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Bernard Madoff, mastermind of vast Wall Street Ponzi scheme, dies at 82
By Emily Langer
April 14, 2021 at 2:49 p.m. GMT+1
https://www.washingtonpost.com/local/obituaries/bernie-madoff-dead/2021/04/14/f8e33fa8-c5da-11df-94e1-c5afa35a9e59_story.html
Bernard L. Madoff, who died April 14 at 82, was the mastermind of perhaps the largest Ponzi scheme in history, a reviled symbol of Wall Street greed and, once, one of the most sought-after stockbrokers in high finance.
For years, “Bernie” Madoff was regarded as an investment sage. He had clients, homes and boats strewn about exclusive enclaves around the world. Leveraging the clout he had amassed as a legitimate trader, he lured — and eventually fleeced — thousands of investors who entrusted to him their retirement savings, their children’s college funds and their financial security.
His clients included Holocaust survivor and Nobel laureate Elie Wiesel, filmmaker Steven Spielberg, actors Kevin Bacon and Kyra Sedgwick, U.S. Sen. Frank R. Lautenberg (D-N.J.), and scores of retirees and other private individuals. Banks, hedge funds, universities and charities came to rely on his improbably reliable reported returns.
In reality, there were no such returns. For at least 16 years, and perhaps longer, Mr. Madoff ran a scam in which he paid existing investors with money from new clients.
Ponzi scheme king Bernie Madoff, who bilked investors out of billions, seeks medical release from prison
In 2008, as a financial crisis crippled the U.S. economy, investors began seeking withdrawals of funds that Mr. Madoff did not have. His undoing recalled the downfalls dramatized in Greek tragedies: It was swift, excruciating and, in retrospect, inevitable.
On Dec. 10, 2008, Mr. Madoff informed his sons, Mark and Andrew Madoff, that his business, the family’s extravagant wealth and his investors’ flourishing portfolios were “all just one big lie.” The brothers turned their father in to authorities.
His arrest the next day at his New York penthouse stunned many of the most experienced financial experts. Government regulators, too, seemed caught unawares — a perception that fueled public outrage as estimates of victim losses reached $20 billion in actual original investments and $65 billion in recorded paper wealth.
His exposure triggered years-long efforts by officials — notably Irving H. Picard, the court-appointed trustee for the liquidation of Mr. Madoff’s securities firm — to unravel his scheme and compensate victims. Many investors would recoup only a fraction of the money they had given him.
For Mr. Madoff, the personal fallout was catastrophic. His family largely disintegrated. He was so widely despised for his perceived hubris that, reporting for at least one court appearance, he wore a bulletproof vest.
“I live in a tormented state now knowing of all the pain and suffering that I have created,” he said in June 2009, when he was sentenced to 150 years in prison after pleading guilty to 11 felony charges, including securities fraud and money laundering. “I have left a legacy of shame.”
Mr. Madoff reportedly had a heart attack in prison in 2013. In February 2020, he asked a judge for compassionate release, citing end-stage renal disease and other ailments that had left him in need of a wheelchair and constant care. His death, at a federal prison medical facility in Butner, N.C., was announced by a Bureau of Prisons spokeswoman.
The spokeswoman, Kristie Breshears, did not provide a cause although she said Mr. Madoff had tested negative for covid-19.
At the time of his death, Mr. Madoff remained a chief villain in the narrative of the 2008 economic meltdown that, ironically, had helped unveil his wrongdoing. His scheme did not feature subprime loans, credit-default swaps or the other complex financial maneuvers that had contributed to the onset of the recession. Mr. Madoff had engaged in the simple, ancient act of swindling.
Creation of a myth
To many clients, Mr. Madoff seemed unimpeachable, an entrepreneur whose grit and ingenuity had fueled his rise from relative rags to extreme riches.
In his early working years, he was a lifeguard and installed sprinkler systems, squirreling away his earnings with the goal of starting a private investment firm. He was in his early 20s when he opened Bernard L. Madoff Investment Securities in 1960.
Mr. Madoff was credited with understanding before many others the potential role of the computer in stock-trading. Through innovative use of technology, he made trading faster and more transparent and helped small investors break into circles that for generations had been dominated by floor traders.
In the early 1990s, Mr. Madoff was appointed chairman of the Nasdaq, the first electronic stock market. His firm became an institution and operated from Manhattan’s Lipstick Building, a landmark in the financial capital of the United States.
As his success grew, Mr. Madoff became increasingly fawned on and, by his design, elusive — so that no one would detect the fraudulent operation that, at some point, he began running on the side. Mr. Madoff dated his scheme to 1992, while government investigators traced its beginning to the 1980s. Other accounts suggested that it started even earlier.
Mr. Madoff did not advertise. Rather that lassoing prospective investors, he turned many away. He had correctly discerned that the fewer clients he accepted, the more desirable his services would appear.
There “was a myth that he created around him that everything was so special, so unique, that it had to be secret,” said Wiesel, whose Elie Wiesel Foundation for Humanity lost $15 million, in public remarks.
Former employees recalled the militaristic authority Mr. Madoff exerted over his office. Workspaces were to be kept spotlessly clean. The decor, on his order, featured black and gray tones described as “icily cold modern.”
At the same time, Mr. Madoff sought to project authenticity, emphasizing the family-run nature of his business, which included his sons, his brother, Peter B. Madoff, and other relatives. Mr. Madoff adopted a reassuring motto: “The owner’s name is on the door.”
He promised his investors annual returns of about 12 percent — sizable enough to be impressive but modest enough to avoid suspicion. More than large, the returns were steady. Mr. Madoff became widely known as “the Jewish T-Bill,” a reference to his Jewish background, his many Jewish clients and an old moniker for conservative government Treasury bonds.
For years, Mr. Madoff rebuffed investors, journalists and government regulators who questioned his results. “It’s a proprietary strategy,” he said in 2001 to Erin E. Arvedlund, then writing for Barron’s magazine and later a Madoff biographer. “I can’t go into it in great detail.”
In retrospect, many experts agreed that the consistency of his returns in a volatile market should have engendered greater skepticism.
Other red flags included the outdated computing system that Mr. Madoff used for his record-keeping and steadfastly refused to replace. His trading statements, produced on a typewriter-ribbon printer in an era of laser machines, looked rather phony in hindsight, at least one investor observed.
In November 2005, Harry Markopolos, a derivatives expert and investment manager, submitted to the Securities and Exchange Commission a memo about Mr. Madoff titled “The World’s Largest Hedge Fund Is a Fraud.” The SEC investigated Mr. Madoff’s firm at least five times before his arrest. But the scheme went on.
In prison, during an investigation by the SEC’s inspector general, Mr. Madoff said that he was “astonished” that regulators had not more fully verified the trading he reported. He said he knew that he would one day be exposed.
“As I engaged in my fraud, I knew what I was doing was wrong, indeed criminal,” Mr. Madoff said at the time of his guilty plea. “When I began the Ponzi scheme, I believed it would end shortly and I would be able to extricate myself and my clients from the scheme. However, this proved difficult, and ultimately impossible, and as the years went by, I realized that my arrest and this day would inevitably come.”
Success, wealth, ruin
Bernard Lawrence Madoff, one of three children, was born April 29, 1938, in New York City. Detailed information about his family was not widely available. His father, Ralph Madoff, wrote on his marriage license that his occupation was “credit.” A family acquaintance recalled that he was perhaps a stockbroker or an account representative, Fortune magazine reported. Both he and his wife, the former Sylvia Muntner, appeared to have had tax and other legal problems involving their finances.
Bernard Madoff attended the University of Alabama before transferring to Hofstra University on Long Island, where he received a bachelor’s degree in political science in 1960. A year earlier, he married Ruth Alpern, his childhood sweetheart. He attended but did not graduate from Brooklyn Law School, having thrown himself into his investment business.
Book: Ruth Madoff hurt more by husband’s alleged infidelity than his Ponzi scheme
Besides his innovations in computerized trading, he helped develop and popularize a concept known as payment for order flow, in which brokers are paid a penny or more per share for routing business to market makers such as Mr. Madoff’s firm. By the 1990s, the practice had become common, and highly controversial. Critics described the payments as kickbacks.
“People would like to apply pejorative-type terms,” Mr. Madoff said at the time. “I think people that use that kind of terminology are unhappy they are losing business.”
The practice, which is not illegal, continues to be widespread and helped Mr. Madoff make his fortune. Besides his penthouse apartment in Manhattan, his assets included homes in the Long Island community of Montauk and in Palm Beach, Fla., yachts, and shares in private jets.
He also collected watches. He had at least two wedding rings, the New York Times reported, so that he could match the metal of the ring to the timepiece, gold or platinum, that he had selected for wear.
In addition to his business interests, Mr. Madoff operated with his wife the multimillion Madoff Family Foundation that gave money to medical, cultural, educational and other causes. When he confessed his crime to his wife, she was said to have replied with a question: “What’s a Ponzi scheme?”
Ruth Madoff said publicly that she and her husband attempted suicide by taking sleeping pills on Christmas Eve in 2008, when he was under house arrest. Eventually, she said, she ended communication with her husband.
Their son Mark Madoff hanged himself in 2010, on the second anniversary of his father’s arrest, amid lawsuits seeking recovery of Madoff family assets to repay victims of the fraud. Before an earlier suicide attempt, his widow wrote in a book, Mark Madoff left a letter to his father. It read in part: “Bernie: Now you know how you have destroyed the lives of your sons by your life of deceit.”
In 2012, Peter Madoff, who had been chief compliance officer at Bernard L. Madoff Investment Securities, was sentenced to a decade in prison after pleading guilty to charges related to the avoidance of taxes and false filings to regulators. He maintained that he had not been aware of his brother’s Ponzi scheme until shortly before it was revealed to the public.
In 2014, Mr. Madoff’s son Andrew died of mantle cell lymphoma. A complete list of survivors was not immediately available.
Andrew H. Madoff, son of convicted financier, dies at 48
In the years since his arrest, biographers have set out to uncover some tragic flaw that Mr. Madoff possessed, some hardship he had undergone or some pathology that might be diagnosed to explain why he did what he did.
The efforts to fully understand his crime were inconclusive. In email exchanges with Diana B. Henriques, a reporter who covered his downfall in the Times and later wrote a book about him, he cast blame on unsavory clients who, he said, had pushed him into losses that he could not withstand.
Reversing the usual description of his relationship with his investors, he claimed that it was he who had “foolishly trusted” them.
At his sentencing, the judge described the fraud as “extraordinarily evil” and recounted a scene in which Mr. Madoff assured a grieving widow that her money was safe with him.
“I’m sorry,” the defendant said before the courtroom.
He added, “I know that doesn’t help you.”
Matt Zapotosky and former Washington Post writer Tomoeh Murakami Tse contributed to this report.
Headshot of Emily Langer
Emily Langer
Emily Langer is a reporter on The Washington Post’s obituaries desk. She writes about extraordinary lives in national and international affairs, science and the arts, sports, culture, and beyond. She previously worked for the Outlook and Local Living sections.Follow
https://www.washingtonpost.com/local/obituaries/bernie-madoff-dead/2021/04/14/f8e33fa8-c5da-11df-94e1-c5afa35a9e59_story.html
The Amazing Madoff Clawback
How two lawyers, Irving Picard and David Sheehan, have recovered 75 cents on the dollar of the stolen money—many times the usual rate in such cases.
By Tunku Varadarajan Nov. 30, 2018 6:35 p.m. ET New York
https://www.wsj.com/articles/the-amazing-madoff-clawback-1543620951
At the head of a conference table, in a room perched high above Rockefeller Plaza, sit two old men who look like twinkly grandpas.
Irving Picard, clean-shaven and measured of speech, is 77. He is the court-appointed trustee who oversees a labyrinthine effort to recover money stolen from investors by Bernard L. Madoff, currently serving a 150-year sentence for running the most massive Ponzi scheme in history. David Sheehan, gray-bearded, is 74. By far the more talkative, he is chief counsel to Mr. Picard, in the latter’s role as Madoff trustee. Since their appointment on Dec. 15, 2008, the two have done nothing else, day after day, but look for and claw back ill-gotten Madoff loot.
Of the $17.5 billion or so of stolen money for which claims have been filed, they have recovered $13,305,106,370.07. (Try saying that aloud.) That’s a little over 75 cents on the dollar, which is remarkable, considering that when they started Mr. Picard expected to recover “5 to 10 cents on the dollar,” which is “typical in a Ponzi-scheme case.” Mr. Picard—who has been the trustee in 10 previous broker liquidations, more than anyone in the country—says that “about 70%” of his job as Madoff trustee is done. His goal is to get to 100% recovery, although he concedes “this may not be realistic.”
Both men are partners at BakerHostetler, one of America’s largest law firms. They appeared Nov. 16 before the Second U.S. Circuit Court of Appeals in Manhattan, contesting a district judge’s ruling that denies them the right to pursue claims for Madoff money abroad. “If we win,” Mr. Picard says, “we’ll be at this task for at least another five years.” While oral arguments aren’t always a reliable indicator of outcome, the judges’ questions left them optimistic of a ruling in their favor. Which means that Messrs. Picard and Sheehan would be 82 and 79 by the time they’re fully rid of Bernie Madoff.
Mr. Sheehan has met Madoff “10 or 12 times” at his prison in Butner, N.C. Will he see him again? “I hope not,” Mr. Sheehan sputters. He calls Madoff “a sociopath” and adds: “He didn’t think he was harming anybody. He actually thought his scheme would work, that it just got out of hand and he couldn’t control it.”
Even so, five more years on the Madoff treadmill wouldn’t exactly be a hardship for Messrs. Picard and Sheehan, as they each get paid around $1,000 an hour. They employ 200 hourly workers, 45 to 60 of them full-time, at an average wage of $430. The two men are quick to point out that none of these emoluments come at the expense of defrauded investors. Instead, they’re reimbursed by the Securities Investor Protection Corp., a nonprofit insurer created by Congress and funded by assessments from brokers and dealers.
Mr. Sheehan says he and Mr. Picard have earned every cent: “The trustee and his counsel put together the pieces of the puzzle of this massive fraud and developed the case from the ground up. Given the enormity of the task and the strength of defenses”—some of America’s top firms have represented the defendants—“our legal fees were a wise investment and totally necessary to the recovery of over $13 billion.” All the money they recover, Mr. Picard emphasizes, “goes to the victims.”
The job appeared unpromising at the beginning. When Messrs. Picard and Sheehan arrived at Madoff’s offices four days after his Dec. 11, 2008, arrest, they found “three different floors, basically all chaos, because there’d been several days of temporary receivership,” as Mr. Sheehan tells it. “No employees were left.” Frank DiPascali, Madoff’s de facto chief financial officer, “was there until 2 o’clock. But he went out for coffee, and never came back. . . . It became very clear very quickly that this was indeed a Ponzi scheme.”
Mr. Picard, who prefers to speak only when spoken to, offers a rare interjection: “We’d heard that there were $65 billion of losses, but we found out pretty quickly that that was a fictitious number.” Bernard L. Madoff Investment Securities LLC didn’t have remotely the right number of securities on deposit at the central depository for all the bulging accounts it had. “I’ll give you an example,” Mr. Picard says. “There should have been, say, 19 million shares of Verizon, but there were really only 300 to 400 of them. So that’s when we got the feeling that this was going to be a very difficult case.”
The trustee and his team had to uncover every trace of wrongdoing themselves. “Nobody told us what was going on,” Mr. Sheehan says. It became apparent that there was a careful strategy by both Madoff and the people who had enabled him—the many “feeder funds” that took investors’ money to Madoff—to sell the company to the public as a legitimate investment vehicle. “So the funds went to investors, got their money, and invested with Madoff at no risk to themselves. The only people with risk were the customers, who were kept in the dark as to what he was doing.”
Then, just as their task was starting to look Sisyphean, a gift arrived on their doorstep—“a big, pivotal point in the case,” in Mr. Sheehan’s words. In May 2009, Spain’s Banco Santander offered $235 million to settle potential legal claims resulting from the funneling of $3 billion of its clients’ money to Madoff by one of its subsidiaries, Optimal Investment Services.
