, that Madoff was actually managing some or all of the funds they invested, the complaint alleges.

As More Madoff Assets are Seized, Some Investors Try to Force Bankruptcy on Admitted Swindler

Thu, 02 Apr 2009 00:00:00 -0700

U.S. Marshalls have seized more assets belonging to admitted Ponzi schemer Bernard Madoff. According to the Associated Press, a beach front mansion and luxury yacht were among the property the U.S. government seized yesterday in an effort to recoup some funds for his defrauded investors.

Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Many of Madoff's investors lost their entire savings to his fraud. Since his arrest, a trustee appointed by the government has been trying to track down his assets so that they can be sold off, and the proceeds distributed to his victims. So far, the trustee has located about $1 billion worth of assets - a mere fraction of what investors have lost.

According to the Associated Press, the mansion seized yesterday could be worth as much as $9.3 million. The Palm Beach property - which was unoccupied - was padlocked, and its contents are being inventoried.

The seizure also included a 55-foot yacht named "Bull," a 1969 Rybovich valued at $2.2 million. A motor boat also was seized, the Associated Press said.

Meanwhile, The Wall Street Journal is reporting that three creditors petitioned U.S. District Judge Louis Stanton in Manhattan to lift a stay in a Securities and Exchange Commission (SEC) case against Madoff that prevents them from pursuing a bankruptcy action against him. The move is an attempt to make sure all of his assets are used to repay investors.

According to the Journal, federal prosecutors and the SEC have indicated they intend to seek forfeiture and disgorgement of Madoff's assets in both the criminal and civil cases. But according to the attorney representing the investors behind the bankruptcy petition, it is unclear if they intend to distribute any such funds to Madoff's customers and what rules would govern any such distribution.

"Under these circumstances, considerations of efficiency and fairness to victims dictate coordinated proceedings in the bankruptcy court," the lawyer wrote in the filing.

Madoff Feeder Fund Charged with Fraud

Wed, 01 Apr 2009 00:00:00 -0700

Fairfield Greenwich Group, a hedge fund that invested with admitted Ponzi schemer Bernard Madoff, has been charged with fraud. According to The Wall Street Journal, the charges filed by the Massachusetts Secretary of State allege the company breached its fiduciary duty to clients by failing to provide promised due diligence on its investments. The complaint accuses Fairfield Greenwich of failing to verify the investment strategy that Madoff claimed allowed him to generate steady returns year after year.

The civil charges are the first to be filed against a Madoff "feeder" fund, the Journal said. Fairfield invested about $7 billion in Madoff's fraudulent funds.

Bernard Madoff pleaded guilty to 11 fraud counts on March 12. The former chairman of the Nasdaq stock exchange ran an investment advisory business for decades that was, in reality, a Ponzi scheme. Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

According to an administrative complaint filed by the Massachusetts Secretary of State, Fairfield Greenwich allegedly misrepresented to investors its "lack of knowledge' about Madoff's operation. The complaint also claims Madoff “coached” Fairfield officials to duck regulatory inquiries concerning his investment practices. Partly because of information Fairfield Greenwich provided to the Securities and Exchange Commission (SEC), the commission's 2007 probe of Madoff closed without any findings, the complaint said.

The complaint also claims that Fairfield insiders sunk $14.8 million into Madoff's business only days before his arrest on securities fraud charges in December.

"The allegations against Fairfield in this complaint outline a total disregard for such (fiduciary) responsibility which helped the Madoff scheme to stay afloat for so long," Massachusetts Secretary of State William Galvin said in a statement.

The complaint seeks restitution to Massachusetts investors for losses and disgorgement of performance fees paid to Fairfield by those investors, as well as an administrative fine. According to the complaint, Fairfield charged investors 1 percent of their assets as a management fee and then collected 20 percent of any investment returns.

Meanwhile, Fairfield Greenwich is facing Madoff-related legal action on another front. According to Bloomberg.com, assets belonging to Fairfield Greenwich and other feeder funds, as well as those belonging to Madoff's family, have been frozen by a Connecticut Superior Court Judge. The assets were frozen as part of a lawsuit brought by the town of Fairfield, Connecticut over the loss of $42 million of local government pension money in Madoff's Ponzi scheme. According to The Associated Press, the town claims Fairfield and other defendants charged the pension fund huge fees while knowing that Madoff was engaged in illegal conduct.

Fairfield Greenwich partner, Walter Noel Jr., Bernard Madoff's wife Ruth, and his brother Peter, are among the individuals whose assets were frozen as a result of the Connecticut lawsuit.

Madoff Could Face UK Charges

Mon, 30 Mar 2009 00:00:00 -0700

The investigation into Bernard Madoff’s historic Ponzi scheme has revealed serious international implications. Madoff’s so-called investment business had operations in London, which, say United Kingdom prosecutors, played “a significant role” in the multi-billion dollar fraud perpetrated by Madoff, reported Bloomberg.com.

Madoff—once a chairman of the NASDAQ stock exchange—is the founder and primary owner of Bernard L. Madoff Investment Securities LLC who pleaded guilty to 11 fraud counts earlier this month. Madoff’s firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds, and other institutions. According to the FBI complaint against Madoff, that business was largely a Ponzi scheme.

The FBI also said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.” Last November, Madoff told his investors his fund held over $64 million—leading investors to believe he was operating a serious investment firm, Bloomberg pointed out. In reality, Madoff only had a fraction of that amount.

According to David Jones, spokesman for U.K.’s Serious Fraud Office (SFO), in 2008, about $1 billion was transferred between Madoff’s U.S. and U.K. operations, reported Bloomberg. The SFO, said Bloomberg “prosecutes complex white-collar crimes” and began its investigation into the case this January. The Telegraph said that officers from the U.K.’s Serious Organised Crime Agency (SOCA), which it described as the British “FBI,” is collaborating with the U.S. Department of Justice (DOJ) to investigate Madoff’s activities; the U.S. Attorneys Office and SOCA are also working with the SFO.

Bloomberg reported that Madoff is accused of moving over $250 million over six years through his New York-based firm to his London operations and back into accounts in the U.S. Bloomberg also reported that just prior to his arrest, the London unit paid $2 million to Ruth Madoff, Bernard Madoff’s wife.

