|
||||
|
|
||||
|
|
 Case Study - Bernie Madoff"Bernie Madoff was a cold-hearted control freak who ripped off friends’ widows weeks after their funerals and ruled his family with fear."3/1/10 - A bankruptcy judge ruled that certain investors in Madoff's Ponzi scheme aren't entitled to recoveries from the fraud. The ruling, by U.S. Bankruptcy Judge Burton Lifland in Manhattan, affirmed the view of a trustee who is recovering assets for victims of the multibillion-dollar fraud, Irving Picard. Mr. Picard has said that investors who withdrew more money from Mr. Madoff's investment firm than they put in—making them "net winners" from the fraud—shouldn't be entitled to recovered funds. The ultimate decision will determine how the pot of money being collected in the aftermath of the fraud is divvied up. The trustee has maintained that the most equitable way to treat victims is to reimburse only those who suffered net losses from the fraud—investors who deposited more into their accounts than they took out. Both net "winners" and "losers" have lots at stake in the outcome. If net winners are eligible for recoveries, the number of victims sharing in the recovery pool would be greater, reducing the net losers' pro rata share. 8/24/09 - Bernie has told fellow prison inmates that he is dying of cancer and does not have much longer to live. 8/6/09 - The trustee liquidating Bernard Madoff’s investment company won court approval of a $14.7 million bill for four months’ work by his law firm, overcoming challenges from victims. The payment to trustee Irving Picard and his firm, Baker & Hostetler LLP, was approved today by U.S. Bankruptcy Judge Burton Lifland in New York. Some victims argued Picard isn’t paying Madoff clients fast enough and is wasting money that should go to them. 7/30/09 - The court-appointed official in charge of recovering money for Bernard Madoff's investors is suing his wife, Ruth, for at least $44.8 million, claiming she lived a "life of splendor" on the gains from the fraud perpetrated by her husband. Irving Picard, the court-appointed trustee, alleged that 68-year-old Ruth Madoff "knew or should have known" that vast sums of money she received from her husband's investment firm, Bernard L. Madoff Investment Securities LLC, rightly belonged to the firm and to her husband's customers. Federal investigators recently concluded there is no physical evidence that Mrs. Madoff actively participated in or concealed her husband's fraud. 7/14/09 - Bernie's final destination will be the the Federal Correctional Complex, located in Butner, North Carolina. Madoff originally requested that he be sent to the medium-security Federal prison in Otisville, New York, which would have been far more convenient for visits from wife and family. In Butner, Madoff will have to deal with some serious competition. The prison contains some of the twentieth century's most notorious white-collar criminals. For the next few years, Madoff will be able to trade stories with John Rigas, Carmine Persico, Omar Abdel-Rahman and Jonathan Pollard. 7/6/09 - Bernie Madoff is not going gentle into that good night of prison life. Instead, he has hired a top prison consultant to help him find the best possible joint in which to spend the rest of his life. Herb Hoelter, CEO of the National Center on Institutions and Alternatives (NCIA), has provided the same service to other high-profile felons, including Ivan Boesky, Michael Milken and Sotheby's Alfred Taubman. Madoff will certainly not be eligible for one of the country-club prisons, given the despicable nature of his crimes, but his team will want to be prepared with arguments why he should not be thrown into a hellhole with the worst of violent offenders, such as the Administrative Maximum facility in Florence, Colorado. Many of his victims, on the other hand, would be delighted to see him locked up with murderers, rapists, and terrorists. 