“Compared to what we’ve recovered so far,” says Mr. Sheehan, “that doesn’t seem like a lot.” It was about 7.3 cents on the dollar, within the usual 5- to 10-cent range. “But at that point, we’d just gotten the case. And we were digging in. Then somebody shows up and offers us $235 million.” As a result of this voluntary surrender, “we became keenly aware of the fact that there must be other defendants out there, similarly situated to Optimal. The settlement had the benefit of enlightening us.”
The Optimal breakthrough came five months into the investigation. “We were still very much in the early discovery phase of what the bad acts were,” Mr. Sheehan says. “But when somebody that really wasn’t on our radar at that point shows up and offers that kind of money, we realized that all this investigative work we were doing was only going to expand, and that all of those defendants out there were going to realize that we’re not going to go away.”
A second pivotal episode occurred in December 2010, with a settlement recouping $7.2 billion from the estate of Jeffry Picower, an investor who withdrew $5.1 billion in “profit” from Madoff’s company and thus was the single largest winner in the sprawling scam. Mr. Picard had argued that the money was owed because Picower, who died in 2009, knew or should have known that Madoff was operating a fraud. The mammoth settlement “did a number of things for us,” Mr. Sheehan says. “One, it was a great impetus for others to come forward and settle, and some did. It spoke volumes to everybody else out there that if they continued to fight us, they’d have to pay as well.”
The Picower settlement—including some $2 billion in principal, which went to the government—“was a big chunk of money,” Mr. Picard understates. It gave the Madoff trustee’s team “a real fund to work with, to distribute to customers.” And it helped Mr. Picard realize that his initial estimate for recovery was, pleasantly, wrong.
Why is the clawback in the Madoff case proving so much healthier than in previous Ponzi schemes? “I think it’s because Madoff was able to continue the scheme for decades,” Mr. Sheehan says, “and we have records that go back to the late 1970s that prove this.” Mr. Sheehan cites Picower as an example.
“Picower’s estate effectively paid back everything he took out in profits from Madoff. Now in a normal case, where a Ponzi scheme is in existence for 18 months or two years, an investor probably wouldn’t have a lot of money. Picower, like a lot of investors, was a wise man. He took his ill-gotten gains and used those to invest in the real market. He knew better.” So his estate was able to “cash in oodles of his Apple stock” and settle. Mr. Sheehan says there are “many, many defendants that are like that, that have the cash and can pay us. And a lot of them don’t want to be smeared with the Madoff case, so they settled.”
Mr. Picard won a key legal victory in August 2011, when the Second Circuit upheld the method he and his team devised to determine how to handle claims. Madoff investors who took out more money from the fund than they deposited would have no claim, and would instead be liable to return their Ponzi-inflated gains. Only net losers would receive payments from money recovered by the trustee. As a result, there have been some “good-faith defendants,” as Mr. Sheehan calls them. “It’s sort of a misnomer. We call them that because we don’t have to prove they knew anything about the Ponzi scheme to get their money back. What they got was fictitious profit.”
That’s rough justice, Messrs. Picard and Sheehan acknowledge. But they say it’s the only way that works, and they are prepared to be flexible with good-faith defendants who face obvious hardship. There are limits on claims by net losers, too. Mr. Picard offers a hypothetical: “You paid in a million dollars,” he says. “Let’s say you didn’t take anything out, but your statement says you were owed four or five million dollars, because you thought you were invested in securities. But you weren’t.” The trustee’s rules would allow a claim only for the $1 million principal.
I ask Mr. Picard, who has a contemplative side, for some meditations on his experience as Madoff trustee. “In many cases,” he says, “people just seemed to look at their financial statement, saw they made money, and really didn’t look behind the rest of the statement.” Had they done so, they would have noticed that Madoff claimed to have conducted trades on Saturdays, Sundays and market holidays. “In the brokerage industry, there’s a rule: ‘Know your customer.’ It seems to me to make sense for the customer to know the broker, too, and in many cases, people didn’t know him.”
Even those who did ask questions were lured into satisfaction by their seemingly lucrative returns. Investors “heard about Madoff from somebody, and they’d call. He would open an account. That’s how a lot of elderly people we’ve been dealing with ended up there.”
As for Mr. Sheehan’s lesson, it’s a pithy one: “Greed cannot be regulated.”
Mr. Varadarajan is executive editor at Stanford University’s Hoover Institution.
https://www.wsj.com/articles/the-amazing-madoff-clawback-1543620951
Madoff Victim Fund
DEPARTMENT OF JUSTICE ASSET FORFEITURE DISTRIBUTION PROGRAM
Madoff Victim Fund
Reaching Victims
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Victims of Bernard Madoff’s Ponzi Scheme to Receive Millions More
By KATIE BENNERAPRIL 12, 2018
https://www.nytimes.com/2018/04/12/business/madoff-ponzi-scheme-compensation.html
WASHINGTON — Victims of Bernard L. Madoff, the architect of one of Wall Street’s largest frauds, will receive another $504 million, proceeds from assets that the government seized after Mr. Madoff’s financial firm collapsed a decade ago.
With this distribution, the second in a series of payouts, about 21,000 victims will have received a total of more than $1.2 billion, the Justice Department said. The payments were made by the Madoff Victim Fund, a government entity created to help people who lost money when Mr. Madoff’s long-running Ponzi scheme unraveled.
The government said it could return more than $4 billion to victims who lost their savings to Mr. Madoff and his firm, Bernard L. Madoff Investment Securities. But that number is still small compared with the imaginary profits the firm had promised investors and the real losses it incurred.
When Mr. Madoff confessed to his crime, he estimated that he had lost about $50 billion. Later estimated losses were even higher: about $65 billion in paper wealth and $17.5 billion in cash.
Mr. Madoff spent client money on family and friends, rather than investing it, and then took in money from additional clients to pay out early investors and cover up the fraud.
Half of the $4 billion the Justice Department hopes to distribute to victims comes from the government’s aggressive move to seize the assets not only of Mr. Madoff and his family, but also of the wealthy investors who over the years cashed out billions from the fund, profits that turned out to be fictions. The other half came from J.P. Morgan Chase, which was accused of ignoring red flags while it acted as Mr. Madoff’s bank.
The practice of seizing assets, known as civil asset forfeiture, has become more prevalent under Attorney General Jeff Sessions, a practice that has drawn criticism from the left and the right. But it has benefited victims of Mr. Madoff’s financial scam.
“In one of the most notorious and unconscionable financial crimes in history, Bernie Madoff robbed tens of thousands of individuals, pension plans, charitable organizations and others, all the while funding a lavish personal lifestyle,” Mr. Sessions said in a statement. “We continue to work to compensate those he defrauded.”
In December 2008 Mr. Madoff told his sons that the investment advisory business he founded in 1960 had been a massive fraud. After his family notified the authorities, he ultimately pleaded guilty to 11 counts of criminal financial activity and was sentenced to 150 years in prison. Both of his sons have since died and his wife, Ruth, is estranged.
The firm’s collapse claimed thousands of victims including pension funds, foundations, a philanthropy established by the Holocaust survivor Elie Wiesel, and wealthy individuals like the actors Kevin Bacon and Kyra Sedgwick.
The Justice Department has approved more than 39,000 petitions for compensation.
In a separate effort, a court-appointed trustee, Irving Picard, has repaid about $11 billion to victims who filed a class-action lawsuit against Mr. Madoff. Much of that money has come from the process of winding down the financial firm and redistributing the assets to customers.
Not long after Mr. Madoff was arrested, Mr. Picard began liquidating the disgraced financier’s firm. Mr. Picard cannot give investors the fake profits they had been misled to believe they had earned, but he hopes to return most of their principal.
A version of this article appears in print on April 13, 2018, on Page B6 of the New York edition with the headline: Scam Victims Will Receive Millions More From Madoff. Order Reprints| Today's Paper|Subscribe
https://www.nytimes.com/2018/04/12/business/madoff-ponzi-scheme-compensation.html
Madoff fund moves closer to payouts after criticism of delays
Fri Jun 16, 2017 | 11:26am EDT By Jonathan Stempel | NEW YORK
http://www.reuters.com/article/us-madoff-payout-idUSKBN19723T
The overseer of a $4 billion U.S. government fund to compensate victims of Bernard Madoff's Ponzi scheme expects to start distributing money this year, following criticism of the lack of payouts in the nearly four years since the fund's creation.
Money would go to 35,508 victims from 123 countries whose total losses exceeded $6.5 billion.
Their claims were deemed valid in early June by the Department of Justice, whose fund is overseen by former U.S. Securities and Exchange Commission Chairman Richard Breeden.
More than 26,000 of the 35,508 eligible victims have received nothing since Madoff's fraud was uncovered in December 2008.
Payouts could begin as soon as late October, a person close to the process said.
In an online update posted late Thursday, Breeden said about 98 percent of eligible victims invested indirectly through Madoff, such as through "feeder funds."
They have been unable to recover any funds in the liquidation of Bernard L. Madoff Investment Securities LLC, in which court-appointed trustee Irving Picard is paying only former Madoff customers. He has approved 2,612 claims.
"We are currently planning on a first distribution of cash prior to the end of this year," Breeden wrote. "We are very optimistic we will succeed."
Breeden declined to comment on Friday.
The fund was set up in November 2013, mostly with settlement money from Madoff's bank, JPMorgan Chase & Co (JPM.N), and the estate of former Madoff investor Jeffry Picower.
Criticism over the lack of payouts was fueled by published reports last month that Breeden's firm had billed the government millions of dollars for its services.
The review process took over three years, during which about 50 people, including some with bank examination experience, assessed 65,500 petitions with millions of pages of paperwork.
Hedge funds and other third parties that bought claims from victims are ineligible to recover, unlike in the Madoff firm's liquidation, in which Picard is paying on such claims.
Picard has recovered $11.6 billion and paid out more than $9 billion.
The payout process for the fund Breeden oversees came up on Tuesday when Republican Senator Richard Shelby of Alabama questioned it during a Justice Department budget hearing.
"Obviously they're not working because there are no distributions," he said.
Deputy Attorney General Rod Rosenstein replied that reimbursing victims was important, and said "we should do it as quickly as possible." He pledged to look into the matter.
"Will you get back to the committee on that?" Shelby asked.
"Yes sir," Rosenstein responded.
(Reporting by Jonathan Stempel in New York; Editing by Dan Grebler)
http://www.reuters.com/article/us-madoff-payout-idUSKBN19723T
The sad new life of exiled Ruth Madoff
By Isabel Vincent May 14, 2017 | 12:58am
http://nypost.com/2017/05/14/the-sad-new-life-of-exiled-ruth-madoff/
Every morning, the petite blonde with the bright red lipstick walks the few blocks from her nondescript condo to the Upper Crust Bagel Company on Sound Beach Avenue, the main drag in this picturesque New England hamlet of 6,600 people.
Just about everyone who lives here knows it’s Ruth Madoff in exile, and they mostly leave her alone.
They know the broad outlines of her fall — how her privileged world exploded in December 2008 when her husband, Bernie, confessed to the biggest Ponzi scheme in history, an $18 billion fraud for which he is serving a 150-year sentence.
Ruth lost everything — her money, social status, husband and her two sons. Mark, the eldest, committed suicide in 2010, and Andrew died of cancer in 2014.
Ruth will turn 76 this week, two days before HBO airs “Wizard of Lies,” a dramatic retelling of the fall of the house of Madoff, starring Robert de Niro as Bernie and Michelle Pfeiffer as Ruth.
How does she feel about the film’s release?
“I have nothing to say,” she said when The Post knocked on the door of the 989-square-foot town house she rents in this bucolic burg of neatly trimmed hedges, where children wait for the school bus outside beautifully restored shingled cottages, and homemakers in Spandex drive their husbands in Audis and Land Rovers to the Metro-North station.
It’s only an hour’s train ride to Manhattan, but it’s a world away for Ruth, who once owned a sprawling apartment on the Upper East Side and mansions in Palm Beach and Montauk.
After her husband’s conviction, Ruth was forced to give up her palatial digs, and was no longer welcome among her socialite friends. Donald Trump, who denounced Bernie as “a sleazebag and a scoundrel without par,” refused to rent an apartment to Ruth in any of his Manhattan buildings as she desperately searched for a place to live, a source close to the Madoff family told The Post.
Before her husband was sentenced in 2009, Bernie made a deal with prosecutors. In exchange for giving up most of their wealth — $80 million worth of mansions, jewelry, cars and art — Ruth was allowed to keep $2.5 million.
Ruth took the cash and skipped town.
After briefly living in an exclusive condo in Boca Raton, Fla., Ruth came to Old Greenwich in 2012, to be close to her three grandchildren who live nearby. She lived for two years at 57 Tomac Ave. in a quaint house, built in 1905 and then owned by her son Andrew and his estranged wife, Deborah West, public records show.
“She was a very nice neighbor is all I have to say,” said Mike Worden, who lived across the street from the Madoff house.
Two months after Andrew died of a rare form of lymphoma, Ruth was booted from her son’s home. It was sold by West two years later and was recently razed by its new owner to make room for new construction.
Ruth moved from 57 Tomac to the town house in the condominium complex called The Gables, where she now lives. The gated community features a heated swimming pool, squash courts, gym and security, although there was no guardhouse attendant when The Post visited last week. A one-bedroom unit was listed for $3,100 a month
It was here that Pfeiffer reportedly sat in Ruth’s kitchen in preparation to play her in “Wizard of Lies,” the drama directed by Barry Levinson. “She sat in her kitchen and studied her,” a source said.
“I don’t think it would be appropriate to say she ‘cooperated’ with the film,” Levinson told Page Six. “Michelle simply spent a little time talking to Ruth. I don’t think Michelle talked much about the script. It was simply to get to know her — however brief the time spent.”
Neighbors say Ruth mainly keeps to herself in Old Greenwich, where she tools around town in a new silver Toyota Prius.
But mostly she just walks and walks, neighbors say.
...
more
http://nypost.com/2017/05/14/the-sad-new-life-of-exiled-ruth-madoff/
Hedge fund executive, 56, who invested billions with Bernie Madoff, leaps to his death from 24th story of New York's luxury Sofitel hotel
* Charles W. Murphy jumped to his death, landing on a fourth floor terrace
* Witnesses said he was wearing a dark business suit
* The 56-year-old plummeted 20 floors before coming to land on the terrace
* Murphy was an executive with Fairfield Greenwich Group, who was Madoff's biggest feeder fund
By Kiri Blakeley For Dailymail.com
Published: 21:15 EDT, 27 March 2017 | Updated: 23:31 EDT, 27 March 2017
...
more
http://www.dailymail.co.uk/news/article-4355186/Man-commits-suicide-jumping-Sofitel-hotel.html
Hedge fund boss who lost billions in Bernie Madoff Ponzi scheme plunges to his death off luxury Midtown hotel
BY ANDY MAI JOHN ANNESE GINGER ADAMS OTIS
NEW YORK DAILY NEWS Updated: Tuesday, March 28, 2017, 3:23 AM
http://www.nydailynews.com/new-york/manhattan/man-plunges-death-24th-floor-nyc-hotel-article-1.3010877
A hedge fund exec who lost billions to Bernie Madoff a decade ago plunged 20 stories to his death Monday after jumping from a luxury Midtown hotel.
Police said the death appeared to be a suicide and a source identified the man as Upper East Side resident Charles Murphy.
Witnesses told officials a man wearing what appeared to be a dark business suit leaped from the 24th floor of the Sofitel New York Hotel on W. 44th St. between Fifth and Sixth Aves. just before 5 p.m., according to reports.
He landed on a fourth-floor terrace, the reports said.
Murphy was an investor working with Paulson & Co, which issued a statement to the Financial Times.
“We are extremely saddened by this news. Charles was an extremely gifted and brilliant man, a great partner and a true friend,” founder John Paulson said. “Our deepest prayers are with his family.”
Murphy, 55, and his second wife, Annabella Murphy, are believed to have two young sons.
He was previously married to Heather Kerzner, with whom he had two children. The couple split in 1999.
A woman answering a cell phone registered to Annabella Murphy on Monday night said “No comment, thank you” before hanging up.