Madoff International was staffed with about 25 traders, managers, and support workers, and was owned almost exclusively by Madoff, serving as his proprietary trading unit, said Irving Picard, reported Bloomberg. Picard was appointed trustee by the Securities Investor Protection Corporation to “unwind” Madoff’s businesses in response to a February filing with a London court, said Bloomberg, which added that, according to Picard, the New York and London operations “may well be inextricably intermingled.” U.K. liquidators focusing on “apparently unwarranted payments to third parties” have interviewed London staff and instructions that they communicate with Madoff Securities through personal, not company email, Picard said.

Prosecutors say the London accounts were used to have it appear as if Madoff were buying international securities on behalf of his clients as well as to buy property and services for his and his family’s personal use, said the Telegraph.

Picard has found about $1 billion in Madoff assets, which includes $75 million recently found in an account held in Britain’s territory of Gibraltar, said the Telegraph, which said that the DOJ believes that over $65 billion in monies belonging to “thousands and thousands” of investors was laundered through Madoff’s American accounts over a 30-year period, noting that the full extend of Madoff’s fraud might never be known.

Judge Agrees to Freeze Peter Madoff's Assets

Thu, 26 Mar 2009 00:00:00 -0700

Assets belonging to Bernard Madoff's brother, Peter, have been frozen. According to Bloomberg.com, Peter Madoff served as the chief compliance officer of Bernard L. Madoff Investment Securities LLC.

Madoff pleaded guilty to 11 fraud counts earlier this month. Madoff - once a chairman of the Nasdaq stock exchange - is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.”

Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Peter Madoff served as a trustee for a $470,000 trust held by Andrew Ross Samuels, a New York law student. Samuel's is suing Peter Madoff for $2 million for breaching his fiduciary duty by investing his inheritance with his brother, Bloomberg said.

"We're doing this because we think what Peter did was wrong," Howard Samuels, a Dix Hills, N.Y., lawyer and Andrew Ross Samuels's father, told The Wall Street Journal . "Either he knew or should have known" that Bernard Madoff was operating a massive fraud, "and either way, he was grossly negligent," he said.

According to Bloomberg.com, the asset freeze agreed to by New York Supreme Court Justice Stephen Bucaria pertains to all of Peter Madoff's property. It prevents him from removing, transferring or encumbering any funds or property and requires him to disclose all assets he owns. The freeze will stay in place at least until an April 3 hearing.

Since Bernard Madoff's guilty plea, focus has shifted to other family members who may have been aware of his fraud. In addition to his brother, Madoff's two sons and a niece worked for his firm. His wife, Ruth, was also his book keeper for a time.

While none of his relatives have been charged in relation to his scam, authorities did arrest Bernard Madoff's accountant last week. U.S. Prosecutors have not accused Friehling of knowing about Madoff’s scheme. However, prosecutors allege that Friehling deceived investors by falsely certifying that he audited the financial statements of Madoff’s business. That allowed Madoff to maintain the illusion that he was legitimately investing his clients’ money, prosecutors said.

Friehling has been charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports to the Securities and Exchange Commission.

Judge Gives Madoff Trustee Power of Attorney Over UK Unit

Wed, 25 Mar 2009 00:00:00 -0700

A judge has granted the trustee charged with liquidating Bernard Madoff's assets power of attorney over a unit of his business in the United Kingdom. According to Bloomberg.com, the attorney for the trustee said that such authority over London-based Madoff Securities InternationalLtd. would aide efforts to quickly recover assets for investors.

Madoff pleaded guilty to 11 fraud counts earlier this month.. Madoff - once a chairman of the Nasdaq stock exchange - is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars.” Some estimates say those losses could reach as much as $50 billion. Estimates of Madoff’s fraud have put the amount lost by investors at more than $64 billion.

The Madoff trustees' bid to gain power of attorney over the London unit had met with resistance from U.S. prosecutors. According to Bloomberg.com, they claimed such a move might hinder their investigation at some future point. Nevertheless, U.S. District Judge Louis Stanton, who is overseeing the Securities and Exchange Commission's civil suit against Madoff, awarded the trustee legal authority over Madoff Securities International yesterday.

According to Bloomberg, Madoff International was owned almost exclusively by Madoff himself and served as his proprietary trading unit. In his ruling, Judge Stanton said it would be "provident and expedient" for the trustee to have power of attorney over the unit. The decision effectively gives the trustee voting rights and other controls over Madoff Securities International Ltd.

Madoff Trustee Has Found $1 Billion in Assets

Tue, 24 Mar 2009 00:00:00 -0700

The trustee charged with liquidating the assets of admitted Ponzi schemer Bernard Madoff says that more $1 billion has been found so far. According to the Associated Press, the $1 billion threshold was breached after $75 million was discovered in an account in Gibraltar.

Bernard Madoff pleaded guilty to 11 counts of securities fraud earlier this month. The criminal charges Madoff admitted to included securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission.

He now faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to the Los Angeles Times, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.

Estimates of Madoff's fraud have put the amount lost by investors at more than $64 billion. At a hearing yesterday, a lawyer working for the trustee said that slightly more than $1 billion had been discovered. According to the Wall Street Journal, the attorney also said French authorities are moving to seize Madoff's residence in France, to satisfy claims by victims in that country, which is valued at around $1 million.

According to Bloomberg.com, the revelations were made yesterday during a court hearing in which the trustee's attorney urged a judge to award the Securities Investor Protection Corp. (SIPC) power of attorney over a Madoff unit in the United Kingdom. But U.S. prosecutors probing Madoff urged U.S. District Judge Louis Stanton in New York to refuse the request, and hold the power in escrow. An Assistant U.S. Attorney told the judge that prosecutors have been in touch with their counterparts in the U.K. According to the Associated Press, the same Assistant U.S. Attorney argued that "the trustee has not explained why the trustee needs this power."

However, the attorney representing the Madoff trustee said the power of attorney was an important tool, especially since actions may need to be taken quickly in foreign countries where things can happen to assets without warning, the Associated Press said. The U.S. Attorney countered that because authorities here already have relationships in foreign countries, they can act quickly to protect investor assets.

Judge Stanton has yet to make a decision on the issue.

As we've reported previously, Madoff’s clients will be lucky to get as much as 10 cents on the dollar. Madoff’s businesses didn’t have many assets, and the money managed by his investment advisory firm has disappeared into thin air. It could also take as many as three years for the funds from any liquidation of Madoff’s assets to be disbursed to investors.