7/4/09 - U.S., U.K. and Austrian prosecutors are investigating, Sonja Kohn, a former Austrian fund manager they believe was paid more than $40 million in kickbacks to funnel billions of dollars of investments to Bernie Madoff. In exchange for the kickbacks, prosecutors allege, Ms. Kohn turned three Bank Medici funds into "feeder funds" that supplied Mr. Madoff with an estimated $3.5 billion from European investors. Ms. Kohn, a 60-year-old Viennese former Wall Street penny-stock broker, has repeatedly denied prior knowledge of Mr. Madoff's $65 billion fraud or any wrongdoing. Ms. Kohn is under investigation in the U.S. for potential criminal charges of conspiracy, fraud and wire fraud in connection with the alleged kickbacks. The fraud charges carry maximum jail terms of 20 years each, while conspiracy carries a maximum five-year term. 7/2/09 - Genevievette Walker-Lightfoot, a SEC lawyer, warned about Madoff irregularities as far back as 2004. She sent emails to Eric Swanson, a supervisor, saying information provided by Madoff during her review didn't add up and suggesting a set of questions to ask his firm. Swanson later married Madoff's niece, and their relationship is now under review by the SEC inspector general. 6/29/09 - U.S. District Court Judge Denny Chin sentenced disgraced financier Bernard Madoff, 71, to 150 years in prison for perpetrating Wall Street's biggest and most brazen investment fraud. Cheers and applause came from the courtroom as Madoff stood facing the judge with his hands clasped in front of him. 6/27/09 - Ruth Madoff has agreed to give up her potential claim to more than $80 million worth of assets, keeping just $2.5 million in cash in an agreement reached with federal prosecutors. The settlement involving Mrs. Madoff was finalized alongside a court order of forfeiture against Mr. Madoff in the amount of $170 billion, which represents the amount of money that prosecutors say flowed into his investment firm. Prosecutors asked the judge to give Bernie the statutory maximum of 150 years in prison. His attorney has asked for far less -- as few as 12 years. Lawyers expect him to receive 25 to 35 years. The settlement will help Mrs. Madoff, 68 years old, move on from what has been a tumultuous period since the multibillion-dollar fraud emerged on Dec. 11 of last year. She has been vilified in the tabloids, fended off photographers camped outside her Manhattan apartment building, and shunned by same communities in New York that once embraced her. According to court documents, she consented to the sale of her properties in Palm Beach, Fla., Montauk and Manhattan, as well as boats and vehicles, in order to preserve value for victims. 6/23/09 - Bernie Madoff asked a federal judge to sentence him to as little as 12 years in prison. "Mr. Madoff is currently 71 years old and has an approximate life expectancy of 13 years," Mr. Sorkin said. "A prison term of 12 years -- just short of an effective life sentence -- will sufficiently address the goals of deterrence, protecting the public and promoting respect for the law without being greater than necessary to achieve them." Sentencing is set for June 29. The statutory maximum in the case is 150 years in prison. Prosecutors said the court-appointed trustee for Mr. Madoff's firm has identified about 1,341 account holders at Madoff's firm who suffered estimated losses of more than $13 billion as of Dec. 11, the day he was arrested. Mr. Madoff claimed to have nearly $65 billion in his firm's account as of the end of November, but the accounts held a small fraction of that. 5/14/09 - The sentencing of convicted Ponzi-scheme operator Bernie Madoff has been postponed until late June. Separately, the trustee overseeing the liquidation of Mr. Madoff's assets says he's received almost 9,000 claims from the disgraced financier's victims. Court-appointed trustee Irving Picard told reporters that he's identified about $1 billion in assets that will be used to pay the claims. He's also filed lawsuits seeking to recover more than $10 billion in fictitious profits paid out by Mr. Madoff's firm. 5/5/09 - Bernard Madoff used the fruits of his multibillion-dollar Ponzi scheme to lend millions to his brother and son, support his relatives' business ventures and pay corporate card bills of his daughter in law, sister in law and captain of his boat. Federal prosecutors previously said that Mr. Madoff used funds from his firm to benefit family members, and they have said they intend to try seizing millions of dollars of assets from Mr. Madoff's wife, Ruth, and as well as $32 million of loans Mr. Madoff made to his sons, Andrew and Mark, who worked at the Madoff firm. Tuesday's filing by Irving Picard, the court-appointed trustee of Mr. Madoff's defunct firm, gives a more detailed look at how Mr. Madoff allegedly used hundreds of millions of his victims' money to enrich himself, his family and others close him. Mr. Picard, charged with recovering assets for burned investors, says in the filing he is entitled under the U.S. bankruptcy code to seek the return of any customer money doled out by Mr. Madoff, including payments to family members. The document doesn't allege that recipients of funds had knowledge of the fraud to which Mr. Madoff has pleaded guilty. The filing also says Mr. Picard is seeking billions of dollars from so-called feeder funds, the investment firms that channeled client money to Mr. Madoff.  