At the couple’s sprawling 25-foot-wide limestone townhouse on E. 67th St. a man standing behind an opaque glass front door also declined to comment.
“Go away, leave the family to grieve,” the man said.
Murphy, who had a law degree from Harvard, a master’s degree in business administration from MIT’s Sloan School and a bachelor’s degree from Columbia, spent nearly 20 years in Europe as an investor for Morgan Stanley, Deutsche Bank and Credit Suisse.
He made a triumphant arrival in the city in 2007, paying $33 million for the Upper East Side mansion. He bought it from Seagram heir Matthew Bronfman, who gutted it after buying it in 1994, for $3 million, from the Foundation for Depression and Manic Depression.
Murphy began work at Fairfield Greenwich Group, a high-stakes hedge fund that did heavy business with Madoff. When Madoff’s Ponzi scheme imploded a year later, FGG was out some $7 billion of its clients’ money — and Murphy was out of a job. He and other Fairfield Greenwich partners were listed as defendants in an $80 million lawsuit brought by distraught investors.
Murphy immediately tried to unload his ritzy property, which has eight bedrooms and 11 fireplaces, for $37 million.
He eventually found work with Paulson & Co., but listed his mega-mansion again last year, this time asking $49.5 million for the 11,000-square-foot abode.
In 2010, Mark Madoff, the 46-year-old son of the disgraced financier, committed suicide in his SoHo apartment.
Two years earlier, Rene-Thierry Magon de la Villehuchet, founder of a firm that lost $1.4 billion to Madoff’s scheme, killed himself in his Manhattan office.
WITH NICOLE HENSLEY, SETH BOOKEY
http://www.nydailynews.com/new-york/manhattan/man-plunges-death-24th-floor-nyc-hotel-article-1.3010877
MORE
http://www.dailymail.co.uk/news/article-4355186/Man-commits-suicide-jumping-Sofitel-hotel.html
Madoff trustee reaches $277 million accord with middleman Chais' family
Fri Oct 28, 2016 | 11:30am EDT
The court-appointed trustee liquidating Bernard Madoff's firm said on Friday he has reached a settlement with the family of late Beverly Hills money manager Stanley Chais that will provide more than $277 million to victims of Madoff's Ponzi scheme.
Irving Picard, the trustee, said the accord requires court approval. Picard is also seeking approval for the creation of a California restitution fund, resulting from efforts of Kamala Harris, the state's attorney general, and the resolution of private California litigation against Chais-related defendants.
(Reporting by Jonathan Stempel in New York; Editing by Jeffrey Benkoe)
http://www.reuters.com/article/us-madoff-chais-idUSKCN12S1Y1?feedType=RSS&feedName=domesticNews&utm_medium=Social&utm_source=Twitter
The Mystery Madoff Victims Who Left $2.5 Billion on the Table
Erik Larson March 4, 2016 — 5:00 AM EST
http://www.bloomberg.com/news/articles/2016-03-04/the-mystery-madoff-victims-who-left-2-5-billion-on-the-table
> Offshore feeder funds account for part of the mystery
> Experts speculate some customers sought to avoid scrutiny
Ever since Bernie Madoff’s Ponzi scheme collapsed in 2008, it’s been much-rumored that investors included tax dodgers shielding money from the IRS, drug dealers who laundered proceeds through the con man and wealthy moguls hiding assets from ex-spouses.
After all, the scheme wiped out $20 billion of investors’ money, but the victims’ claims for repayment total just $17.5 billion.
Who would walk away from $2.5 billion, and why?
Part of the answer may be far less mysterious or dubious than thought.
Almost half of the unclaimed money can be traced to a couple of Caribbean-based hedge funds. Their reason, while unknown, may have amounted to a calculated decision that any recovery on their $1.2 billion of claims would be tiny compared with what they might be forced to give back if they got tangled up in U.S. courts, according to lawyers familiar with the recovery process.
As for the remaining $1.3 billion in unclaimed money, experts are left to ponder. Unlike the two funds, these are likely individual investors who had a variety of reasons to shy away from the claims process, especially at a time when victims were expecting to recover only 4 or 5 cents on the dollar, legal experts say.
"What’s the downside of putting a claim in and seeing what happens, unless somebody doesn’t want their own affairs being scrutinized?" said Richard Scheff, a former federal prosecutor. Some of these people may be kicking themselves now; victims are getting 57 cents on the dollar.
Feeder Funds
The situation underscores the complexities involved in the effort to recover money for Madoff’s victims. So far Irving Picard, the trustee hired to wind down Madoff’s firm, has repaid about $9.2 billion to people who invested directly with the scammer. Tens of thousands of others await some recovery. They couldn’t file claims with Picard because they placed money in so-called feeder funds that invested with Madoff.
"We can’t speculate on the motivations for any customer deciding not to attempt to recover lost principal via the claims process," said Amanda Remus, spokeswoman for Picard and his team of lawyers at BakerHostetler LLP in Manhattan. Picard is barred by law from revealing the names of victims.
The biggest of the two hedge funds that invested with Madoff is Harley International (Cayman) Ltd., managed by the obscure trust company Euro-Dutch Management Ltd. Harley opened an account with Madoff in 1996, around the time the con man began ramping up his fraud with the help of rigged computer programs, court records in New York show.
Lost $1 Billion
Harley ended up investing all its money -- more than $2 billion -- in Madoff’s firm, according to the court filings. But as the financial crisis accelerated, Harley withdrew $1.07 billion in the two years before Madoff’s arrest. The remaining $1 billion in Harley’s account went up in smoke, and the fund was forced into liquidation by a Cayman Islands court in 2009.
Picard sued Harley in federal court in Manhattan in 2009 for the return of the entire $1.07 billion it had withdrawn. Picard argued the hedge fund "knew or should have known" that Madoff was a fraud, based on the unrealistic and steady returns it received, according to the complaint against the fund.
U.S. Jurisdiction
Harley now faced a decision: Filing a claim for its $1 billion loss would expose the hedge fund to U.S. jurisdiction and Picard’s suit. That trade-off may not have seemed wise at the time, according to lawyers. Harley could conceivably be forced to cough up the $1.07 billion to Picard -- and recover maybe $50 million on its loss.
So, Harley didn’t file a claim and ignored the suit. In 2010 a federal judge awarded Picard a default judgment for the full amount he sought. Picard still hasn’t collected the money.
Harley “made a strategic decision not to appear in this jurisdiction,” Elizabeth Scully, one of Picard’s lawyers, said in a 2010 court hearing in Manhattan.
“You can envision someone doing the math and thinking the recovery in the bankruptcy process would be only a few pennies on the dollar,” said Matthew L. Schwartz, a former federal prosecutor in Manhattan who worked on the Madoff case.
Geoff Varga, Harley’s court-appointed liquidator with Duff & Phelps LLP in Manhattan, confirmed that Harley didn’t file a claim in the Madoff case. He declined to say why.
"It shouldn’t be too difficult to figure out why Harley didn’t file a claim in the Madoff liquidation," Anthony Inder Rieden, the chief executive officer of Euro-Dutch, which is still in operation, said in an e-mail. He declined to elaborate.
Ignored Lawsuit
Another feeder fund, Vizcaya Partners, could have filed a claim for $147 million but didn’t, court records show. The British Virgin Islands-based fund also ignored a lawsuit by Picard that sought $180 million withdrawn from Madoff’s firm in the months before it collapsed. They later reached a settlement, with Vizcaya paying $25 million.
Anthony Paccione of Katten Muchin Rosenman LLP in New York, who represented Vizcaya in its dealings with Picard, declined to comment on why the fund didn’t file a claim.
Not filing a claim isn’t automatically a sign of wrongdoing. Some folks may have just missed the deadline or could afford to put the mess behind them and move on.
One thing is certain: the missing claims mean there will be a lot more money to go around for Madoff’s other victims. Picard has said he’d like to pay back 100 cents on the dollar, and now he can get there faster.
http://www.bloomberg.com/news/articles/2016-03-04/the-mystery-madoff-victims-who-left-2-5-billion-on-the-table
'Madoff' Mini-Series Brings Swindler Story to Life
2/3/2016 1:45PM
Bernie Madoff in December 2008 admitted to a multi-billion dollar Ponzi scheme that sent him to prison for 150 years. Now, ABC's two-part series starring Richard Dreyfuss brings his story to life. Photo: ABC/Bloomberg News (Inset)
http://www.wsj.com/video/madoff-mini-series-brings-swindler-story-to-life/0B3B6C18-B22F-4D28-B5EB-9E2D99B34F3C.html?mod=e2tw
Prosecutors seek fund manager fine as Swiss Madoff trial begins
ZURICH Mon Dec 7, 2015 4:43pm GMT
http://uk.reuters.com/article/uk-swiss-madoff-trial-idUKKBN0TQ22K20151207
A fund manager accused of negligently funnelling client money to disgraced financier Bernard Madoff before the U.S. money manager's swindle was revealed faced a suspended fine rather than jail time as his trial in Geneva began on Monday.
Geneva prosecutors have charged Manuel Echeverria, the former head of Banco Santander's (SAN.MC) Swiss-based unit Optimal Investment Services, with mismanagement with intent to enrich. It carries punishment of up to five years in jail.
But they sought only a fine of 150,000 Swiss francs ($149,805) suspended for three years in the trial, which is set to run until Friday. Echeverria has denied wrongdoing via his legal team, according to media reports.
The unit of Santander, which fed billions to Madoff before his scam surfaced, agreed in 2009 to pay $235 million to a U.S. court-appointed trustee to settle the case.
The Santander settlement payment represented money withdrawn just before Madoff's fraud was revealed in late 2008. The trustee has been seeking the return of funds from big investors to reimburse other victims of the money manager, who used money from new investors to pay existing clients.
Swiss asset managers were among the biggest investors in Madoff's scheme, with firms based in Geneva particularly hard hit.
Five former Geneva wealth managers paid "substantial compensation" to settle criminal complaints brought by clients whose assets were invested by the managers with Madoff, the Geneva prosecutor's office said in September.
Madoff is serving a 150-year prison term in the United States after pleading guilty in 2009 to masterminding the Ponzi scheme, estimated to have cost investors $17 billion in principal.
In the United States, 15 people including Madoff either pleaded guilty or were convicted at trial in connection with the collapse of the scheme. The final Madoff defendant in the United States was sentenced to six months in prison in August.
(Reporting by Michael Shields and Joshua Franklin; Editing by Gareth Jones)
http://uk.reuters.com/article/uk-swiss-madoff-trial-idUKKBN0TQ22K20151207
Statement Regarding Recovery Agreement of $46.6 Million Reached with the Thybo Feeder Funds
October 23, 2015
http://www.madofftrustee.com/statements-07.html#621
Statement from the office of Irving H. Picard, Securities Investor Protection Act (SIPA) Trustee for the liquidation of Bernard L. Madoff Investment Securities LLC (BLMIS)
Attributable to Amanda Remus, spokeswoman for Irving H. Picard, SIPA Trustee for the liquidation of BLMIS, and his counsel:
SIPA Trustee for the liquidation of BLMIS Irving H. Picard filed a motion today in the United States Bankruptcy Court for the Southern District of New York seeking approval of a settlement agreement with Thybo Asset Management Limited and Thybo Stable Fund Ltd., collectively, the “Thybo Funds.”
Under the terms of the agreement, the settlement with the Thybo Funds will immediately benefit the BLMIS Customer Fund by approximately $46.6 million. The payment amount reflects 75 percent of the $62 million withdrawn by the defendants within the six-year period prior to the BLMIS liquidation filing date, and also reflects an adjustment based on the recovery received by the SIPA Trustee as a result of his settlement with the Internal Revenue Service. The approval hearing has been set for November 18, 2015 at 10:00 a.m.
The Thybo Funds will be entitled to an allowed claim of $186 million and the corresponding catch-up payments based on the five pro rata interim distributions made in the SIPA liquidation of BLMIS to date and will be eligible for the sixth distribution announced earlier this week. The Thybo Funds will then continue to receive future distributions, along with all other BLMIS customers with allowed claims who are not yet fully satisfied.
Upon closing, the Thybo Funds will make the settlement payment to the SIPA Trustee through a deduction from the distribution on the allowed claim, and the SIPA Trustee will then pay the remaining balance of the catch-up distribution payments due on the allowed claim.
# # #
*********************
Link to the Motion:
http://www.madofftrustee.com/document/dockets/006611-006611-thybomotion-09-01365.pdf
http://www.madofftrustee.com/statements-07.html#621
DATE 1-U.S. Supreme Court rejects appeal from Madoff Ponzi scheme victims
(Adds background on case, paragraphs 3-8)
By Lawrence Hurley
Mon Oct 5, 2015 10:03am EDT
http://www.reuters.com/article/2015/10/05/usa-court-madoff-idUSL1N12510520151005
Oct 5 (Reuters) - The U.S. Supreme Court on Monday declined to hear an appeal by victims of Bernie Madoff's multibillion-dollar Ponzi scheme who were seeking inflation or interest adjustments on the money they lost, ending litigation that had delayed $1.249 billion from being dispersed to his former customers.
The justices declined to take up an appeal of a February ruling by the 2nd U.S. Circuit Court of Appeals in New York that the victims of the imprisoned fraudster were not entitled to such adjustments.
Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, has kept $1.249 billion in reserve because of the litigation over whether former customers deserved "time-based" damages on claims arising from Madoff's Ponzi scheme that was uncovered in 2008.
The appeals court said that because the federal law that helps victims of failed brokerages did not address such damages, Picard had the flexibility to choose the fairest method to determine the size of valid claims.
The appeals court also said it would be unfair to adjust the claims of earlier customers for inflation and interest at the expense of later customers.
Picard has recouped $10.89 billion for Madoff victims who lost an estimated $17.5 billion of principal.
Madoff, 76, is serving a 150-year prison term after pleading guilty to running a decades-long fraud.
The case is Peshkin v. Picard, U.S. Supreme Court, No. 15-95. (Reporting by Lawrence Hurley; Editing by Will Dunham)
http://www.reuters.com/article/2015/10/05/usa-court-madoff-idUSL1N12510520151005
Ex-accounting executive avoids prison in Madoff fraud case
NEW YORK | By Joseph Ax
Thu Jul 9, 2015 6:07pm EDT
http://www.reuters.com/article/2015/07/09/usa-crime-madoff-konigsberg-idUSL1N0ZP2LL20150709
A former associate of Bernard Madoff avoided prison on Thursday for his role in perpetuating the fraudster's massive Ponzi scheme because of his extensive cooperation with prosecutors.
Paul Konigsberg, 79, a lawyer and accounting firm executive, pleaded guilty in June 2014 to charges of conspiracy and falsifying books and records.
At the time, his cooperation deal was seen as a signal that prosecutors were still pursuing a criminal case against Madoff's son, Andrew, who died of cancer three months later.
U.S. District Judge Laura Taylor Swain in New York, citing an otherwise admirable life, said Konigsberg had been punished enough by the loss of his reputation.
"You've demonstrated sincere remorse," she said.
Prosecutors said Konigsberg was unaware of the scheme but helped by conspiring with Madoff employees to create some of the fraudulent customer statements at its heart.
"Not a day goes by that I don't regret that I trusted Mr. Madoff," a tearful Konigsberg told Swain. "As we've all come to know, this man was truly a monster."
Konigsberg's plea last year included references to two unnamed co-conspirators who allegedly received sham tax-free loans from Madoff. Sources told Reuters the two people were Madoff's sons, Mark and Andrew.
Mark Madoff committed suicide in December 2010 on the second anniversary of his father's arrest. Andrew Madoff died in September.
The Madoff brothers denied any knowledge of or involvement in their father's fraud. Bernard Madoff is serving a 150-year sentence after pleading guilty to running the Ponzi scheme, estimated to have cost investors $17 billion in principal.
In the 1990s, Madoff began steering some of his biggest clients to Konigsberg's accounting firm.
In several instances, Konigsberg agreed to return customer account statements to Madoff's firm, to be replaced by amended statements with fraudulent backdated trades. He then filed clients' tax returns based on the revised statements.