In addition to the asset liquidation, some investors might be able to recover up to $500,000 each through the SIPC, the Associated Press said. The SIPC, which acts essentially as an insurance fund set up to help victims of securities fraud, sent out 8,000 claim forms to Madoff investors who might be eligible for recovery in early January. However, third-party investors - those whose Madoff investments were made through other entities - might not be eligible for the full SIPC benefit. Those investors could choose to sue the third party, and some hedge funds have already been named in such lawsuits.

Appeals Panel Says No on Madoff Bail

Fri, 20 Mar 2009 00:00:00 -0700

Convicted Ponzi schemer Bernard Madoff will have to await his June sentencing in jail. According to Bloomberg.com, a panel of the U.S. Court of Appeals in New York rejected Madoff's request to have his $10 million bail reinstated.

Madoff has been jailed at the Metropolitan Correctional Center in Manhattan since pleading guilty to 11 felony counts on March 12. At that time, the former investment advisor publicly admitted he had run a Ponzi scheme, and had never invested any of his clients' money.

Judge Denny Chin revoked Madoff bail immediately after accepting his guilty plea, saying that Madoff had means to flee and an incentive to do so because of his age. Applause broke out in the Manhattan courtroom after the judge’s announcement. Until March 12, Madoff had been living in his luxurious Manhattan penthouse apartment under house arrest, an arrangement that did not sit well with defrauded investors.

Madoff's lawyers immediately appealed the bail revocation. It's not unusual for white collar criminals to remain free on bail until sentencing.

But the three judge panel agreed with Judge Chin's reasoning. “The defendant’s age and his exposure to imprisonment are undisputed, and the court did not err in inferring an incentive to flee from these facts,” they wrote in their ruling. “The district court’s finding that the defendant has the means -- and therefore the ability -- to flee was not clear error.”

While Madoff's lawyers said they were disappointed with the appeal's court's decision, they did not indicate if they would continue with his appeals. According to Reuter's, Madoff could potentially seek a rehearing before the full appeals court, but such a bid is considered a long-shot.

Madoff now faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to the Los Angeles Times, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.

Madoff's sentencing is scheduled for June 16.

Ruth Madoff Uses Homestead Act to Protect Palm Beach Mansion

Thu, 19 Mar 2009 00:00:00 -0700

In yet another move to retain their ill-gotten wealth and protect themselves from creditors, Bernard Madoff's wife, Ruth, has declared her $9.4 million Palm Beach, Florida mansion her primary residence, says Bloomberg News.

Ruth Madoff, wife of the criminal mastermind behind the massive and historic Ponzi scheme that decimated billions of dollars in investor savings, applied for a so-called homestead exemption for property taxes. According to an assistant property appraiser for Palm Beach County, Madoff received her exemption, a real estate maneuver that enables homeowners to avoid seizure of property once in place, explained Bloomberg.

On September 18, Ruth Madoff applied for the exemption, receiving it on January 12, Bloomberg reported, citing appraiser office information. With the exemption in hand, Ruth Madoff is entitled to a tax reduction this year based on a $50,000 property appraisal reduction, said Bloomberg. Last year, Ruth Madoff paid $157,298 in property taxes on that home, which was appraised at $9.4 million in 2008, up from $7.4 million in 2007, according to Palm Beach County records; the 8,753-square-foot property is located at 410 North Lake Way, said Bloomberg.

Meanwhile, this week the U.S. government announced plans to seize a variety of Madoff assets including the $7 million Manhattan apartment where Madoff was kept under house arrest and the Palm Beach home that Ruth Madoff—who has yet to be accused of any crime in relation to her husband’s activities—is working to protect, said Bloomberg. Florida residency can be proven via voter registration and a Florida driver’s license and involves making a sworn statement attesting that the home to be exempted is a primary residence, said Bloomberg.

WBPF pointed out that not only is the Palm Beach mansion vacant, but Ruth Madoff was turned down for exemption in 2007 because she was receiving tax consideration for homeowners in New York. Just prior to Madoff’s arrest, Ruth ended her New York exemption and applied for exemption in Florida, said WBPF.

Madoff himself pleaded guilty to 11 counts of securities fraud and faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to the Los Angeles Times yesterday, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.

Ruth Madoff bought the Palm Beach mansion in 1994 for $3.8 million, according to county records, said Bloomberg, deep within the time of her husband's Ponzi scamming activities. Bernard Madoff has been held at the Metropolitan Correctional Center in lower Manhattan since March 12.

Accountant Richard Rampell—who has clients who have lost about $100 million in the Madoff scheme—finds Ruth’s recent homestead filing suspicious, and a move meant to protect her investments from bilked clients looking to reclaim losses, said Bloomberg. Rampell told Bloomberg, "Just doesn't pass the smell test, that she could be completely innocent of it, and she's trying to claim $100 million in assets. Where did she get all this? They just didn't appear out of thin air," adding that, "Florida is a debtors haven. It's a refuge for deadbeats and crooks and scam artists and it has been forever.”

Feds Arrest Madoff Accountant

Wed, 18 Mar 2009 00:00:00 -0700

Bernard Madoff's accountant has been charged in connection with the jailed swindler's Ponzi scheme. According to ABC News, David Friehling has turned himself in and has been charged with securities fraud, aiding and abetting investment adviser fraud and four counts of filing false audit reports to the Securities and Exchange Commission.

U.S. Prosecutors have not accused Friehling of knowing about Madoff's scheme. In fact, he and his wife had an account of about $500,000 with Madoff, ABC said. However, prosecutors allege that Friehling deceived investors by falsely certifying that he audited the financial statements of Madoff's business. That allowed Madoff to maintain the illusion that he was legitimately investing his clients' money, prosecutors said.

According to prosecutors, Madoff's firm paid Friehling about $12,000 to $14,500 per month between 2004 and 2007. He is the first person other than Madoff to face charges related to the Ponzi scheme.

Madoff himself pleaded guilty to 11 counts of securities fraud. He now faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to the Los Angeles Times, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.

Judge Denny Chin revoked Madoff's bail after accepting his guilty plea, saying that Madoff had means to flee and an incentive to do so because of his age. Since March 12, Madoff has been held at the Metropolitan Correctional Center in lower Manhattan.