4/30/09 - Bernie observed his 71st birthday behind bars in Lower Manhattan, with no party and little to celebrate as he awaits what is likely to be a lifetime sentence after pleading guilty to running an enormous Ponzi scheme. Mr. Madoff was visited by his wife Ruth. Mrs. Madoff had told family members that she still loved her husband, but that she felt shunned and lonely because of her husband’s estimated $65 billion fraud, which cheated some of her closest friends along with thousands of other people. Mr. Madoff is scheduled to be sentenced on June 16 and he faces a maximum of 150 years in prison. 4/20/09 - A federal judge blocked Madoff's assets from being moved into bankruptcy, saying there is probable cause the assets should be forfeited to the government. The order comes exactly one week after five investors filed papers in Federal Bankruptcy Court seeking nearly $64 million in an effort to force Madoff into involuntary bankruptcy. Previously a different federal judge allowed investors to proceed with the filing, asserting that personal bankruptcy proceedings would be the best recourse for investors trying to recover their money. The SEC had tried to block such proceedings, as did the trustee tasked with liquidating Madoff's assets and the U.S. Attorney's office. 3/20/09 - Madoff will remain in prison until he is sentenced in one of the largest financial frauds in history. The 2nd U.S. Circuit Court of Appeals backed a lower court ruling after hearing arguments from lawyers who sought Madoff's release from jail. The appeals court said the lower court was correct when thye sent Madoff to prison last week after Madoff confessed that he had defrauded thousands of investors of billions of dollars for at least two decades. The court cited Madoff's age and said the possibility of life in prison heightened his incentive to flee. Madoff faces up to 150 years in prison at sentencing, scheduled for June 16. The court noted that Madoff has a residence abroad and "had had ample opportunity over a long period of time to secret substantial resources outside the country." 3/18/09 - Madoff's accountant has been charged with criminal fraud and faces a maximum of 105 years in federal prison. The charges against accountant David Friehling, 49, include securities fraud and filing false audit reports. They come in addition to civil charges filed separately by the Securities and Exchange Commission (SEC). "Mr. Friehling is charged with deceiving investors by falsely certifying that he audited the financial statements of Mr. Madoff's business. Mr. Friehling's deception helped foster the illusion that Mr. Madoff legitimately invested his clients' money." Friehling served as the accountant for Madoff's firm from 1991 through 2008, and was paid roughly $12,000 to $14,500 a month between 2004 and 2007.  3/12/09 - Saying he was "deeply sorry and ashamed," Madoff pleaded guilty to pulling off perhaps the biggest swindle in Wall Street history and was immediately led off to jail in handcuffs to the applause of his seething victims in the courtroom. U.S. District Judge Denny Chin denied bail for Madoff, 70, and ordered him to jail, noting that he had the means to flee and an incentive to do so because of his age. Prosecutors say the disgraced financier, who has spent three months under house arrest in his $7 million in Manhattan penthouse, could face a maximum sentence of 150 years in prison at sentencing. The scheme evaporated life fortunes, wiped out charities and apparently pushed at least two investors to commit suicide. In addition to prison time, Madoff faces mandatory restitution to victims, forfeiture of ill-gotten gains and criminal fines.  