Konigsberg also allowed Madoff to pay a relative for a no-show job at Madoff's firm, prosecutors said.
Konigsberg has forfeited more than $4 million of commissions his firm received for Madoff clients.
Prosecutors said Konigsberg aided the investigation into Madoff's longtime bank, JPMorgan Chase & Co. The bank agreed in January 2014 to pay $2.6 billion to resolve criminal and civil claims related to Madoff.
Fifteen defendants including Madoff have been convicted in connection with the fraud.
The case is U.S. v. Konigsberg, U.S. District Court for the Southern District of New York, No. 10-cr-228.
http://www.reuters.com/article/2015/07/09/usa-crime-madoff-konigsberg-idUSL1N0ZP2LL20150709
Accounting Executive to Be Sentenced in Madoff Fraud Case
NEW YORK — Jul 9, 2015, 10:05 AM ET
http://abcnews.go.com/US/wireStory/accounting-executive-set-sentencing-madoff-fraud-case-32319215
A New York accounting firm executive who worked for some of Bernard Madoff's most important clients is likely to receive leniency at his sentencing in return for his cooperation with the government.
Seventy-nine-year-old Paul Konigsberg is set for sentencing Thursday in Manhattan federal court after pleading guilty last year to conspiracy and falsifying books and records. He sold his Manhattan accounting and consulting firm four years ago.
Prosecutors agree he didn't know about Madoff's Ponzi scheme that cost thousands of investors nearly $20 billion. But they say he unwittingly helped by conspiring with Madoff employees to produce fraudulent investor statements.
Prosecutors recommended leniency, saying Konigsberg provided vital facts toward the prosecution of others.
The 77-year-old Madoff is serving a 150-year prison sentence after revealing the fraud in December 2008.
http://abcnews.go.com/US/wireStory/accounting-executive-set-sentencing-madoff-fraud-case-32319215
Heiress wants $7.4M from IRS over Madoff swindle
By Kathianne Boniello
July 5, 2015 | 10:34am
http://nypost.com/2015/07/05/heiress-wants-7-4m-from-irs-over-madoff-swindle/
The estate of a real-estate heiress swindled by Bernie Madoff is trying to recoup $7.4 million from the IRS, claiming the Ponzi schemer filed a false tax return for the woman to keep his scam secret.
Gladys C. Luria, whose father, Henry Claman, built the Times Square Hotel in 1922, was supposedly worth $32 million when she died in 2005 at age 96, according to tax returns filed by Madoff, who is now serving a 150-year sentence for fraud.
But those tax returns were bogus, because Madoff had cheated Luria, along with thousands of others, in a historic Ponzi scheme, according to a Manhattan federal lawsuit filed against the US government by Luria’s estate.
“The value of the accounts at the date of [her] death was in fact zero, because the accounts had no securities in them ... Madoff ... knowingly filed a false return to cover up his criminal Ponzi scheme,” according to court papers.
Madoff’s crimes didn’t come to light until his arrest in 2008.
Luria was a Madoff client for so long she made Bernie and his brother, Peter, co-executors of her estate.
The family paid $10 million in estate taxes upon Luria’s death based upon the false return, an overpayment of $7.4 million, the estate alleges in its legal filing.
The IRS declined to comment.
http://nypost.com/2015/07/05/heiress-wants-7-4m-from-irs-over-madoff-swindle/
Madoff trustee to recoup $140 million from Plaza feeder fund
NEW YORK | By Jonathan Stempel
Fri Jun 19, 2015 1:48pm EDT
http://www.reuters.com/article/2015/06/19/madoff-plaza-idUSL1N0Z51JE20150619
The trustee seeking money for Bernard Madoff's victims on Friday said they will receive $140 million from a feeder fund that ignored "glaring" red flags that the swindler was running a Ponzi scheme.
Plaza Investments International Ltd will make the payment to end a lawsuit brought by Irving Picard, the trustee liquidating the former Bernard L. Madoff Investment Securities LLC.
The accord would boost to nearly $10.9 billion the sum that Picard has recovered for Madoff customers, who he estimates lost $17.5 billion of principal.
According to settlement papers filed with the U.S. bankruptcy court in Manhattan, Picard will deem valid about $405 million of Plaza's claims against Madoff's former firm.
Plaza, based in the British Virgin Islands, will also be entitled to $198.2 million of "catch-up" distributions, based on sums that the trustee has already paid out.
Picard will retain the first $140 million of this sum under the settlement, which also resolves claims against Plaza's investment manager Notz, Stucki Management (Bermuda) Ltd. The trustee had in 2010 sued the defendants for $235 million.
Friday's settlement requires court approval. A hearing has been scheduled for July 29. Neither defendant admitted wrongdoing.
Picard filed more than 1,000 lawsuits to recoup money from "feeder funds" such as Plaza that sent client cash to Madoff's firm, and former Madoff customers who withdrew more money from the firm than they put in prior to its December 2008 bankruptcy.
The U.S. Supreme Court may announce as soon as next week whether it will hear Picard's appeal of a lower court ruling limiting his ability to recoup payments made to customers more than two years before the bankruptcy.
Madoff, 77, is serving a 150-year prison term.
The case is Picard v. Plaza Investments International Ltd et al, U.S. Bankruptcy Court, Southern District of New York, No. 10-ap-04284.
http://www.reuters.com/article/2015/06/19/madoff-plaza-idUSL1N0Z51JE20150619
Ex-Madoff auditor sentenced to home confinement
NEW YORK | By Nate Raymond and Joseph Ax
Thu May 28, 2015 1:50pm EDT
http://www.reuters.com/article/2015/05/28/usa-crime-madoff-friehling-idUKL1N0YI21O20150528
May 28 The former outside auditor for Bernard Madoff's firm was sentenced on Thursday to a year of home confinement, avoiding prison after cooperating with U.S. authorities investigating Madoff's multibillion-dollar Ponzi scheme.
U.S. District Judge Laura Taylor Swain in New York also ordered David Friehling to pay his share of a $130 billion joint penalty assessed symbolically to him and other defendants convicted for roles in the fraud.
"I will regret for the rest of my life the role I play in this devastating crime," Friehling said in court.
Friehling, 55, was the latest individual to be sentenced for his role facilitating the massive fraud, which landed Madoff a 150-year prison term and is estimated to have cost investors $17 billion in principal losses.
Friehling pleaded guilty in 2009 after becoming an early cooperator in the government's probe of Bernard L. Madoff Investment Securities LLC.
Prosecutors said Friehling, as outside auditor, never conducted a meaningful review of the firm's finances but instead rubber-stamped information presented to him by Madoff employees. They said he also certified to the U.S. Securities and Exchange Commission that he had used standard accounting practices to audit the firm.
Though Friehling's actions helped Madoff conceal his massive fraud, he has said he was unaware of the Ponzi scheme at the heart of the firm.
Friehling also served as Madoff's personal accountant and prepared fraudulent tax returns for Madoff, his brother Peter, and his sons Mark and Andrew, prosecutors said.
He testified as a government witness for several days at the trial of five former Madoff employees, all of whom were convicted in 2014 and sentenced to prison terms ranging from 2-1/2 to 10 years.
Later on Thursday, Craig Kugel, a former employee at Madoff's firm, is scheduled to be sentenced for enrolling non-employee relatives of workers in the firm's health care plan.
Kugel played a relatively minor role at Madoff's firm. In addition to the health care fraud, he pleaded guilty to using a company credit card for personal expenses while employed at Primex, an affiliate of Madoff's firm.
Kugel testified at the five workers' trial as well. His father, David, a longtime trader at Madoff's firm, was sentenced to 10 months of home arrest on Wednesday.
The cases are U.S. vs. Friehling, No. 09-cr-700, and U.S. vs. Kugel, No. 10-cr-228, both in U.S. District Court for the Southern District of New York. (Reporting by Nate Raymond and Joseph Ax; Editing by David Gregorio)
http://www.reuters.com/article/2015/05/28/usa-crime-madoff-friehling-idUKL1N0YI21O20150528
Madoff feeder fund settles; victims' recovery tops $10.6 billion
By Jonathan Stempel
NEW YORK Mon Mar 23, 2015 6:16pm EDT
http://www.reuters.com/article/2015/03/23/us-madoff-settlement-idUSKBN0MJ2EW20150323?feedType=RSS&feedName=domesticNews
(Reuters) - The trustee recovering money for Bernard Madoff's victims on Monday announced a settlement to recoup $93 million from a "feeder fund" that sent client money to the swindler's firm, boosting the total sum raised to roughly $10.65 billion.
Irving Picard, the trustee, said the settlement calls for the Defender Ltd feeder fund to receive a $522.8 million claim in the liquidation of Bernard L. Madoff Investment Securities LLC because it deposited more there than it withdrew.
Defender, which was incorporated in the British Virgin Islands, will get "catch-up" payments from distributions that Picard previously made to Madoff customers. The first $93 million of the payments will go to other Madoff customers, and Defender will get its share of future payouts.
Picard has recouped roughly 60 percent of the $17.5 billion of principal he has estimated that Madoff's victims lost in a decades-long Ponzi scheme.
The trustee is separately asking the U.S. Supreme Court to reverse a Dec. 8 lower court ruling that bars him from clawing back alleged "fictitious profits" made to some customers more than two years before Madoff's firm collapsed.
Picard said that ruling prevents him from distributing nearly $2 billion to Madoff's victims, and calls into question $2 billion of potential payouts.
The Defender settlement requires U.S. bankruptcy court approval.
Madoff, 76, pleaded guilty to fraud in March 2009 and is serving a 150-year prison term.
(Reporting by Jonathan Stempel in New York; Editing by Lisa Shumaker)
http://www.reuters.com/article/2015/03/23/us-madoff-settlement-idUSKBN0MJ2EW20150323?feedType=RSS&feedName=domesticNews
Madoff trustee to high court: Ruling blocking $4B in payouts
By LARRY NEUMEISTER 16 hours ago
http://news.yahoo.com/madoff-trustee-high-court-ruling-blocking-4b-payouts-222519082.html
NEW YORK (AP) — The trustee finding money for victims of Bernard Madoff's epic fraud asked the U.S. Supreme Court on Tuesday to overturn a court ruling that he says may prevent the recovery of nearly $4 billion, reward those who unwittingly profited from the Ponzi scheme at the expense of those who did not, and have far-reaching effects for future victims of financial frauds.
Lawyers for the trustee, Irving Picard, asked the high court to look at the December ruling by the 2nd U.S. Circuit Court of Appeals in Manhattan, saying the case raises novel questions for the Supreme Court and threatens a century's worth of law that steered how courts respond to the legal aftermath of Ponzi schemes.
"Denying review would only perpetuate confusion and uncertainty at a time when investors can afford neither," the legal papers said, adding that the 2008 financial crisis revealed that investors are victims of a remarkable number of financial frauds.
The lawyers argued that the 2nd Circuit ruling guts Picard's authority at a time when trustees increasingly rely on so-called clawbacks to recover money from those who profited from illegal schemes and redistribute money to those who did not.
The court papers said the appeals court decision had an "absurd result," extending a "stockbroker defense" designed by Congress as a narrow exception to the clawback authority. They said the exception was created to prevent potential market instability that might result if a trustee unwound large numbers of actual securities trades by the debtor, possibly causing the insolvency of one market participant "to spread like a contagion throughout the market."
But Picard's lawyers said Congress did not intend for the stockbroker defense to extend to someone like Madoff, who cheated thousands of people over several decades by failing to invest their $19.5 billion at all, instead redistributing the money whenever an investor requested a payout. Madoff, 76, is serving a 150-year prison sentence after revealing the fraud in December 2008.
Picard has so far recovered $10.5 billion for investors, largely through deals reached with some of the thousands of investors who received more money from Madoff than they had invested. That money is not threatened by the 2nd Circuit decision.
The court papers said the 2nd Circuit ruling permits those who received false profits from the fraud to keep their gains and treats Madoff's fraudulent securities trading scheme as if it was genuine, threatening the recovery of $2 billion and calling into question another $2 billion in potential recoveries and distributions.
http://news.yahoo.com/madoff-trustee-high-court-ruling-blocking-4b-payouts-222519082.html
Madoff brother's mansion nets $3.5M for victims
Kevin McCoy
2 Hours Ago
http://www.cnbc.com/id/102479889
The five-bedroom, white stucco mansion in the opulent Old Westbury neighborhood roughly 25 miles east of Manhattan boasts a tennis court, an in-ground pool and four acres of property at the edge of a country club and golf course.
What it hasn't had in several years is a family whose members warmed up by the fireplace in the 400-square-foot living room, played billiards in the finished basement or entertained friends or relatives in the guest house.
The last owner who regularly used the residence, Peter Madoff, had to leave unexpectedly. He was implicated in the Ponzi scheme his now-notorious older brother, Bernard Madoff, used to steal as much as $20 billion from thousands of average investors, charities, celebrities and others.
http://www.cnbc.com/id/102479889
Payout to Madoff victims tops $7.2 billion
By Jonathan Stempel
NEW YORK Mon Feb 9, 2015 12:04pm EST
http://www.reuters.com/article/2015/02/09/us-madoff-payout-idUSKBN0LD1XQ20150209
(Reuters) - The trustee liquidating Bernard Madoff's firm on Monday said he is distributing another $355.8 million to the swindler's victims, bringing the total payout to more than $7.2 billion.
Irving Picard, the trustee, said the payout began on Feb. 6, and covers claims by fraud victims with 1,077 accounts at the former Bernard L. Madoff Investment Securities LLC. Claimants will receive between $431 to $67.1 million.
Most of the payout comes from November settlements with the Herald, Primeo and Senator "feeder funds," which Picard accused of sending customer money to Madoff to further his Ponzi scheme.
The trustee said claimants on 1,160, or 52 percent, of the 2,216 accounts where he found valid claims have been fully paid.
Madoff, 76, is serving a 150-year prison term after pleading guilty to running a decades-long fraud that was uncovered in December 2008.
The $7.2 billion payout includes $823.7 million advanced by the Securities Investor Protection Corp, which helps liquidate failed brokerages.
Picard has recouped roughly $10.55 billion for Madoff victims, or about 60 percent of the estimated $17.5 billion of principal he estimates they lost.
Some of that money has been held back because of pending litigation, including by former Madoff customers who challenge Picard's authority to block their competing claims.
Picard has filed more than 1,000 lawsuits against feeder funds, and former customers he has labeled "net winners" because they took out more from Madoff's firm than they put in.
Through Sept. 30, 2014, law firms, consultants and other professionals had billed $1.01 billion in fees and expenses to recoup money for Madoff's victims, court papers show.
Federal bankruptcy judges have so far approved more than $601 million of payments, largely comprising fees, to Picard's law firm Baker & Hostetler.
Former U.S. Securities and Exchange Commission Chairman Richard Breeden oversees a separate $4.05 billion fund to compensate customers and third parties who lost money because of Madoff.
(Reporting by Jonathan Stempel in New York)
http://www.reuters.com/article/2015/02/09/us-madoff-payout-idUSKBN0LD1XQ20150209
Bernie Madoff: My late sons never forgave me
Jailed Ponzi schemer says living with pain he caused investors is 'nothing' compared to anguish he suffers from sons' deaths.
By JTA | Jan. 26, 2015 | 12:54 PM |
http://www.haaretz.com/jewish-world/jewish-world-news/1.639059
Bernie Madoff wrote that the pain he caused investors with his financial fraud was “nothing” compared to the anguish he has suffered from his sons’ deaths.
Madoff, who defrauded investors of billions of dollars in one of the largest Ponzi schemes in history, wrote in an email to NBC News Friday that his sons were unaware of his crimes and that they never forgave him.
“As difficult as it is for me to live with the pain I have inflicted on so many, there is nothing to compare with the degree of pain I endure with the loss of my son’s [sic] Mark and Andy,” he wrote. “I live with the knowledge that they never forgave me for betraying their love and trust. As much as I tried to reach out to them in an attempt to explain the circumstances that caused my betrayal they could not find it possible to forgive me.”
Mark Madoff committed suicide in December 2010, on the second anniversary of his father’s arrest. Andrew Madoff died last year from cancer.