According to CNN, Madoff's lawyers are trying to have his $10 million bail reinstated, so that he can stay out of jail until his June 16 sentencing. He is scheduled to appear tomorrow at the U.S. Court of Appeal for the 2nd Circuit to appeal the bail revocation.

Meanwhile, investors defrauded by Madoff got a rare bit of good news yesterday. According to a report on Bloomberg.com, the IRS will allow them to claim some of their Madoff losses as deductions on their tax returns. Under the new guidance issued yesterday, the losses are classified as theft losses rather than capital losses, giving most victims a bigger deduction, Bloomberg.com said. In addition, a special limitation that sometimes reduces deductions by 10 percent won’t apply.

The IRS guidance says defrauded investors can claim theft losses not only for amounts originally invested, but also for fictitious income. The new rules apply immediately, Bloomberg said, and will be applicable to victims of all Ponzi schemes.

Investors who sue Madoff and may receive some settlement are limited to a 75 percent theft-loss deduction. Those who don’t sue can deduct 95 percent of their losses immediately and claim the rest at a later date if they receive none of their funds back, Bloomberg said.

Madoff Prosecutors Want Manhattan Digs, Other Assets Ruth Wants to Keep

Mon, 16 Mar 2009 00:00:00 -0700

With Ponzi schemer Bernard Madoff now in jail, federal prosecutors appear to be setting their sites on his wife, Ruth. According to USA Today, prosecutors want to seize the couple's $7 million Manhattan penthouse apartment, as well as another $62 million that Ruth Madoff had sought to keep.

Bernard Madoff pleaded guilty to 11 counts of securities fraud last week. The criminal charges Madoff admitted to included securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission.

He now faces up to 150 years in prison. In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to the Los Angeles Times, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.

During last week's hearing, Madoff spoke publicly about the fraud for the first time. Madoff said he started the scheme during a recession, which was difficult for investing in stocks, the Journal said. “As the years went by, I realized my risk, and this day would inevitably come,” he said, reading from a statement. “I cannot adequately express how sorry I am for my crimes.”

Judge Denny Chin revoked Madoff bail after accepting his guilty plea, saying that Madoff had means to flee and an incentive to do so because of his age. Applause broke out in the Manhattan courtroom after the judge’s announcement. Until today, Madoff had been living in his luxurious Manhattan penthouse apartment under house arrest, an arrangement that did not sit well with defrauded investors.

That apartment is among the assets purportedly belonging to Ruth Madoff that prosecutors are seeking. Earlier this month, Madoff’s lawyers claimed the penthouse, $45 million in municipal bonds and another $17 million held in a Wachovia account belonged to Ruth Madoff, and had no connection to the fraud. Advocates for Madoff’s investors have decried this move, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

According to the New York Times, Ruth Madoff has not been charged with a crime, but some of her actions before and after her husband's arrest have raised eyebrows. For instance, she withdrew more than $15 million from an account at Cohmad Securities - an investment introduction business part-owned by Bernard Madoff which recruited investors for Madoff’s main fund - just days before her husband's arrest. She also mailed $1 million in jewelry to relatives after his fraud became public, the Times said.

In addition to the apartment, prosecutors want the $45 million in bonds and the $17 million in the Wachovia account that Ruth has sought to keep. According to the Associated Press, they are also seeking several homes the couple owned in Palm Beach, Long Island and France.

Prosecutors also want to confiscate a Cayman Islands company called Yacht Bull, and three boats valued at more than $10 million. Four cars, $65,000 in silverware, and a Steinway piano worth $39,000 are also included on the list of assets being eyed by the feds, the Associated Press said.

A report on Fox News said prosecutors were "working around the clock" to freeze Ruth Madoff's assets because of fears she might flee the country, or otherwise try to hide the assets.

Bernard Madoff Headed to Jail Following Guilty Plea

Thu, 12 Mar 2009 00:00:00 -0700

Bernard Madoff is finally going to jail. The Ponzi schemer pled guilty to 11 different counts this morning, prompting a federal judge to immediately revoke his bail, in anticipation of a June 16 sentencing. Madoff could be sentenced to as much as 150 years in jail.

During a hearing in federal court in Manhattan this morning, Madoff spoke publicly about his fraud for the first time. According to The Wall Street Journal, Madoff admitted that he ran a Ponzi scheme and that he never invested client funds as promised. He also claimed to be "deeply sorry and ashamed".

Madoff said he started the scheme during a recession, which was difficult for investing in stocks, the Journal said. "As the years went by, I realized my risk, and this day would inevitably come," he said, reading from a statement. "I cannot adequately express how sorry I am for my crimes."

The criminal charges Madoff admitted to included securities fraud, wire fraud, mail fraud, money laundering and making a false filing with the U.S. Securities and Exchange Commission.

In addition to a long jail term, U.S. prosecutors are also seeking as much as $170 billion in forfeited assets from Madoff. According to the Los Angeles Times, that amount includes all of the money that moved through the Madoff accounts since the early 1980s, when the government says the investor fraud began.

According to MSNBC.com, Judge Denny Chin revoked Madoff bail after accepting his guilty plea, saying that Madoff had means to flee and an incentive to do so because of his age. Applause broke out in the Manhattan courtroom after the judge’s announcement. Until today, Madoff had been living in his luxurious Manhattan penthouse apartment under house arrest, an arrangement that did not sit well with defrauded investors.

Madoff did not plead guilty to a conspiracy charge. Because he has insisted he acted alone - a claim prosecutors find highly suspect - and would not provide information on others who may have aided his scheme, federal prosecutors would not give him a plea deal. Thus, it is likely the 70-year-old Madoff will spend the rest of his life in jail.

Already speculation is building about other individuals who might be a target of the Madoff Ponzi scheme investigation. Most of the speculation centers on his wife, Ruth, who had kept his firm's books for a time. His sons, who worked at his firm, and who he supposedly confessed his fraud too, could be targets, as could Madoff's brother Peter, who was his firm's compliance officer.

Before his December arrest, Madoff had been a towering figure on Wall Street. Once a chairman of the Nasdaq stock exchange, Madoff was the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm was primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately millions of dollars.”