3/11/09 - Federal authorities charged the accused swindler with 11 felonies, including four counts of fraud and three counts of money laundering. Madoff, 70, faces up to 150 years in jail and plans to plead guilty. Madoff made no plea deal to improve his possible sentence - a move that indicates he will not be helping prosecutors determine who else may have been involved in the multibillion-dollar Ponzi scheme. Under the sentencing guidelines associated with his crimes, if he pleads guilty he will face life in prison. Prosecutors charged Madoff with defrauding clients since at least the 1980s, by "soliciting billions of dollars of funds under false pretenses, failing to invest investors' funds as promised, and for misappropriating and converting investors' funds to Madoff's own benefit" and to others. In addition to prison time, the government is seeking fines and restitution from Madoff. Prosecutors said they would seek forfeiture of $170 billion. They also will seek property worth $800 million relative to the money laundering charges.  3/6/09 - Madoff is expected to plead guilty to criminal charges next week, three months after his arrest shocked his customers worldwide. Legal experts said all signs indicate that a guilty plea has been negotiated in what authorities have called the biggest Ponzi scheme in Wall Street history. The purported swindle ran for decades but collapsed in last year's market meltdown. The 70-year-old could spend the rest of his life in prison. In the meantime, he is out on $10 million bail and under house arrest in his $7 million New York apartment with 24-hour surveillance.  3/3/09 - Ruth Madoff's lawyers are purporting that the $45mm in muni bonds and $17mm in cash on depo at Wachovia that she possesses are "unrelated" to the Grand Ponzi. Madoff is arguing that his wife should be allowed to keep nearly $70 million worth of assets held in her name, including the Manhattan apartment where Madoff is under house arrest. Madoff argues that his wife should be able to keep the property as it is unrelated to a fraud she knew nothing about.  2/12/09 - Bernard Madoff's wife withdrew $10 million from a feeder fund to his securities firm the day before he was busted by the feds, prompting new suspicions she may have been in on his $50 billion scam. Ruth Madoff also took $5.5 million out of her account at Cohmad Securities on Nov. 25, about two weeks before her husband's Dec. 11 confession that his business was "basically, a giant Ponzi scheme."  1/14/09 - A federal judge denied another bid by prosecutors to jail Madoff pending trial. The judge said that prosecutors failed to make a compelling argument that he's a flight risk or a danger to the community -- the two main requirements for bail decisions. Prosecutors sought to jail Madoff after he mailed more than $1 million in watches, diamond jewelry and other valuables to relatives and others late last month. Mr. Madoff has been free on a $10 million personal recognizance bond since shortly after his arrest on a securities fraud charge on Dec. 11, 2008. He has since been placed on 24-hour home detention, and a private security company monitors the entrances to his Upper East Side apartment. The day before his arrest, Mr. Madoff, a former chairman of the Nasdaq Stock Market who had been a force in Wall Street trading for nearly 50 years, allegedly told his sons the firm's investment-advisory business was "basically a giant Ponzi scheme," and he estimated the losses from the fraud were at least $50 billion. Background on Bernie Madoff Madoff was an affable, charismatic man who moved comfortably among power brokers on Wall Street and in Washington, a winning financier who had all the toys: the penthouse apartment in Manhattan, the shares in two private jets, the yacht moored off the French Riviera. He secured a longstanding role as an elder statesman on Wall Street, allowing him to land on important boards and commissions where his opinions helped shape securities regulations. Along the way, he snared a coveted spot as the chairman of a major stock exchange, Nasdaq. Reclusive, at times standoffish and aloof, Bernie rarely rubbed elbows in Manhattan’s cocktail circuit or at Palm Beach balls. He was quiet, controlled and closely attuned to his image, down to the most minute details. While he managed billions of dollars for individuals and foundations, he shunned one-on-one meetings with most of his investors, wrapping himself in an Oz-like aura, making him even more desirable to those seeking access. So, what could have driven him to choreograph a $50 billion Ponzi scheme? An easy answer is that Mr. Madoff was a charlatan of epic proportions, a greedy manipulator so hungry to accumulate wealth that he did not care whom he hurt to get what he wanted. |
|
||