Several large Jewish institutions and charities fell victim to the Madoff scheme. Madoff was convicted of fraud in 2009 and is serving a 150-year prison sentence.
In the letter, Madoff claims his sons were not involved in the scheme.
“What is still my most important goal is to do everything in my power to protect their legacy, although neither of my son’s [sic] were ever charged with anything,” he wrote.
http://www.haaretz.com/jewish-world/jewish-world-news/1.639059
U.S. prosecutors seek longer sentences for Madoff aides
By David Ingram
NEW YORK Sat Jan 10, 2015 7:38pm EST
http://www.reuters.com/article/2015/01/11/us-madoff-workers-idUSKBN0KK00E20150111?feedType=RSS&feedName=domesticNews
(Reuters) - U.S. prosecutors plan to ask an appeals court to review the prison sentences given to five former employees of Bernard Madoff, after earlier questioning whether the sentences were too short, according to court filings.
In filings late on Friday in U.S. District Court in Manhattan, prosecutors gave notice that they would be appealing the sentences to the 2nd U.S. Circuit Court of Appeals in New York but did not elaborate further.
One of the five former employees, former portfolio manager JoAnn Crupi, filed a separate notice that she planned to appeal her conviction and her sentence.
A prosecutor urged Judge Laura Taylor Swain in court last month to avoid issuing light sentences for the Madoff defendants so as not to set a precedent for unrelated fraud cases.
"Judges will have to explain how small-time crooks in front of them were worse than the defendants in this case," said Matthew Schwartz, an assistant U.S. attorney.
Prosecutors said the five employees helped Madoff bilk investors of billions of dollars in his massive Ponzi scheme by creating fake documents and backdating trades.
A jury in Manhattan convicted them in March 2014, and Swain sentenced them last month.
Former back office director Daniel Bonventre received 10 years in prison; portfolio manager Annette Bongiorno, six years; computer programmers Jerome O'Hara and George Perez, 2-1/2 years each; and Crupi, six years.
The government had requested more than 20 years for Bonventre and Bongiorno, more than eight for O'Hara and Perez and more than 14 for Crupi.
A lawyer for one of them defended the judge's decisions and called her a "courageous jurist."
"Judge Swain's sentences were handed down following her painstaking review of the record and her conscientious consideration of all of the appropriate sentencing factors," Larry Krantz, who represents Perez, said in an email to Reuters on Saturday.
A spokesman for the U.S. Attorney's Office in Manhattan declined to comment on Saturday. Attorneys for the four other former employees did not immediately respond to a request for comment.
Madoff is serving a 150-year prison term in North Carolina after pleading guilty in 2009 to running a scheme that cost investors an estimated $17 billion or more in principal.
(Reporting by David Ingram, Nate Raymond and Joseph Ax; editing by Andrew Hay)
http://www.reuters.com/article/2015/01/11/us-madoff-workers-idUSKBN0KK00E20150111?feedType=RSS&feedName=domesticNews
Ex-Madoff manager sentenced to six years prison for fraud
By Nate Raymond
NEW YORK Mon Dec 15, 2014 5:45pm EST
http://www.reuters.com/article/2014/12/15/us-madoff-workers-sentencing-idUSKBN0JT2GD20141215
(Reuters) - A former manager at Bernard Madoff's firm was sentenced to six years in prison on Monday for helping her now imprisoned boss carry out his multibillion dollar Ponzi scheme.
JoAnn Crupi, 53, was the last of five former Madoff employees to be sentenced after a Manhattan federal jury found them guilty in March in the first criminal trial over Madoff's decades-long fraud, which collapsed in 2008.
U.S. District Judge Laura Taylor Swain also ordered Crupi, who worked in Madoff's investment advisory business for 25 years, to forfeit a symbolic $33.9 billion jointly with other defendants who worked at Bernard L. Madoff Investment Securities LLC.
Swain said at sentencing that Crupi served as the "reassuring voice of Madoff Securities," enabling the "devastating effects" of the crime.
"She was compliant with everything and questioned little," Swain said.
The five employees are among 15 people who have pleaded guilty or been convicted at trial. Madoff is serving a 150-year prison term after pleading guilty in 2009 to running a scheme that cost investors an estimated $17 billion or more in principal.
Prosecutors said the five employees knowingly propped up Madoff's fraud by creating fake documents and backdating trades.
Prosecutors said Crupi, who managed accounts purporting to have a $900 million balance in 2008, helped generate fictitious trading data presented to firm clients.
Prosecutors had sought more than 14 years in prison for Crupi, who was convicted of securities, conspiracy and other charges with the other four employees.
But Swain imposed a more lenient term, as she did in sentencing the other employees, a trend a prosecutor last week said set a bad precedent.
Daniel Bonventre, Madoff's former back office director, was sentenced last Monday to the longest prison term, 10 years.
Annette Bongiorno, Madoff's former secretary and later a manager, received six years in prison, while computer programmers Jerome O'Hara and George Perez received 2-1/2 years in prison each.
Prosecutors sought more than 20 years for Bonventre and Bongiorno and more than eight for Perez and O'Hara.
The defendants, who are expected to appeal, have said Madoff deceived them into believing the business was legitimate.
Crupi told Swain on Monday that she had believed Madoff, who had discouraged her from learning about the securities industry.
"Knowing my work played a part in carrying out this horrible scheme will cause me shame and remorse for the rest of my life," Crupi said.
http://www.reuters.com/article/2014/12/15/us-madoff-workers-sentencing-idUSKBN0JT2GD20141215
Joann Crupi, a former manager at Bernard Madoff's firm, is sentenced to six years in prison: court hearing
Reuters Business @ReutersBiz · 4m4 minutes ago
https://twitter.com/ReutersBiz
Ex-Madoff computer programmer gets 2-1/2 years prison for fraud
By Nate Raymond
NEW YORK Wed Dec 10, 2014 4:24pm EST
http://www.reuters.com/article/2014/12/10/madoff-workers-sentencing-idUSL1N0TT1YX20141210
Dec 10 (Reuters) - A former computer programmer for Bernard Madoff was sentenced to 2-1/2 years in prison on Wednesday for helping the imprisoned fraudster carry out his multibillion dollar Ponzi scheme.
The sentencing of George Perez, who worked at Madoff's firm from 1991 until its collapse in 2008, came nine months after a Manhattan federal jury found him guilty and a day before the sixth anniversary of Madoff's arrest.
U.S. District Judge Laura Taylor Swain also ordered Perez to forfeit a symbolic $19.7 billion jointly with other defendants who worked at Bernard L. Madoff Investment Securities LLC.
"He must be punished in a way that's severe and commensurate with his crimes," she said.
Perez, 48, was the fourth of five former employees to be sentenced following their convictions in March on all counts, including securities fraud and conspiracy in the first criminal trial over Madoff's Ponzi scheme.
Perez told Swain he was "sad and tired," adding: "I'm terribly sorry for the role my work played."
Madoff is serving a 150-year prison term after pleading guilty in 2009 to running a scheme that cost investors more than an estimated $17 billion in principal.
Prosecutors said the employees knowingly propped up Madoff's fraud by creating fake documents and backdating trades. Prosecutors said Perez developed and maintained computer programs that enabled the fraud to multiply.
The defendants have said Madoff deceived them into believing his investment advisory business was legitimate. They are expected to appeal their convictions.
Daniel Bonventre, Madoff's former back office director, was sentenced Monday to 10 years in prison. On Tuesday, former Manager Annette Bongiorno and Computer Programmer Jerome O'Hara received six years and 2-1/2 years, respectively.
All the defendants received less prison time than requested by prosecutors, who in Perez's case had asked for more than eight years.
Matthew Schwartz, an assistant U.S. attorney, ahead of Perez being sentenced, urged Swain to avoid issuing further light sentences for the Madoff defendants to avoid setting a precedent in future fraud cases.
"Judges will have to explain how small-time crooks in front of them were worse than the defendants in this case," he said.
Swain nevertheless gave Perez a less-harsh sentence than prosecutors wanted, saying he was less culpable than other defendants.
Fifteen people have been convicted in connection with Madoff's fraud. A final defendant, former Portfolio Manager Joann Crupi, is scheduled to be sentenced next Monday. (Reporting by Nate Raymond in New York; Editing by Dan Grebler)
http://www.reuters.com/article/2014/12/10/madoff-workers-sentencing-idUSL1N0TT1YX20141210
U.S. judge sentences Madoff aide Bongiorno to six years in prison
By Nate Raymond
NEW YORK Tue Dec 9, 2014 1:08pm EST
http://www.reuters.com/article/2014/12/09/us-madoff-workers-sentencing-idUSKBN0JN20420141209
(Reuters) - A former manager at Bernard Madoff's firm was sentenced to six years in prison on Tuesday for helping the convicted fraudster carry out a Ponzi scheme that caused investors to lose billions of dollars.
Annette Bongiorno, who worked for Madoff from the 1960s until the firm's collapse in 2008, was the second of five former employees to be sentenced after being convicted in March of securities fraud, conspiracy and other charges in a Manhattan federal court.
U.S. District Judge Laura Taylor Swain also ordered Bongiorno, 66, to forfeit $155 billion, a symbolic amount for which she and the other defendants who worked at Bernard L. Madoff Investment Securities LLC would be jointly responsible.
The sentencing came a day after former Madoff operations director Daniel Bonventre was sentenced to 10 years in prison.
Swain said Bongiorno, who was indicted in 2010, was not a "coldly calculating participant" in her boss's Ponzi scheme, but willfully blinded herself to the "corrupt illogicality" of what was going on.
"She could and should have looked at what was in front of her," the judge said.
Prior to being sentenced, a tearful Bongiorno apologized to victims of Madoff's fraud, calling her own ignorance "so severe it caused me to become a criminal.
"I didn't know what was happening," she said. "I didn't mean to hurt you."
Prosecutors accused Bongiorno, Bonventre, former portfolio manager Joann Crupi and former computer programmers Jerome O'Hara and George Perez of helping Madoff hide his fraud from auditors, government regulators and the public through fake documents and bogus transactions.
The defendants have said Madoff deceived them into believing his investment advisory business was legitimate. They are expected to appeal their convictions.
Lawyers for Bongiorno had sought a sentence of eight to 10 years in prison.
O'Hara is expected to be sentenced later on Tuesday, Perez on Wednesday and Crupi next Monday.
Madoff is serving a 150-year prison term after pleading guilty in 2009 to running a scheme that cost investors more than an estimated $17 billion in principal.
Fifteen people have been convicted at trial or have pleaded guilty in connection with Madoff's fraud.
(Reporting by Nate Raymond in New York; Editing by Alden Bentley and Paul Simao)
http://www.reuters.com/article/2014/12/09/us-madoff-workers-sentencing-idUSKBN0JN20420141209
Madoff's ex-back office director gets 10 years in prison
By Nate Raymond and Joseph Ax
NEW YORK Mon Dec 8, 2014 2:21pm EST
http://www.reuters.com/article/2014/12/08/us-madoff-workers-sentencing-idUSKBN0JM20I20141208
(Reuters) - Bernard Madoff's former back office director was sentenced to 10 years in prison on Monday for helping the convicted fraudster conceal his massive Ponzi scheme for decades.
Daniel Bonventre, 67, is the first of five former Madoff employees to be sentenced over the next week, nine months after their conviction by a Manhattan federal jury of securities fraud, conspiracy and other charges.
U.S. District Judge Laura Taylor Swain also ordered Bonventre to forfeit more than $155 billion, a symbolic sum for which he would and the other defendants who worked at Bernard L. Madoff Investment Securities LLC would be jointly responsible.
"Mr. Bonventre, you lived a prestigious and luxurious life," Swain said at a hearing. "We now all know it was supported by a massive fraud."
In the first criminal trial stemming from Madoff's fraud, Bonventre was found guilty in March of all counts, as were former portfolio managers Annette Bongiorno and Joann Crupi and former computer programmers Jerome O'Hara and George Perez.
Madoff is serving a 150-year sentence after pleading guilty to running the unprecedented scheme, which cost investors more than an estimated $17 billion in principal losses.
Prosecutors accused the five aides of helping Madoff to hide his fraud from auditors, government regulators and the public through fake documents and bogus transactions.
The employees' lawyers said Madoff fooled their clients into believing the investment advisory business at his firm was legitimate.
"I was used by the ultimate con man," Bonventre told Swain on Monday.
But prosecutors called Bonventre one of the "core perpetrators of the massive fraud" and sought a sentence of more than 20 years in prison.
Prosecutors said Bonventre helped Madoff create false documents to deceive auditors and facilitated the transfer of nearly $800 million in clients' money from the fraudulent asset management unit to the firm's failing market-making and proprietary trading businesses.
Prosecutors also said Bonventre committed fraud while helping Madoff file false tax returns.
Bonventre's lawyers asked for home confinement or at most a short prison sentence, saying he was essentially a victim of a psychopath with a talent for deception.
In a surprise move, he took the witness stand during the trial, testifying that he had simply followed orders.
Fifteen people have been convicted in connection with the fraud. Bongiorno and O'Hara are scheduled for sentencing on Tuesday.
(Reporting by Nate Raymond and Joseph Ax; Editing by Lisa Von Ahn)
http://www.reuters.com/article/2014/12/08/us-madoff-workers-sentencing-idUSKBN0JM20I20141208
Madoff trustee loses appeal on clawbacks
By Jonathan Stempel
NEW YORK Mon Dec 8, 2014 11:21am EST
http://www.reuters.com/article/2014/12/08/madoff-appeal-payouts-idUSL1N0TS11020141208
(Reuters) - Victims of Bernard Madoff's fraud may recover less money than they had hoped after a federal appeals court limited the ability of the trustee liquidating the swindler's firm to recoup "fictitious profits" and other transfers from other customers.
The 2nd U.S. Circuit Court of Appeals in New York on Monday said federal bankruptcy law did not let the trustee Irving Picard recoup a variety of securities-related payments that Bernard L. Madoff Investment Securities LLC made to customers before it collapsed on Dec. 11, 2008.
"Permitting the clawback of millions, if not billions, of dollars from BLMIS clients - many of whom are institutional investors and feeder funds - would likely cause the very 'displacement' that Congress hoped to minimize," Circuit Judge Barrington Parker wrote for a three-judge panel. "The interpretation pressed by the trustee risks the very sort of significant market disruption that Congress was concerned with."
A spokeswoman for Picard had no immediate comment.
Picard, who has recouped about $10.5 billion, had sought the ability to claw back money sent to various customers in the six years before Madoff's firm went bankrupt.
Those customers, in contrast, said federal law limited Picard to recoup money only from the last two years, and only if payments were made with fraudulent intent.
They claimed not to have known Madoff was a fraud, and that taking money from them would provide a windfall to others.
"I am delighted," Richard Levy, a Pryor Cashman partner representing some of these customers, said about the decision in a phone interview. "It will benefit so many people."
The case turned on a "safe harbor" provision of the U.S. Bankruptcy Code that protects customers who receive transfers from stockbrokers that are made "in connection with a securities contract" or are "settlement payments."
While Madoff did not trade securities for many customers, U.S. District Judge Jed Rakoff in Manhattan ruled in a series of cases in 2011 and 2012 that transfers made more than two years before the bankruptcy could not be clawed back by Picard.
Picard's lawyer, David Sheehan, had argued that Madoff's shenanigans simply involved moving money from one customer to another, and was not what Congress meant to regulate.
The cases are Picard v. Ida Fishman Revocable Trust et al, 2nd U.S. Circuit Court of Appeals, Nos. 12-2497, 12-2500, 12-2557, 12-2616, 12-3422, 12-3440, 12-3582 and 12-3585.
http://www.reuters.com/article/2014/12/08/madoff-appeal-payouts-idUSL1N0TS11020141208
Madoff Aide Hired in 1960s Will Be First to Learn Fate
By Erik Larson - Dec 6, 2014
http://www.bloomberg.com/news/2014-12-06/madoff-aide-hired-in-1960s-will-be-first-to-learn-fate.html
Daniel Bonventre, one of five former Bernard Madoff employees convicted for aiding his $17.5 billion fraud, will be first to learn his fate at a sentencing hearing almost exactly six years after his ex-boss’s arrest.