Last November, Madoff told his investors that his fund held more than $64 million, but in reality, he only had a fraction of that amount.

Madoff to Plead Guilty to 11 Counts, But Not Conspiracy

Wed, 11 Mar 2009 00:00:00 -0700

On the heels of Bernie Madoff’s attorney, Ira Sorkin, telling the Washington Post that there is a "fair expectation" that the accused Ponzi scammer will plead guilty tomorrow to cheating investors out of billions in savings, new details about the his plea have emerged. According to Bloomberg.com, because Madoff has refused to plead guilty to a conspiracy charge, he was unable to secure plea bargain from federal prosecutors.

Madoff refused to admit to conspiracy because it would mandate that he would have to admit that he did not work alone in the massive Ponzi scheme—the largest in history, said Bloomberg. This means that the government will be unable to secure Madoff’s assistance in “determining” if “his employees assisted in the fraud,” Bloomberg reported.

So, tomorrow, Madoff - who waived his right to have a grand jury review the allegations against him is scheduled to plead guilty to one count each of securities fraud, investment advisory fraud, mail fraud, wire fraud, perjury, falsifying a filing with the Securities and Exchange Commission (SEC), stealing from an employee benefit plan, making false statements, as well as three counts of money laundering, said the Washington Post. But in light of Madoff’s refusal to admit to conspiracy, he loses any hope of leniency “or anything else in return,” said Bloomberg.

The government is looking to claim $170.8 billion in “forfeiture” from Madoff, said the Washington Post, an amount triple what Madoff acknowledged stealing. Also of note, reported the Washington Post, a judge said that despite some conflicts of interest with Madoff, Sorkin can continue to represent him.

Madoff, 70—once a chairman of the Nasdaq stock exchange—was arrested on a single count of securities fraud on December 11. Formerly a respected figure on Wall Street, Madoff was founder and primary owner of Bernard L. Madoff Investment Securities LLC, a firm known primarily for market-making, or serving as the middleman between buyers and sellers of shares. Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds, and other institutions. Now, Madoff is facing a sentence of up to 150 years in prison.

In December, Madoff confessed to authorities that his fund was, in fact a large Ponzi scheme and that he robbed investors by as much as $50 billion; a government-appointed trustee has recovered about $900 million, to date, said the Washington Post. Federal authorities believe the actual number could be half that figure, it added.

“The information crafted by the government does not contain a conspiracy charge, and you can read what you like into that,” Madoff attorney Mauro Wolfe said today in an interview, referring to a document listing the charges that were filed Tuesday, reported Bloomberg. “The information speaks for itself,” Wolfe added.

Bloomberg explained that, according to the government, Madoff directed staff to develop bogus documents and confirmations of fake returns, including false financial statements; acting Manhattan U.S. Attorney Lev Dassin said that Madoff did not act alone. Madoff is free on $10 million bond, but may be jailed after his plea tomorrow.

A former federal prosecutor told Bloomberg that Madoff might be protecting his former employees. Madoff’s brother Peter was chief compliance officer; his sons Mark and Andrew held senior positions; and his wife, Ruth, was Madoff’s bookkeeper for a time and may be both civilly and criminally culpable for his fraud. None of Madoff’s family members have been charged with any crime, Bloomberg pointed out. Also, senior and key members of Madoff’s team have all claimed they had no knowledge of the fraud and, like Madoff’s family members, have not been accused.

Some investors are particularly concerned about Ruth, who is trying to retain millions of dollars in assets for herself. As we reported last week, Madoff’s lawyers claimed the couple’s $7 million Manhattan penthouse, $45 million in municipal bonds, and another $17 million held in a separate account belonging to Ruth.

Bernard Madoff Will Have to Face Investors on Thursday

Tue, 10 Mar 2009 00:00:00 -0700

Some of Bernard Madoff's investors want to be heard when he pleads guilty to fraud charges on Thursday. According to USA Today, federal prosecutors have heard from at least 25 investors who want a chance to tell Madoff how his alleged Ponzi scheme has forever altered their lives.

Madoff - once a chairman of the Nasdaq stock exchange - was arrested on a single count of securities fraud on December 11. Once a respected figure on Wall Street, Madoff was the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm was primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately millions of dollars."

Madoff is expected to plead guilty to fraud charges during a hearing in Federal Court on Thursday. According to The Wall Street Journal, those charges are expected to include securities fraud, wire fraud, mail fraud and money laundering.

Since news of a Madoff guilty plea first went public, at least 25 investor have emailed U.S. prosecutors asking to speak at Thursday's hearing in federal court in Manhattan, USA Today said. Prosecutors described the e-mails in a letter to Judge Denny Chin, who sent notification to investors last week saying they could speak Thursday. According to the USA Today report, prosecutors have not said whether each e-mail involved a single investor or multiple Madoff victims.

According to a report on CBSnews.com, investors are hoping that Thursday's hearing will answer some of their most pressing questions. Most importantly, they want prosecutors to spell out how Madoff's scheme worked, how much money they will get back and who else was involved.

"If those questions aren't answered, then the government should proceed in every way possible to put him in prison for as long as possible, and go after absolutely everyone that they can go after - the sons, the brother, the wife, Ruth, anyone complicit in this," a lawyer representing 100 Madoff victims told CBS News.

Some investors are particularly concerned about Madoff's wife, Ruth, who is trying to retain millions of dollars in assets for herself. As we reported last week, Madoff’s lawyers claimed the couple’s $7 million Manhattan penthouse, $45 million in municipal bonds and another $17 million held in separate account belonged to Ruth Madoff. Advocates for Madoff’s investors have decried this move, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

According to USA Today, investors face a 10 a.m. Wednesday deadline to file speaking requests with prosecutors.

Madoff Assistants Prepared Fake Trade Tickets

Mon, 09 Mar 2009 00:00:00 -0700

Two of Bernard Madoff's assistants created what are now believed to be fake trading tickets. According to The Wall Street Journal, the stock tickets supposedly showed gains that were later applied to client accounts.

The two assistants, who did clerical work for Madoff, reportedly told government investigators that their supervisor, Annette Bongiorno, would ask them to research daily share prices for blue-chip stocks from the previous month or several months. Bogniorno would then instruct the assistants to use that data to compose the trading tickets. According to the Journal, the tickets showed profitable trades that coincided with the returns Madoff claimed.