The punishment will be handed down in Manhattan Dec. 8 by U.S. District Judge Laura Taylor Swain, who oversaw a five-month trial that ended in a total victory for prosecutors in March.
Jurors agreed that the five ex-colleagues used a web of fake account documents, phony regulatory filings and bogus computer programs to keep the biggest U.S. Ponzi scheme afloat. The decades-long scam finally collapsed during the financial crisis with Madoff’s confession and arrest on Dec. 11, 2008.
“I hope the sentences will provide an outlet for some of the rage, pain and desire for justice so many of the victims have been clamoring for,” said Julian Moore, a former prosecutor who worked on the Madoff case from 2010 to 2013 and is now a senior managing director at K2 Intelligence, a risk analytics firm in New York. “For many, their lives as they knew them were destroyed.”
The three men and two women have been free on bail since a federal jury found them guilty of securities fraud and related counts. The group continues to deny wrongdoing.
Bonventre, 67, was Madoff’s director of operations and ran the firm’s broker-dealer business for almost 40 years. He was one of two defendants in the case who took the witness stand during the trial, a move later criticized by jurors who said he came off as a liar in denial about his actions.
Swain will hand down sentences over a week-long period. She repeatedly delayed the hearings as lawyers squabbled over details of the case, including how much money the former staffers should be ordered to forfeit.
Madoff Five
The four other defendants are Annette Bongiorno, 67, who ran the investment advisory unit at the center of the fraud; Joann Crupi, 54, who managed large accounts; and computer programmers George Perez, 48, and Jerome O’Hara, 51, who automated the scam as it grew rapidly in the 1990s.
In court filings, the U.S. Probation Office said the crimes warranted 20-year terms for Bongiorno and Bonventre; 14 years for Crupi; and eight years each for Perez and O’Hara.
The government has urged Swain to issue harsher sentences, arguing the defendants remain unapologetic and refuse to come to terms with their complicity in Madoff’s scam.
Defense lawyers, in separate court filings, have asked for leniency, arguing their clients were found guilty by association with Madoff and were brought down by a tainted jury process and prosecutorial misconduct during the trial.
‘Symbolic’ Terms
The proposed sentences are already longer than normal for white-collar crimes, and for some of the defendants they amount to “symbolic” life sentences, said Samuel Buell, a former federal prosecutor who is now a professor at Duke University School of Law in Durham, North Carolina.
“Most people would not think a life sentence or the equivalent should be routine in a white-collar case,” Buell said in a phone interview. “If so, what’s left for the murderers, the mafia and the terrorists?”
Jurors who spoke after the verdict said they believed the defendants were lying to the court and themselves when they argued they were duped by Madoff and didn’t have enough education in the industry to recognize the fraud.
One juror described the group as Madoff’s willing “soldiers” and the con man as their “commander.”
Prosecutors showed the jury extensive evidence of the defendants receiving millions of dollars in compensation and unusual bonuses, as well as unlimited use of company credit cards for personal expenses, including tropical cruises, wine collections, Manhattan apartments and family vacations.
Celebrities, Charities
The fraud, hatched in the 1970s, targeted thousands of wealthy investors, celebrities, retirees and Jewish charities. It unraveled in 2008 when the economic crisis triggered more withdrawals than Madoff could pay. In addition to $17.5 billion in principal, the collapse erased about $47 billion in fake profit that customers thought was being held in their accounts.
Some clients learned they lost their life savings after Madoff’s confession and arrest by federal agents, leading to criticism of regulators who repeatedly overlooked the scam. Madoff, 76, pleaded guilty in 2009 and is serving 150 years in a North Carolina prison.
“There’s a severity to this kind of victimization that makes it feel more like a theft or a violent crime than your typical fraud case,” Buell said.
‘Stunning’ Acts
The five worked in concert, the jury found, to create millions of fake trade confirmations and account statements for thousands of clients, and fashioned an extensive, phony paper trail that repeatedly duped outside auditors and the U.S. Securities and Exchange Commission.
“The trial revealed stunning illegal acts by each of the defendants to ensure the fraud continued, and thrived,” said Moore, the former prosecutor.
As of November, the cost of liquidating Madoff’s company in bankruptcy court topped $1 billion for six years of work by hundreds of lawyers and forensic accountants. The fees and expenses are being paid by the industry financed Securities Investor Protection Corp., which has also pitched in hundreds of millions of dollars to help repay victims.
The trustee overseeing the process, Irving Picard, surpassed $10 billion in recoveries for victims last month, mostly through settlements with Madoff’s biggest customers who withdrew more money from their accounts than they put in. Picard also reached a $325 million accord with Madoff’s bank, JPMorgan Chase & Co. (JPM), which he accused of negligence for failing to recognize the fraud and profiting from the con man’s business.
Others Guilty
The sentencing hearings for the five ex-workers won’t be the last in the case. Former employees who pleaded guilty, some of whom cooperated with prosecutors, are due to be sentenced next year. They include Madoff’s former accountant, Paul Konigsberg; Madoff’s ex-controller, Enrica Cotellessa-Pitz; and Frank DiPascali, his former finance chief.
Madoff’s brother, Peter Madoff, who also worked for the company, pleaded guilty in the case and is serving a 10-year term.
Prosecutors have said longer sentences are needed in the Madoff case to deter fraud in the securities industry. That doesn’t always work, according to Alfredo Mendez, a former state and federal prosecutor who now defends white-collar criminals in New York and isn’t involved in the case.
“In a case of this magnitude, victims want restitution and they also want to see the people involved in the scheme be punished -- that’s human nature,” he said.
Long sentences “might have a deterrent effect on certain people, but is it going to stop the Bernie Madoffs of this world from doing it? I don’t think so,” Mendez said. “There’s an aspect of human nature called greed and it will remain as long as we’re on this earth.”
The case is U.S. v. O’Hara, 10-cr-00228, U.S. District Court, Southern District of New York (Manhattan).
To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net
To contact the editors responsible for this story: Andrew Dunn at adunn8@bloomberg.net Michael Hytha
http://www.bloomberg.com/news/2014-12-06/madoff-aide-hired-in-1960s-will-be-first-to-learn-fate.html
Five ex-Madoff aides face up to 20 years in prison
By Joseph Ax
NEW YORK Sun Dec 7, 2014 1:14am EST
http://www.reuters.com/article/2014/12/07/us-madoff-workers-idUSKBN0JL04V20141207
NEW YORK (Reuters) - Five former employees of Bernard Madoff, convicted in March of helping the fund manager bilk investors of billions of dollars in his massive Ponzi scheme, will be sentenced this week, with prosecutors seeking prison terms of up to 20 years.
Like the six-month trial, one of the longest white-collar trials in recent memory, the sentencings will take time, stretching out over a week in four separate hearings.
The sentencings have been delayed for months, as defense lawyers fought the government's demand that the three men and two women should be ordered to pay billions of dollars in forfeiture they say they don't have.
First up on Monday is former back office director Daniel Bonaventure, followed in the coming days by portfolio manager Annette Bongiorno, computer programmers Jerome O’Hara and George Perez and portfolio manager Joann Crupi.
The five aides were convicted on all counts, including conspiracy and fraud charges, by a federal jury in March. Prosecutors said they knowingly propped up Madoff's fraud by creating fake documents and backdating trades.
The government has requested more than 20 years for Bonaventure and Bongiorno, more than 14 for Crupi and more than eight for O’Hara and Perez.
Defense lawyers have asked U.S. District Judge Laura Taylor Swain to show leniency. At trial, they argued that Madoff duped their clients into believing his investment advisory business was legitimate.
Attorneys for Bongiorno are seeking eight to 10 years, while lawyers for Bonaventure, Perez and O’Hara asked for home confinement or brief imprisonment. Cru pi's lawyers have also asked for a shorter sentence than the government requested.
Prosecutors also have demanded more than $150 billion in forfeiture. While the aides are unable to pay that amount, the size of the forfeiture could affect whether their relatives must relinquish certain assets stemming from their earnings at the firm.
Fifteen people have been convicted in connection with the fraud, estimated to have cost investors more than $17 billion in principal.
Madoff is serving a 150-year sentence after pleading guilty in 2009. His son Andrew Madoff died in September after a long battle with cancer. His other son, Mark, committed suicide in 2010 on the second anniversary of his father’s arrest.
Both brothers, who worked at the firm, always maintained they had no knowledge of the fraud.
(Reporting by Joseph Ax; Editing by Noeleen Walder and David Gregorio)
http://www.reuters.com/article/2014/12/07/us-madoff-workers-idUSKBN0JL04V20141207
Judge Approves Madoff Settlement, New Deal Reached
Millions to Flow to Victims of Bernard Madoff’s Ponzi Scheme
By Sara Randazzo
Updated Nov. 18, 2014 3:25 p.m. ET
http://online.wsj.com/articles/judge-approves-multimillion-dollar-madoff-settlement-1416327515?KEYWORDS=madoff
An investment fund that parked all of its money with Bernard Madoff has agreed to give up $95 million for the benefit of Mr. Madoff’s victims in the second major settlement announced this week by the court-appointed official tracking down money tied to the biggest Ponzi scheme ever.
The settlement with Senator Fund SPC, announced Tuesday, follows a $497 million deal announced Monday that will collect money from Herald Fund SPC and Primeo Fund, two other funds that invested with Mr. Madoff, who is currently serving a 150-year prison sentence. Both deals are subject to bankruptcy-court approval.
Also Tuesday, Judge Stuart Bernstein of the U.S. Bankruptcy Court in Manhattan signed off on a settlement with real-estate developer Edward Blumenfeld and related parties, who have agreed to pay $32.75 million in cash and to surrender a $29.35 million claim against Mr. Madoff’s investment firm.
Irving Picard , the official who in December 2008 was tasked with paying back Mr. Madoff’s victims, has to date collected or reached deals to collect approximately $10.5 billion of the $17.3 billion in principal investors lost upon the collapse of the Ponzi scheme. Of the recovered funds, nearly $6 billion has been returned to investors.
The Senator agreement represents 100% of the principal Senator withdrew from Mr. Madoff’s investment firm. Because Senator put in more money than it took out, the fund will receive a $238.75 million claim against Mr. Madoff’s firm. The first $95 million it is in line to receive as a creditor will go toward paying the amount due under the settlement.
A representative for Senator said Tuesday that the fund is “glad to have reached a resolution” and “looks forward to putting the litigation behind it.” As part of the deal, Senator has also agreed to split with Mr. Picard any proceeds it receives from other Madoff-related claims.
In the Blumenfeld deal, Howard Simon, an attorney for Mr. Picard, said in court Tuesday that reaching the agreement “has been an arduous two-year process of mediations and negotiations resulting in a heavily negotiated but ultimately very beneficial settlement.”
That settlement, Mr. Simon said, is the best way to ensure the money can be collected from Mr. Blumenfeld, his New York real-estate company and his family. The deal resolves litigation that Mr. Picard brought in December 2010 to recover the $88 million Mr. Blumenfeld and the other defendants received from Mr. Madoff in the six years before his arrest, including $27 million in false profits. The lawsuit also sought to knock out the claims the defendants brought against Mr. Madoff’s firm.
Mr. Blumenfeld and his fellow defendants disputed the lawsuit and denied they received the payments from Mr. Madoff’s investment firm with any knowledge or suspicion of fraud.
The defendants’ release of their $29.35 million in claims against Mr. Madoff’s investment firm gives Mr. Picard the right to collect on those claims and turn over the proceeds to investors.
—Jacqueline Palank contributed to this article.
Write to Sara Randazzo at sara.randazzo@wsj.com
http://online.wsj.com/articles/judge-approves-multimillion-dollar-madoff-settlement-1416327515?KEYWORDS=madoff
Madoff Son Andrew Leaves More Than $15 Million in Will
By Chris Dolmetsch
Sep 12, 2014 12:01 AM GMT-0400
http://www.bloomberg.com/news/2014-09-11/andrew-madoff-leaves-15-million-to-family-fiancee.html
Andrew Madoff, the son of convicted Ponzi schemer Bernard Madoff, left more than $15 million in property to his children, wife and fiancee in his will following his death from lymphoma this month.
Andrew Madoff listed $11 million in personal property and $4.5 million in improved real property in his will, which was filed two days ago with Surrogate’s Court in Manhattan and made public yesterday.
Madoff left all of his tangible personal property to his daughters, Emily and Anne, and one-third of his estate to his estranged wife, Deborah West, according to the will. The rest goes to his fiancee, Catherine Hooper. Ruth Madoff, his mother, isn’t listed as a beneficiary.
Andrew Madoff died Sept. 2 at Memorial Sloan Kettering Cancer Center in New York after battling mantle cell lymphoma, his attorney, Martin Flumenbaum, said in a statement. Flumenbaum didn’t immediately return a voice-mail message left at his office after regular business hours seeking comment on the will.
As heads of the trading desk at Bernard L. Madoff Investment Securities LLC, Madoff and his older brother, Mark, led the market-making business of the once-respected firm while their father, based on another floor, handled client investments.
Falsified Statements
The firm’s clients invested $17.5 billion in principal and were led to believe, through falsified statements and trade confirmations, that they had a total of $64.8 billion in their accounts. Irving Picard, the trustee appointed to collect money for victims of the fraud, had recovered $9.8 billion as of July to partially reimburse clients who lost money.
On Dec. 10, 2008, the brothers contacted the Federal Bureau of Investigation to expose their father’s long-running fraud. The brothers called the FBI, they said, only hours after first learning of the fraud from their father, who confessed to them because his investment-management business was being inundated with redemption orders he couldn’t fill.
Bernard Madoff is serving a 150-year term in federal prison in North Carolina.
Though sued for millions of dollars, the brothers were never charged with complicity in the fraud, or with any other wrongdoing, although they never shed public suspicions that they were involved in their father’s scheme.
Mark Madoff committed suicide on Dec. 11, 2010, the second anniversary of his father’s arrest.
Andrew Madoff, in April 2013, disclosed the recurrence of his mantle cell lymphoma, a form of cancer for which he had been treated in 2003. He underwent a stem-cell transplant in May 2013, following chemotherapy and radiation.
Picard sought $73.8 million in repayment from Andrew Madoff, part of $255.3 million he targeted from Madoff family members who, he said, used money from the firm to “fund personal business ventures and personal expenses such as homes, cars and boats.”
To contact the reporter on this story: Chris Dolmetsch in New York State Supreme Court in Manhattan at
cdolmetsch@bloomberg.net
To contact the editors responsible for this story: Michael Hytha at mhytha@bloomberg.net Andrew Dunn
http://www.bloomberg.com/news/2014-09-11/andrew-madoff-leaves-15-million-to-family-fiancee.html
When a former client’s secretary was arrested for embezzlement years before his own crimes were uncovered, Bernie Madoff commented to his own secretary, “Well, you know what happens is, it starts out with you taking a little bit, maybe a few hundred, a few thousand. You get comfortable with that, and before you know it, it snowballs into something big.”
We now know that Madoff’s Ponzi scheme started when he engaged in misreporting to cover relatively small financial losses. Over a 15-year period, the scam grew steadily, eventually ballooning to $65 billion, even as regulators and investors failed to notice the warning signs.
[...]
More -
How Unethical Behavior Becomes Habit
by Francesca Gino, Lisa D. Ordóñez and David Welsh | 11:00 AM September 4, 2014
http://blogs.hbr.org/2014/09/how-unethical-behavior-becomes-habit/?utm_source=Socialflow&utm_medium=Tweet&utm_campaign=Socialflow
Andrew Madoff, Who Told of His Father’s Swindle, Dies at 48
By DIANA B. HENRIQUESSEPT. 3, 2014
http://www.nytimes.com/2014/09/04/business/andrew-madoff-son-of-convicted-financier-dies-at-48.html?_r=0
Andrew H. Madoff, the last surviving son of the convicted swindler Bernard L. Madoff, died on Wednesday in a Manhattan hospital, where he had been undergoing treatment for cancer. He was 48.
A family lawyer, Martin Flumenbaum, said the cause was mantle-cell lymphoma, for which Mr. Madoff had been treated since early 2013. His older brother, Mark, committed suicide in 2010.