According to the Journal, the two assistants were given proffer agreements by prosecutors, which means their statements won't be held against them as long as the are truthful.

Meanwhile, various media sources are continuing to report that Madoff is expected to plead guilty to fraud charges during a hearing in Federal Court on Thursday. According to The Wall Street Journal, those charges are expected to include securities fraud, wire fraud, mail fraud and money laundering.

If Madoff does, in fact, plead guilty, prosecutors will have more time to devote to other people who might have been involved in the alleged fraud, The Wall Street Journal said. Some of those individuals could include relatives, like his wife and sons, who had worked with his firm.

Newsday is also reporting that Madoff's wife, Ruth, will be hiring her own attorney. At one time, Ruth Madoff kept her husband's books. One unidentified defense attorney told Newsday that such a move could be a sign that her husband is preparing to plead guilty.

Ruth Madoff is also trying to hold on to millions of dollars in assets the couple holds. As we reported last week, Madoff’s lawyers claimed the couple’s $7 million Manhattan penthouse, $45 million in municipal bonds and another $17 million held in separate account belonged to Ruth Madoff. Advocates for Madoff’s investors have decried this move, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

Estimates of Madoff Fraud Questioned; Plea Deal Possibly in the Works

Fri, 06 Mar 2009 00:00:00 -0800

Bernard Madoff's fraud may have "only" cost investors around $20 billion, a new report from the Associated Press said. The early $50 billion figure cited by many reportedly came from Madoff himself on the day he was arrested, but according to The Associated Press, that figure may be as fictitious as the trades Madoff supposedly made for his clients.

Meanwhile, there are fresh indications that Madoff''s lawyers and federal prosecutors are close to reaching a plea deal.

Madoff, founder and primary owner of Bernard L. Madoff Investment Securities LLC, was arrested on securities fraud charges in December. He also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds, and other institutions. According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately millions of dollars.”

Early report said that on the day of his arrest, Madoff himself confessed that as much as $50 billion could have been lost to his alleged fraud. But Stephen Harbeck, President of the Securities Investor Protection Corp. (SIPC) said that the figure "does not appear to reflect reality." The $50 billion number likely included the fictitious profits Madoff claimed, not the amount money investors had actually placed with him, Harbeck said.

No one will actually know the extent of the fraud until investors file their claims with the SIPC.

Harvey Pitt, former head of the Securities Exchange Commission, told the Associated Press that the Madoff fraud would likely amount to more than $10 billion. Other people involved in the case said the losses would probably total around $20 million. But even the lower estimates would make Madoff's fraud one of the largest Ponzi schemes in history.

Meanwhile, CNBC is reporting this afternoon that prosecutors may be closer to reaching a plea deal with Madoff. According to the report, federal prosecutors have filed a notice of intent to file an information. This is the first step prosecutors often take when they believe a defendant may waive his right to a grand jury indictment. Such a waiver generally precedes the announcement of a plea, CNBC said.

A lot of people - especially Madoff's investors - will be watching closely if there is a plea. According to CNBC, a plea could take several forms. The minimum would be a guilty plea to one count of securities fraud, which carries of maximum of 20 years. But such a light sentence would probably produce a public outcry.

Madoff could also be charged with violating the Racketeer Influenced Corrupt Organizations Act, or RICO. If he were to plead guilty to such a charge, any ill-gotten gains from the fraud would become property of the U.S. government, CNBC said.

That would include assets Madoff's wife, Ruth, is trying to hold on to. As we reported earlier this week, Madoff's lawyers claimed the couple's $7 million Manhattan penthouse, $45 million in municipal bonds and another $17 million held in separate account belonged to Ruth Madoff. Advocates for Madoff's investors have decried this move, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

Indictment Deadline Approaching for Madoff

Thu, 05 Mar 2009 00:00:00 -0800

Former chairman of the Nasdaq stock exchange and accused Ponzi scammer Bernard Madoff is pending an indictment decision, reported Newsday. Madoff, who is awaiting a decision on indictment or plea bargain, has to tough it out until his next court date, scheduled for March 13, the newest deadline in which prosecutors can seek an indictment or hold a preliminary hearing based on the December 11 federal filing.

Many believe that the notorious scammer might be awarded a plea deal in the massive $50 billion dollar scandal, said Newsday. As of yesterday, Madoff agreed to give up ownership of his businesses, artwork that belongs to his investment firm, and entertainment tickets. According to a report on Reuters.com, the trustee liquidating the accused Ponzi schemer’s assets asked a judge that he be allowed to take over ownership of the property. Presumably, the assets would be sold and the proceeds divided up among Madoff’s defrauded former clients.

Yesterday, a special court hearing over a potential conflict of interest between Madoff and his attorney was postponed mere hours after it had been requested by federal prosecutors in Manhattan, said Newsday, who added that a federal court official said it was adjourned without a new date. Under federal law, prosecutors must receive an indictment or hold a hearing by 30 days following arrest. If both sides agree to a 30-day postponement, the decision can be delayed, said Newday, which reported that Madoff and his attorney, Ira Sorkin, have agreed to two postponements and five adjournments, to date.

Madoff was the founder and primary owner of Bernard L. Madoff Investment Securities LLC. and also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds, and other institutions. According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately millions of dollars.”

Sorkin's parents had money with Madoff, but Sorkin claims he never personally had any investment, which is presenting the potential conflict, said Newsday. Manhattan defense attorney Charles Ross noted that, "It has to be dealt with, it is not something that can be swept under the rug," quoted Newsday. Such a conflict could be used Madoff later to fight any possible conviction.

And, while Madoff agreed to surrender some assets, he is still trying to hold on to his luxury penthouse apartment in Manhattan, where he currently lives under house arrest, as well as $45 million in municipal bonds and $17 million in cash. As we reported earlier this week, Madoff’s lawyers have asserted that those assets belong to his wife Ruth, who has not been accused of any wrongdoing.