The two brothers attracted worldwide attention in December 2008 after they alerted federal agents that their father, a respected Wall Street statesman, had confessed to them that his private investment management business was a vast Ponzi scheme. Based on that report, the senior Mr. Madoff was arrested the next morning, Dec. 11, 2008.
After the arrest, it became clear that his fraud was one of the largest Ponzi schemes in history, with paper losses of almost $65 billion, cash losses of about $17 billion and tens of thousands of victims ranging from Swiss private bankers to labor union pension funds to notable charities and universities.
Bernard Madoff, 76, pleaded guilty in March 2009 and is serving a 150-year sentence in a federal prison in North Carolina.
Andrew Madoff was born on April 8, 1966, and grew up in Roslyn, on Long Island. He joined his father’s closely held wholesale trading house, Bernard L. Madoff Investment Securities, right after graduating from the Wharton School at the University of Pennsylvania in 1988. He worked alongside his brother at the firm’s trading desk in the Lipstick Building, on Third Avenue near 53rd Street, two floors away from the secretive money management operation at the heart of his father’s long-running fraud.
After Bernard Madoff’s arrest, both sons denied any knowledge of the scheme, which federal prosecutors later said had probably begun when they were children. No criminal charges were ever filed against them.
But civil litigation filed by the bankruptcy trustee seeking assets for their father’s victims accused them of knowing about the fraud or deliberately turning a blind eye to it. In the only judgment rendered so far, a British judge in 2013 rejected the trustee’s case there against the Madoff sons, affirming their “honesty and integrity” and ruling that there was no evidence that they were involved in the crime.
Neither of his sons ever visited the senior Mr. Madoff after his arrest, and just last year, Andrew Madoff told a writing seminar at Princeton University, “My father is dead to me.” In an earlier interview, he told The New York Times that his father’s fraud was “a father-son betrayal of biblical proportions.”
But the suspicion and harsh publicity that followed the arrest became a heavy burden for the family. In December 2010, on the second anniversary of the arrest, Mark Madoff hanged himself in his Manhattan apartment, sending a last note to Mr. Flumenbaum contending that “no one wants to believe the truth.”
Andrew, too, acknowledged the damage the case inflicted on him, blaming it for the return in December 2012 of the cancer he had fought off in 2003. “One way to think of this is the scandal and everything that happened killed my brother very quickly,” he said in a People magazine interview last year. “And it’s killing me slowly.”
But unlike his brother, Andrew refused to cringe from the spotlight or hide from critics. He helped his fiancée, Catherine Hooper, build a consulting firm to advise others on dealing with life-shattering developments. He joined with Ms. Hooper and his mother, Ruth Madoff, in promoting an authorized family biography, which was published in fall 2011. When his cancer returned, he detailed his experience with stem-cell transplant treatments in a private blog made available to family and friends.
After a series of optimistic reports, the final blog post, dated Aug. 9, noted that he had been hospitalized again but also said that he and Ms. Hooper had taken advantage of the summer’s beautiful weather to take several hiking trips. “Getting away from the city crowds and breathing fresh, clean air is a godsend for me,” he wrote. “I can feel my body healing as I drink it in.”
Besides his fiancée, Mr. Madoff is survived by his mother, his father and two daughters from a former marriage, Anne and Emily.
A version of this article appears in print on September 4, 2014, on page B19 of the New York edition with the headline: Andrew Madoff, Son of Convicted Financier, Dies at 48. O
http://www.nytimes.com/2014/09/04/business/andrew-madoff-son-of-convicted-financier-dies-at-48.html?_r=0
Madoff clients stiffed in $410M settlement
By Reuters
August 8, 2014 | 9:26pm
http://nypost.com/2014/08/08/madoff-clients-stiffed-in-410m-settlement/
In a setback for the trustee seeking money for the former customers of imprisoned fraudster Bernard Madoff, an appeals court refused to void two settlements benefiting investors who sued “feeder funds” that sent their money to Madoff.
Friday’s unanimous decision by a three-judge panel of the 2nd US Circuit Court of Appeals in New York leaves intact a $410 million settlement with J. Ezra Merkin, a Wall Street hedge fund manager who oversaw the Ariel Fund and Gabriel Capital, and an $80 million settlement with Fairfield Greenwich.
The Merkin settlement had been negotiated by New York Attorney General Eric Schneiderman and also resolved claims by Bart Schwartz, the receiver of the Ariel and Gabriel funds.
Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities, claimed the settlements impeded his ability to recoup fraudulent transfers that Madoff made to Merkin and Fairfield, and that belong to the firm’s estate.
http://nypost.com/2014/08/08/madoff-clients-stiffed-in-410m-settlement/
U.S. judge won't overturn convictions of five ex-Madoff employees
NEW YORK, July 24 Thu Jul 24, 2014 3:48pm EDT
http://www.reuters.com/article/2014/07/24/madoff-employees-idUSL2N0PZ2K820140724
NEW YORK, July 24 (Reuters) - The federal judge who oversaw the trial of five associates of imprisoned swindler Bernard Madoff refused to overturn their convictions for helping their former boss run one of the world's biggest Ponzi schemes.
U.S. District Judge Laura Taylor Swain said on Thursday there was sufficient evidence for jurors to have convicted back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi, and computer programmers Jerome O'Hara and George Perez on all counts they faced, including securities fraud and conspiracy to defraud.
Swain also rejected the defendants' alternative argument that they deserved a new trial because prosecutors made improper remarks during their opening and closing statements.
The defendants were convicted on March 24, and are scheduled to be sentenced in mid-September. (Reporting by Jonathan Stempel in New York; Editing by Phil Berlowitz)
http://www.reuters.com/article/2014/07/24/madoff-employees-idUSL2N0PZ2K820140724
Judge dismisses suit claiming JPMorgan knew of Madoff fraud
NEW YORK Wed Jul 23, 2014 8:13pm EDT
http://www.reuters.com/article/2014/07/24/us-jpmorgan-madoff-idUSKBN0FS2JX20140724?feedType=RSS&feedName=businessNews
(Reuters) - A U.S. federal judge on Wednesday dismissed a shareholders' lawsuit claiming JPMorgan Chase & Co board members knew about Bernard Madoff's Ponzi scheme and ignored red flags signaling his massive fraud.
The lawsuit filed in February alleged that Chief Executive Jamie Dimon and 12 other current and former executives and directors turned "a blind eye to Madoff's thievery."
The claims were based partly on statements Madoff gave in a series of interviews - including conversations with plaintiffs lawyers while in federal prison in North Carolina - about his interactions with the bank. Madoff was an important client of the bank for two decades.
Judge Paul Crotty ruled there were not enough specific facts to prove the board breached their duties to shareholders.
"Any alleged red flags are insufficient to demonstrate bad faith on the part of the outside directors," Crotty wrote in his opinion.
JP Morgan spokeswoman Kristen Chambers said the bank declined to comment. An attorney for the plaintiffs did not immediately respond to a request for comment.
The lawsuit, filed in New York federal court, was brought by the Steamfitters Local 449 Pension Fund in Pittsburgh and Central Laborers' Pension Fund in Jacksonville, Illinois, both shareholders of JPMorgan.
The action came after JPMorgan agreed to pay $2.6 billion to settle other lawsuits over its Madoff dealings.
In those accords JPMorgan entered a "deferred prosecution agreement," or DPA, to resolve criminal charges, under which the bank acknowledged its responsibility for failing to stop Madoff before his scheme surfaced publicly in December 2008.
Madoff, 76, is serving a 150-year prison term after pleading guilty to fraud in March 2009.
The case is Central Laborers' Pension Fund et al v. Dimon et al, U.S. District Court, Southern District of New York, No 14-01041.
(Reporting by Mica Rosenberg and Jonathan Stempel; Editing by Eric Walsh)
http://www.reuters.com/article/2014/07/24/us-jpmorgan-madoff-idUSKBN0FS2JX20140724?feedType=RSS&feedName=businessNews
Exclusive: Accountant's plea signals more possible scrutiny of Madoff son
By Joseph Ax
NEW YORK Tue Jul 8, 2014 3:33pm EDT
http://www.reuters.com/article/2014/07/08/us-madoff-son-idUSKBN0FD2AH20140708?feedType=RSS&feedName=businessNews
(Reuters) - U.S. prosecutors may still be building a case against imprisoned swindler Bernard Madoff's only surviving son, who according to sources was one of the "co-conspirators" mentioned in a plea deal by a Madoff associate last month.
Two sources familiar with the Madoff case confirmed to Reuters that people identified only as "co-conspirators" in statements and court documents at accountant Paul Konigsberg's June 24 plea hearing are Madoff's sons, Mark and Andrew, who were employees of the Madoff investment firm.
Mark Madoff committed suicide in December 2010 at the age of 46 on the second anniversary of Bernard Madoff's arrest. Andrew Madoff, 48, spoke publicly last year about his battle with stage-four blood cancer, though his current health is unclear.
Andrew Ehrlich, a lawyer for Andrew Madoff and Mark Madoff's estate, declined to comment on the case.
Speculation about whether the sons knew of their father's decades-long, worldwide fraud has persisted since its collapse. They have denied any involvement in the scheme, which is estimated to have cost investors $17 billion in principal.
A spokesman for Manhattan U.S. Attorney Preet Bharara said only that the Madoff investigation continues, including efforts to recover assets for victims of the Ponzi scheme, in which the money of new investors was used to pay returns to earlier clients.
Last September, The New York Times reported that prosecutors had examined Andrew Madoff's conduct. But the Konigsberg case is the first signal in months that the government may still be contemplating charges.
Konigsberg signed a deal to cooperate with prosecutors as part of his plea. With no charges pending against anyone else, the deal, coupled with the references to the Madoff sons as co-conspirators, suggests prosecutors hope Konigsberg may be able to provide evidence against Andrew Madoff, a legal expert said.
"It certainly does indicate that the government thinks they committed crimes," said Robert Anello, a white-collar defense lawyer not involved in the case. "If they haven’t already been charged, it would certainly make you sit up and take notice if you’re their lawyers."
That said, prosecutors sometimes refer to co-conspirators in court filings, but may not end up charging them if they do not have enough evidence, Anello added.
Bernard Madoff, 76, is serving a 150-year prison sentence after pleading guilty in March 2009. Konigsberg, who provided accounting services for some of Madoff's biggest clients, was the 15th person to be convicted in connection with the fraud.
UNPAID LOANS
Like most defendants pleading guilty, Konigsberg was required to tell a judge what he had done wrong, acknowledging he filed tax returns for various Madoff clients based on altered customer statements.
He said he was unaware of the Ponzi scheme, however, and prosecutors said he had not intended to assist in the broader fraud. But after admitting his guilt, Konigsberg added an unusual statement concerning actions he said he took that were perfectly legal.
He said he gave Madoff "accurate and proper" tax advice regarding money Madoff wished to transfer to two unidentified "co-conspirators" who worked at his firm. Konigsberg said he told Madoff the money would be tax-free if structured as loans, as long as the loans were repaid, and referred Madoff to a lawyer to help him do so.
Assistant U.S. Attorney Matthew Schwartz said Madoff and the co-conspirators then used the "accurate" advice to set up tax-free loans that were never intended to be repaid.
Prosecutors also referred to the loans in a court filing containing the charges against Konigsberg.
Between roughly 1995 and 2008, Madoff transferred more than $20 million to each of the co-conspirators through these loans, "which resulted in the payment of no additional taxes" by Madoff and the co-conspirators, the filing said.
Since the outset of the case and during the search to recover money, criminal and civil investigators have scrutinized the loans while trying to determine what family members knew. Another relative who worked at the firm, Bernard Madoff's brother Peter, pleaded guilty and was sentenced to 10 years in prison in 2012.
In forfeiture proceedings filed against Bernard Madoff in 2009, prosecutors sought to seize promissory notes for loans he and his wife made to Andrew and Mark for more than $30 million in total.
Meanwhile, Irving Picard, the trustee in charge of recovering assets for Madoff’s victims, has sued Mark and Andrew Madoff, claiming they collected millions of dollars through sham loans that were essentially tax-free gifts from the mid-1990s to 2008.
Picard asserted that Andrew Madoff collected nearly $75 million from the Madoff firm, including $13 million in unpaid loans. Picard also has sought to seize several homes owned by the brothers, including apartments in Manhattan and houses in Greenwich, Connecticut.
Apart from the loans, the Konigsberg document refers to a 2002 transaction in which the two co-conspirators, along with Konigsberg, Bernard Madoff, Peter Madoff and another person, donated property to a charity to secure a tax deduction.
The donation was legitimate, but according to the Konigsberg filing, former Madoff portfolio manager Annette Bongiorno backdated fake trades in the two co-conspirators' accounts to ensure their gross income was high enough to take a deduction of more than $2 million.
A similar-sounding transaction involving the two sons came up during the trial of Bongiorno and four other Madoff aides last year, who were all eventually convicted. Former Madoff accountant David Friehling testified that he and Bernard Madoff once discussed making sure that Mark and Andrew had enough gross income to take a full deduction on a "large charitable donation."
(Editing by Eric Effron, Amy Stevens and Noeleen Walder; Grant McCool)
http://www.reuters.com/article/2014/07/08/us-madoff-son-idUSKBN0FD2AH20140708?feedType=RSS&feedName=businessNews
Madoff, Stanford fraud victims refused appeals by U.S. top court
By Jonathan Stempel
June 30 Mon Jun 30, 2014 9:51am EDT
http://www.reuters.com/article/2014/06/30/usa-court-madoff-stanford-idUSL2N0P80LD20140630
(Reuters) - Victims of the Ponzi schemes of Bernard Madoff and Allen Stanford, two of the largest in U.S. history, suffered setbacks on Monday as the U.S. Supreme Court refused to hear appeals in two cases seeking to recoup more money for them.
In the Madoff case, the court rejected a request by Irving Picard, the trustee liquidating Bernard L. Madoff Investment Securities LLC, to review the dismissal of his claims against banks he accused of enabling Madoff's fraud.
Separately, the court rejected a request by Ralph Janvey, a receiver unwinding Stanford's businesses, to review a ruling that blocked him from pursuing claims against Stanford employees on behalf of the receivership's creditors, not the businesses themselves.
In both cases, lower courts concluded that Picard and Janvey lacked standing to bring their respective claims.
The Supreme Court did not give reasons for its decisions, which leave intact a June 2013 ruling in the Madoff case by the federal appeals court in New York, and an August 2013 ruling in the Stanford case by the federal appeals court in New Orleans.
Representatives for Picard and Janvey were not immediately available to comment.
Picard has recovered about $9.82 billion for former Madoff customers, who he has estimated lost $17.5 billion of principal in a decades-long fraud uncovered in December 2008. A Ponzi scheme is one in which the early investors are usually paid high returns using money from later investors.
Picard had sued banks including JPMorgan Chase & Co, Britain's HSBC Holdings Plc, Italy's UniCredit SpA and Switzerland's UBS AG over their dealings with Madoff.
JPMorgan, which was Madoff's main bank, was dropped from the case after reaching a $325 million settlement with Picard in January, part of a $2.6 billion global resolution of federal and private Madoff claims.
Stanford's estimated $7.2 billion fraud was based on the sale of bogus certificates of deposit issued by Antigua-based Stanford International Bank to customers who thought the CDs were safe. The Ponzi scheme was uncovered in February 2009.
Janvey won court approval for an initial $55 million distribution to CD investors in April 2013.
Madoff, 76, is serving a 150-year prison term after pleading guilty in March 2009. Stanford, 64, is serving a 110-year term following his jury conviction in March 2012.
The cases are Picard v. JPMorgan Chase & Co et al, U.S. Supreme Court, No. 13-448; and Janvey v. Alguire et al, U.S. Supreme Court, No. 13-913. (Reporting by Jonathan Stempel in New York; Editing by Grant McCool)
http://www.reuters.com/article/2014/06/30/usa-court-madoff-stanford-idUSL2N0P80LD20140630
Ex-Madoff accountant pleads guilty to aiding fraud
7 Hours Ago
http://www.cnbc.com/id/101785438
Bernard Madoff's former accountant pleaded guilty on Tuesday to helping the convicted swindler perpetrate his massive Ponzi scheme.
Paul Konigsberg, a former senior tax partner at Konigsberg Wolf & Co, pleaded guilty to one count of conspiracy and two counts of falsifying the records of a broker-dealer before U.S. District Judge Laura Taylor Swain in New York.
Read More › Five ex-Madoff employees convicted at trial
The defendant, 78, became the 15th person to be convicted or plead guilty in connection with Madoff's fraud, which was uncovered in December 2008.
—By Reuters
http://www.cnbc.com/id/101785438
Ex-Madoff accountant expected to plead guilty: court hearing
NEW YORK Tue Jun 17, 2014 3:10pm EDT
http://www.reuters.com/article/2014/06/17/us-madoff-accountant-idUSKBN0ES2IR20140617?feedType=RSS&feedName=businessNews
(Reuters) - Bernard Madoff's former accountant is expected to plead guilty to charges that he helped the convicted swindler run his massive Ponzi scheme, a U.S. prosecutor said on Tuesday at a court hearing.
Paul Konigsberg, a former senior tax partner at Konigsberg Wolf & Co, is scheduled to appear in court on June 25, when he will likely enter a guilty plea pursuant to a cooperation agreement with the government, Assistant U.S. Attorney Matthew Schwartz told U.S. District Judge Laura Taylor Swain on Tuesday.
"We are finalizing the terms of a plea," he said.
Konigsberg and his defense attorney, Reed Brodsky, attended the hearing but did not discuss the possible plea. Brodsky declined to comment following the hearing.
Konigsberg would be the 15th defendant to be convicted either at trial or via a guilty plea in connection with Madoff's fraud, estimated to have cost investors more than $17 billion in principal.
In March, five former Madoff aides were convicted of all counts after one of the longest white-collar trials in Manhattan federal court history.
(Reporting by Joseph Ax; Editing by Jonathan Oatis)
http://www.reuters.com/article/2014/06/17/us-madoff-accountant-idUSKBN0ES2IR20140617?feedType=RSS&feedName=businessNews
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Trustee: Madoff Victims Could Get All Their Money Back
May 6, 2014 4:27 PM
http://boston.cbslocal.com/2014/05/06/madoff-victims-to-be-reimbursed-12b-total/
BOSTON (CBS) — The investors who lost billions of dollars in the Bernie Madoff Ponzi Scheme may actually get all of their lost investments back.
WBZ New England Business Editor Anthony Silva spoke with the court-appointed trustee in the case
Video
Court appointed trustee Irving Picard says about 800 legal cases remain unresolved but he’s confident everyone will be reimbursed. Tuesday’s payout is the fourth in the Madoff recovery efforts.
“We’re pleased with what we’ve done, but we’re still striving to get 100-percent back to the people who lost money,” Picard told WBZ NewsRadio 1030.
Madoff was head of Wall Street firm Bernard L. Madoff Investment Securities LLC from 1960 until his 2008 arrest when he admitted the wealth management division of his business was an elaborate Ponzi scheme. Madoff is currently serving a 150-year prison sentence for defrauding investors out of more than $12 billion.
http://boston.cbslocal.com/2014/05/06/madoff-victims-to-be-reimbursed-12b-total/
Madoff trustee sees victims' payout nearing $6 billion
By Jonathan Stempel
NEW YORK Tue Mar 25, 2014 5:08pm EDT
http://www.reuters.com/article/2014/03/25/us-madoff-payout-idUSBREA2O1V120140325?feedType=RSS&feedName=businessNews
(Reuters) - Former customers of Bernard Madoff will have recouped nearly $6 billion of their money if a federal bankruptcy judge approves the latest payout request by the trustee liquidating the swindler's firm.
The trustee, New York lawyer Irving Picard, on Tuesday said he is seeking approval to pay out $349 million to fraud victims with 1,080 accounts, with payments ranging from $496 to $77.3 million.
The bulk of the payout comes from Picard's $325 million settlement of claims against JPMorgan Chase & Co, once Madoff's main bank.
Picard said the payout would boost the total amount distributed to Madoff victims above $5.9 billion, including sums advanced by the Securities Investor Protection Corp, which oversees the liquidation of failed brokerages.
"Our commitment is simple: to recover the maximum amount of funds stolen in the Madoff Ponzi scheme and to distribute these funds to their rightful owners as quickly as possible," Picard said in a statement.
The proposed payout was announced the day after a federal jury in New York convicted five former Madoff employees of helping their former boss commit fraud, including by falsifying customer accounts and creating false trades and records.
Madoff, 75, is serving a 150-year prison term after pleading guilty in March 2009 to running a decades-long fraud, which once revealed, shook public confidence and regulators who failed to detect it.
Four days ago, Picard announced that his law firm, Baker & Hostetler, submitted a $39.3 million bill for the work of more than 200 lawyers plus other staff between August and November 2013 to recoup money for victims.
If approved, the amount authorized to be paid to the firm since Bernard L. Madoff Investment Securities LLC failed in December 2008 would surpass a half billion dollars, reaching $519.2 million plus other deferred sums, court records show.
U.S. Bankruptcy Judge Stuart Bernstein in Manhattan, who now oversees the liquidation of Madoff's firm following the death in January of his colleague Burton Lifland, is scheduled to review the payout and fee requests on April 17.
Picard has recouped $9.8 billion for Madoff's victims, more than half of his estimate of $17.5 billion in principal lost. Some of the money has been held back because of litigation challenging Picard's authority to recoup profits and decisions on who deserves to be paid. Picard has deemed just 2,517, or 15 percent, of the 16,519 claims he reviewed as "allowed claims."
A separate $4.05 billion fund set up by the U.S. government and overseen by former U.S. Securities and Exchange Commission Chairman Richard Breeden will pay customers and third parties who lost money.
(Additional reporting by Sarah N. Lynch in Washington; Editing by Grant McCool)
http://www.reuters.com/article/2014/03/25/us-madoff-payout-idUSBREA2O1V120140325?feedType=RSS&feedName=businessNews
Five Former Employees of Bernie Madoff Found Guilty Of Fraud
Verdict Comes After Four Days of Deliberations and Trial of More Than Six Months
By Christopher M. Matthews
Updated March 24, 2014 3:31 p.m. ET
http://online.wsj.com/news/articles/SB10001424052702304679404579459551977535482?mod=WSJ_Markets_LEFTTopStories&mg=reno64-wsj
Jurors found five former employees of Bernard L. Madoff guilty of fraud, a verdict that shows the convicted Ponzi schemer got a wide range of help keeping afloat a scam that ran for decades and cost investors $17 billion.
The defendants, who included two trading managers, two computer programmers and the firm's director of operations, were found guilty of conspiracy to defraud investors and securities fraud. The outcome means that jurors were convinced all five in some way helped Mr. Madoff perpetrate the fraud. They each face decades in prison.
The result, which comes after four days of deliberation, caps a trial that lasted more than six months and hands prosecutors a win in their only attempt to bring a Madoff case before a jury.
Testimony during the trial showed the extent of the efforts Mr. Madoff and his employees went to disguise their fraud, from creating computer programs that generated fake documents to lying to regulators and auditors.
Computer programmers Jerome O'Hara and George Perez were convicted of creating phony customer accounts, while portfolio managers Annette Bongiorno and JoAnn Crupi were convicted of concocting trading records. Daniel Bonventre, a former operations director for Mr. Madoff, helped gin up phone books and records, the jury found.
Mr. Madoff himself was sentenced nearly four years ago to 150 years in prison. He has insisted he carried out the long-running scheme on his own. Prosecutors turned to an array of witnesses, including several of Mr. Madoff's former employees, to establish that wasn't the case.
The government's star witness was Frank DiPascali Jr., the former chief financial officer who worked with Mr. Madoff for 33 years. Mr. DiPascali was on the stand for more than a month and in sometimes emotional testimony implicated all of the defendants, telling jurors he worked with all five to produce fraudulent records.
In one instance, he recalled asking Mr. O'Hara to produce records after an outside auditor from KPMG showed up at the firm. Mr. DiPascali said that when he went to get the document hours later, he witnessed Messrs. O'Hara and Perez and Ms. Crupi putting it in the refrigerator to cool it down after it came off the printer and throwing the document around like a "medicine ball" to make it look used.
Mr. DiPascali, 57 years old, pleaded guilty in 2009 and faces a maximum 125 years in prison. He is confined to his home as part of a cooperation agreement with the government that could result in a recommendation for a more lenient sentence.
The defense attorneys tried to discredit Mr. DiPascali as a professional con man who would say anything to reduce his sentence. During a combative and lengthy cross-examination, they asked him about the five boats he was given by Mr. Madoff and whether he would have made more money if he was paid for every lie he told.
Other testimony focused on the alleged spending habits of the defendants, who prosecutors say became millionaires in their time working at the firm.
Ms. Bongiorno, for example, bought a Bentley and two Mercedes-Benz automobiles as well as a $6.5 million condominium in Florida, which she said she purchased in order to "downsize."
With the verdict, more than a dozen people, including Mr. Madoff, have either pleaded guilty or been convicted of crimes connected to the Ponzi scheme.
The defense attorneys didn't dispute that their clients fabricated documents that misled clients and regulators. But they sought to portray them as innocent victims of the scheme's masterminds.
One of the defense attorneys, Gordon Mehler, described Mr. Madoff and Mr. DiPascali as "two of the greatest criminal masterminds in human history."
The defendants trusted Mr. Madoff—"a titan, a guru, a Wall Street genius," according to Ms. Bongiorno's attorney, Roland Riopelle— and merely did what they were told.
Ms. Bongiorno testified in her own defense, a somewhat rare occurrence in white-collar trials, and said she never thought it was suspicious to backdate trades because her only instruction in the financial- services industry had come from Mr. Madoff. Mr. Bonventre also testified in his own defense and said that because he wasn't involved in the trading, he never realized the firm was a fraud.
Prosecutors called the defense theories "preposterous," and urged jurors to reject their "fantasy" defenses.
Assistant U.S. Attorney Randall Jackson said the defendants' explanations were akin to portraying themselves as helpers in the workshop of Santa Claus, who never realized everything was make-believe. But even children figure out that Santa doesn't exist, Mr. Jackson said.
"Madoff Securities was not Santa's factory," he said. "The defendants in this case were not children. During the decades they worked at Madoff Securities, they were adults."
Write to Christopher M. Matthews at christopher.matthews@wsj.com
http://online.wsj.com/news/articles/SB10001424052702304679404579459551977535482?mod=WSJ_Markets_LEFTTopStories&mg=reno64-wsj
Judge drops sick juror from trial of Madoff aides
By Joseph Ax
NEW YORK Thu Mar 20, 2014 2:50pm EDT
http://www.reuters.com/article/2014/03/20/us-madoff-employees-idUSBREA2J1XW20140320?feedType=RSS&feedName=domesticNews
(Reuters) - After a two-day delay, the jurors considering whether to convict five former Bernard Madoff aides of helping him perpetuate his Ponzi scheme will resume deliberations on Friday with one fewer member.
U.S. District Judge Laura Taylor Swain in New York ruled on Thursday that the trial would move forward with only 11 jurors, after a juror fell sick on Tuesday and has not yet recovered.
"I believe that is the efficient way to go," she said.
The five aides -- back-office director Daniel Bonventre, portfolio managers Annette Bongiorno and Joann Crupi and computer programmers Jerome O'Hara and George Perez -- have all denied the charges, saying they were fooled by Madoff into believing the business he ran was legitimate.
The case, which is already one of the longest white-collar criminal trials in New York history, was put on hold on Tuesday afternoon when juror No. 6, a teacher from Westchester, became ill. Deliberations began on Monday afternoon.
Swain said at a court hearing on Thursday that the juror was unable to come to court on Friday and that it was unclear whether she would recover by Monday.
Government lawyers urged Swain to bring the jury back on Friday, either with 11 members or by substituting one of the alternate jurors, who have been on standby in case they are needed.
Adding an alternate juror, however, would require the jury to begin deliberating from scratch.
Defense lawyers had asked Swain to consider delaying a decision until Monday in the hopes that the juror would feel better, arguing that she deserved the chance to continue deliberating after sitting through five months of testimony.
Swain's decision means the sick juror will not be able to rejoin jury.
The trial, which began in October, included more than 40 witnesses and thousands of documents entered into evidence.
The case is USA v. O'Hara et al, U.S. District Court, Southern District of New York, No. 10-cr-0228.
(Reporting by Joseph Ax; editing by Andrew Hay)
http://www.reuters.com/article/2014/03/20/us-madoff-employees-idUSBREA2J1XW20140320?feedType=RSS&feedName=domesticNews
Here is a list of the once super wealthy - His clients
http://clusterstock.alleyinsider.com/2008/12/bernie-madoff-hosed-client-list
http://www.finalternatives.com/node/6354
a great resource
http://clusterstock.alleyinsider.com/bernie-madoff
WOW for ten years Harry Markopolos was after the SEC
Here is the original news
NEW YORK (Reuters) – Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion "Ponzi scheme" in what may rank among the biggest fraud cases ever.
The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.
Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.
A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.
On Thursday, two agents for the U.S. Federal Bureau of Investigation entered Madoff's New York apartment.
"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.
The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.
U.S. prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.
The Securities and Exchange Commission filed separate civil charges against Madoff.
"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."
Dan Horwitz, Madoff's lawyer, told reporters outside a downtown Manhattan courtroom where he was charged, "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."
A shaken Madoff stared at the ground as reporters peppered him with questions. He was released after posting a $10 million bond secured by his Manhattan apartment.
Authorities, citing a document filed by Madoff with the U.S. Securities and Exchange Commission on January 7, 2008, said Madoff's investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management. Those clients may have included other funds that in turn had many investors.
The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.
CONSISTENT RETURNS
An investor in the hedge fund said it generated consistent returns, which was part of the attraction. Since 2004, annual returns averaged around 8 percent and ranged from 7.3 percent to 9 percent, but last decade returns were typically in the low-double digits, the investor said.
The fund told investors it followed a "split strike conversion" strategy, which entailed owning stock and buying and selling options to limit downside risk, said the investor, who requested anonymity.
Jon Najarian, an acquaintance of Madoff who has traded options for decades, said "Many of us questioned how that strategy could generate those kinds of returns so consistently."
Najarian, co-founder of optionmonster.com, once tried to buy what was then the Cincinnati Stock Exchange when Madoff was a major seatholder on the exchange. Najarian met with Madoff, who rejected his bid.
"He always seemed to be a straight shooter. I was shocked by this news," Najarian said.
'LOCK AND KEY'
Madoff had long kept the financial statements for his hedge fund business under "lock and key," according to prosecutors, and was "cryptic" about the firm. The hedge fund business was located on a separate floor from the market-making business.
Madoff has been conducting a Ponzi scheme since at least 2005, the U.S. said. Around the first week of December, Madoff told a senior employee that hedge fund clients had requested about $7 billion of their money back, and that he was struggling to pay them.
Investors have been pulling money out of hedge funds, even those performing well, in an effort to reduce risk in their portfolios as the global economy weakens.
The fraud alleged here could further encourage investors to pull money from hedge funds.
"This is a major blow to confidence that is already shattered -- anyone on the fence will probably try to take their money out," said Doug Kass, president of hedge fund Seabreeze Partners Management. Kass noted that investors that put in requests to withdraw their money can subsequently decide to leave it in the fund if they wish.
Bernard L. Madoff Investment Securities has more than $700 million in capital, according to its website.
Madoff remains a member of Nasdaq OMX Group Inc's nominating committee, and his firm is a market maker for about 350 Nasdaq stocks, including Apple, EBay and Dell, according to the website.
The website also states that Madoff himself has "a personal interest in maintaining the unblemished record of value, fair-dealing, and high ethical standards that has always been the firm's hallmark."
The company's website may be found here: http://www.madoff.com/
(Additional reporting by Christian Plumb, Phil Wahba, Michelle Nichols and Jennifer Ablan in New York and Rachelle Younglai in Washington; Editing by Andre Grenon, Bernard Orr and Alex Richardson)
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