One lawyer who represents about 100 investors told the Associated Press they won’t stand for Madoff holding on to so much wealth. “Bernie Madoff has no shortage of chutzpah to suggest as he does that his wife was not the beneficiary of his fraud. It is not only senseless, but offensive,” the lawyer said, pointing out that Ruth Madoff was her husband’s bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

Bernard Madoff Surrenders Assets

Wed, 04 Mar 2009 00:00:00 -0800

Bernard Madoff has agreed to give up ownership of his businesses, artwork that belongs to his investment firm, and entertainment tickets. According to a report on Reuters.com, the trustee liquidating the accused Ponzi schemer's assets has asked a judge that he be allowed to take over ownership of the property. Presumably, the assets would be sold and the proceeds divided up among Madoff's defrauded assets.

Madoff - once a chairman of the Nasdaq stock exchange - was the founder and primary owner of Bernard L. Madoff Investment Securities LLC., Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions. According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately millions of dollars.”

Following his arrest, a trustee was appointed to undertake the liquidation of Madoff’s assets in an effort to recover some of the his investors’ missing money. At a meeting last month, the trustee told investors that so far he had recovered about $950 million from Madoff’s assets - a fraction of what they have lost.

According to Reuters, the trustee has filed a motion in U.S. District Court in Manhattan seeking control of Bernard L. Madoff Investment Securities LLC and Primex Holdings LLC "and any membership or ownership interest therein." Primex was a digital trading firm that operated out of Madoff's New York headquarters, Reuters said.

The judge in the case is expected to approve the motion. When he does, the trustee will take possession of real estate belonging to the firms, including warehouses in Queens that reportedly hold 7,000 unmarked boxes of documents. The trustee would also get control of all the furniture, computer hardware, software, network equipment, facilities and paperwork from the firms, Reuters said. Finally, the trustee would also acquire any artwork and corporate entertainment tickets bought or used by the businesses.

While Madoff agreed to surrender those assets, he is still trying to hold on to his luxury penthouse apartment in Manhattan - where he currently lives under house arrest - as well as $45 million in municipal bonds and $17 million in cash. As we reported yesterday, Madoff's lawyers have asserted that those assets belong to his wife Ruth, who hasn't been accused of any wrongdoing.

Many investors are understandably angered by this move. A lawyer who represents about 100 investors told the Associated Press they won't stand for Madoff holding on to so much wealth.

"Bernie Madoff has no shortage of chutzpah to suggest as he does that his wife was not the beneficiary of his fraud. It is not only senseless, but offensive," the lawyer said. The attorney also pointed out that Ruth Madoff was her husband's bookkeeper for a time, and thus may be both civilly and criminally culpable for his fraud.

Madoff's Wife Wants to Keep Penthouse, Other Assets

Tue, 03 Mar 2009 00:00:00 -0800

Bernard Madoff wants to hold on to his luxury penthouse in Manhattan, and has claimed that the $7 million dwelling belongs to his wife, Ruth. According to the Associated Press, Madoff's lawyers are also claiming that $45 million in municipal bonds and $17 million more in a separate account belong to Madoff's wife and should be exempt from any asset seizure.

Madoff - once a chairman of the Nasdaq stock exchange - was the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm was primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately $50 million."

Following his arrest, a receiver was appointed to undertake the liquidation of Madoff's assets in an effort to recover some of the his investors' missing money. At a meeting last month, the trustee told investors that so far he had recovered about $950 million from Madoff’s assets - a fraction of what they have lost.

According to Bloomberg News, Madoff's lawyers claimed that only Ruth Madoff has a "beneficial ownership” of the assets they want protected. The revelation was part of an order filed yesterday by U.S. District Judge Louis Stanton, which modified terms of an asset freeze on Bernard Madoff’s property. The order cited a claim by Ruth Madoff that some of her assets are separate from her husbands'. Judge Stanton is presiding over the civil lawsuit filed by the Securities and Exchange Commission against Madoff.

Among the assets Madoff lawyers are trying to protect are municipal bonds held in account at Cohmad Securities Corp. As we reported last month, Cohmad is an investment introduction business part-owned by Bernard Madoff which recruited investors for Madoff’s main fund. Massachusetts Secretary of State William Galvin is trying to prove that Cohmad was so intertwined with Madoff’s firm that it constituted a “common enterprise.”

Court papers recently filed by Galvin assert that Ruth Madoff removed $5.5 million on November 25, and another $10 million on December 10, the day before her husband’s arrest. Galvin is seeking to revoke Cohmad’s state securities registration because it allegedly withheld information about the Madoff case.

Robert Jaffe, one of the middlemen who recruited investors for Madoff, became the manager of the Boston office of Cohmad Securities in 1989. As part of his investigation, Galvin subpoenaed Jaffe, but according to court documents, Jaffe invoked his right against self-incrimination.

FINRA Being Inundated with Securities Fraud Claims

Thu, 26 Feb 2009 00:00:00 -0800

Thanks to the likes of Bernard Madoff, Arthur Nadel and other financial scammers, a record number of people have been victims of securities fraud in the past year. Many of these wronged investors have looked to the Financial Industry Regulatory Authority (FINRA) to settle their claims against brokers, financial advisors and others who have failed in their fiduciary duty.

According to the Associated Press, there were 4,982 disputes filed with FINRA last year. That's a 54 percent increase over the previous year. According to its website, FINRA is the largest non-governmental regulator for all securities firms doing business in the United States. All told, FINRA oversees nearly 5,000 brokerage firms, about 172,000 branch offices and approximately 663,000 registered securities representatives. Any organization registered with FINRA is subject to the agency's arbitration rules, the Associated Press said.

But according the Associated Press, there are several things investors need to know before they file a case with FINRA. First of all, there are fees involved. According to the Associated Press, the filing fee ranges from $50 to $1,800 depending on the size of the dispute. In arbitration, there is also a daily fee that ranges from $50 to $1800. Again, the amount of a claim, as well as the number arbitrators needed to hear it, will determine that fee.

In bringing a FINRA claim, it is important to retain a lawyer. Most law firms are willing to handle large claims on a contingency-fee bases. But if a case is under $25,0000, most lawyers will charge clients an hourly fee, the Associated Press said.

Regardless of whether a fee is hourly or contingency, using a lawyer for a FINRA claim is worth the investment. An attorney that specializes in securities fraud will know how to file a claim with FINRA. He or she will also be able to determine if it is worth seeking a settlement with a FINRA-appointed mediator. According to the Associated Press, fees for such mediation range between $50 and $300, and can also include travel and other expenses for the mediator.

When a claim moves to arbitration, it can take as much as 15 months to reach a resolution, the Associated Press said. However, claims for amounts under $25,000 can move much faster, as they are often decided on the basis of just a document review.

According to the Associated Press, victims of securities fraud generally find some relief with FINRA. About 70 percent of the cases filed with FINRA are settled through mediation or directly between the parties, which usually means some type of compensation for securities fraud victims.

Madoff Investor Loses Bid to Recover Funds Transferred Just Days Before Ponzi Scheme Unraveled

Wed, 25 Feb 2009 00:00:00 -0800

The claims of a Bernard Madoff investor who put money with the accused Ponzi schemer just days before his arrest will not take precedence over the claims of other Madoff clients, a court has ruled. According to The Wall Street Journal, a federal bankruptcy judge in Manhattan has dismissed a lawsuit filed by Martin Rosenman that sought to have $10 million that he had transferred to Madoff returned.

Madoff - once a chairman of the Nasdaq stock exchange - was the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm was primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

According to the FBI complaint against Madoff, that business was largely a Ponzi scheme. The FBI said Madoff “deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately.

Madoff was arrested on one count of securities fraud on December 11. According to The Wall Street Journal, Rosenman, who is managing member of Rosenman Family LLC, transferred $10 million to Madoff's firm on December 5. His lawsuit asserted that the firm never "obtained legal, beneficial or equitable title to these funds," the Journal said.

But the trustee overseeing the liquidation of Madoff's assets asked that the suit be dismissed. In his ruling, the bankruptcy judge agreed, writing that Rosenman's claim was "indistinguishable" from other similarly situated customers of the Madoff firm and there was no basis for giving him special treatment to recover the funds deposited for investment.

Unless he chooses to appeal, the dismissal means Rosenman's claim will be handled just like those of other Madoff's investors. They are eligible for a portion of any funds recovered from the liquidation of Madoff's assets, and they could also receive as much as $500,000 from the Securities Investor Protection Corp., or SIPC.

At a meeting last Friday, the trustee told investors that so far he had recovered about $950 million from Madoff's assets - a fraction of what they have lost. Investors were also told that the trustee would seek to recover phony profits earned by some investors so they can be redistributed to others. An attorney working for the trustee pointed out that any such profits were “just made up”, and the investors who received them “got somebody else’s money.”

Madoff Securities Fraud Lawyers

Wed, 25 Feb 2009 00:00:00 -0800

Madoff Securities Fraud Lawyers

The lawyers / attorneys at our firm are offering consultations to investors who sustained substantial financial losses as a result of securities fraud allegedly committed by Bernard Madoff. On December 11, 2008, Madoff was arrested by the FBI and charged with a single count of securities fraud. According to media reports, the "Ponzi scheme" Madoff ran constituted a fraud that could ultimately be "bigger than Enron."

The Madoff securities fraud lawyers at our firm are actively investigating this alleged wrongdoing. If the initial estimates of losses prove true, the Madoff securities fraud would be nearly five times larger than the accounting fraud that drove telecom company WorldCom into bankruptcy proceedings in 2002, The Wall Street Journal said. Investors who trusted Madoff with their money could see millions, if not billions, vanish.

The Securities and Exchange Commission (SEC) characterized the Madoff fraud as "stunning" and "of epic proportions". If you sustained financial losses because of the Madoff securities fraud, you may be entitled to compensation. To discuss the legal remedies available to you, please contact one of the Madoff securities fraud lawyers at our firm as soon as possible.

Allegations Against Bernard Madoff

According to The Wall Street Journal, the 70-year-old Madoff - once a chairman of the Nasdaq stock exchange - is the founder and primary owner of Bernard L. Madoff Investment Securities LLC. The firm is primarily known for its business in market-making, or serving as the middleman between buyers and sellers of shares. However, Madoff also oversaw an investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions.

The Wall Street Journal reported that Madoff’s firm was the 23rd-largest market maker on Nasdaq in October 2008, handling an average of about 50 million shares a day. It took orders from online brokers for some of the largest U.S. companies, including General Electric Co. and Citigroup Inc.

The fraud allegedly perpetrated by Madoff may be the largest fraud ever blamed on a single individual. According to the Associated Press, nearly all of the allegations stem from what Madoff told three senior employees of his firm.

According to federal investigators, most of the alleged fraud involved Madoff's investment-advisory business that managed money for high-net-worth individuals, hedge funds and other institutions. That business served between 11 and 25 clients, the Associated Press said.

According to Reuters, Madoff's advisory business had $17.1 billion of assets under management. But many other investors may have had indirect exposure by investing through the hedge funds and other of the firm's clients. Two hedge funds that invested with Madoff were the $7.3 billion Fairfield Sentry Ltd and the $2.8 billion Kingate Global Fund Ltd. Fix Asset Management and Tremont Capital Management also invested heavily with Madoff.

Employees told FBI investigators that Madoff ran the investment arm on a separate floor of the firm's offices. According to The Wall Street Journal, the employees said Madoff kept the financial statements from the firm under lock and key and was "cryptic" about the firm's investment business.

According to the complaint, Madoff allegedly confessed to employees that he perpetuated the massive fraud scheme, which Madoff himself said could cost investors at least $50 billion. The employees claimed Madoff even referred to his investment firm as "one big Ponzi scheme."

The FBI charged that Madoff's investment advisory business had "deceived investors by operating a securities business in which he traded and lost investor money, and then paid certain investors purported returns on investment with the principal received from other, different investors, which resulted in losses of approximately billions of dollars."

The Wall Street Journal characterized the Madoff securities fraud as a "split-strike conversion," which involves buying stocks and buying and selling options against them. According to the Journal, because Madoff's returns were so steady - and because Madoff was such a well-liked and well-respected figure - investors felt at ease putting a large chunk of their wealth in his fund.

Legal Help for Victims of Madoff Securities Fraud

In addition to the charges filed by the FBI, the SEC has filed a civil suit against Madoff. The SEC said it was seeking emergency relief for investors, including an asset freeze and the appointment of a receiver for Madoff's firm.

If you or someone you know suffered financial losses as a result of fraud committed by Bernard Madoff, you have valuable legal rights. Please fill out our online form, or call 1-800 LAW INFO (1-800-529-4636) as soon as possible to discuss your case with one of our Madoff securities fraud lawyers.