Posted on 12/15/2008 8:55:49 PM PST by Liz
In the wealthy enclaves of Long Island and Palm Beach, people spent years trying to get on to Bernie Madoff’s client list. Some even joined the blue-blooded golf clubs where he recruited many of his investors – just for the chance of meeting him. Inside this world of predominately older investors, there is not just shock and panic over the huge losses inflicted by Mr Madoff’s colossal swindle there is a profound sense of betrayal. To many he was not just a philanthropic pillar of the community: many considered him a friend. Mr Madoff’s modus operandi was based on his image as an unimpeachable old-school banker. His company website praised his personal touch that “harks back to an earlier era in the financial world” and is “unblemished record of value, fair dealing and high ethical standards.” A chance to send your funds to Mr Madoff was so coveted that it was in essence by invitation only. Some of his wealthiest clients were fellow members of the exclusive Palm Beach Country Club....where many were happy to part with hundreds of thousands of dollars of membership fees each year in the hope of an encounter with Mr Madoff. Roughly a third of the club’s members invested with him. He would not even consider taking a client on without an initial investment of at least $1 million.
(Excerpt) Read more at business.timesonline.co.uk ...
EXCERPT Madoff was single-handedly managing billions of dollars in offices he kept separate from the rest of his firm........The only oversight was conducted in am upstate Rockland County accounting office only slightly larger than a cubicle (the firm's main office was in NYC). Friehling & Horowitz is a three-person accounting operation based in the northern suburbs of New York City. It is run by one partner, David Friehling, who is in his seventies and is understood to live in Florida, and employs an accountant and a secretary. David Friehling is now under investigation.
Madoff made his fortune embracing the latest and best technology, BUT he forbade investors to get online access to their accounts, insisting instead on paper printouts....
For well over a decade, competitors and experts said they found Madoff's track record suspicious. He seemed immune to any volatility in the market and, no matter what was happening in the economy at large, managed to finish each month with almost identical profits. . Madoff dismissed attacks as envy and said critics simply did not understand the complexities of his strategies.
Aksia LLC was hired to investigate Madoff several years ago, said principal Jake Walthour. The probe only increased the concerns about the fund. Madoff's returns were "abnormally smooth" from month to month, and it seemed impossible to replicate his investment strategy or verify his track record.
Mr Madoff claimed to be moving as much as $13 billion in and out of the market every month, but "no one on the street could verify it or even see his footprints," Walthour said. "That organization was incredibly secretive." When they staked out the tiny accounting firm no one had ever heard of, investigators concluded something was amiss. "We decided there are several scenarios here, one of which is, this could be a Ponzi scheme," Walthour said.
Those who have invested in the fund have told investigators that withdrawing cash from it was an arduous process that involved faxes and inexplicable delays. That's because in a Ponzi scheme, money from new investors is used to pay those seeking to withdraw their money.
SOURCE Bloomberg and NY Post wire reports
http://www.nypost.com/seven/12132008/news/regionalnews/alarm_bells_in_1999_ignored_143971.htm
Just goes to show that rich doesn’t necessarily = smart.
The litigation will go on for years and only the lawyers will make any real money out of this.
That sounds like a safe bet.
Hmmm, rich libs who think they are trendy and smart, impressed by “abnormally smooth” returns, end up getting burned by a fraud.
This could be some foreshadowing.
I'll show as much concern as they do about Joe the Plumber and the rest of us....which to say is NONE!
LOL.
No it’s really sad.
LOL.
I’m sorry, but I’m willing to bet that a lot of these people are huge libs.
LOL.
I read something where Madoff’s marketing making company hired a firm to track their trades. This was required recently by the SEC or maybe NYSE. The electronic audit firm was hired about a year ago - probably due to a new regulation. The audit showed their trade executions were very good with no front running.
I think Bernie was front running in the past. I think it ended a few years ago when decimalization came in i.e. stocks traded in pennies instead of in the past when they traded 1/16ths. This means the bid and ask spreads evaporated which meant lower profitability and probably much harder to front run.
If Bernie had been clean as far as no Ponzi scheme - this is when it fell apart. Still front running is illegal too.
Many of his “investors” thought he had an edge and supposedly they thought he was able to front run using the firms market making. I do not have a lot of sympathy for those who thought Bernie figured out a way to cheat without getting caught by frontrunning.
Yup. You and Rush are correct. The receiver will be able to go after those who got distribution over the last few years. It goes back in the pot but the legal expenses will eat it up.
Known as "fraudulent conveyance"......receiving profits obtained illegally.
Has to be returned by law-----also has horrendous tax implications.
LOLOLOL!! I started laughing aloud for the SAME REASON, before I even saw your post, but you put it so WELL!
He’s out on million dollar bail, what bet he runs to Israel.
If the investors admit to this, they could be exposed to aiding and abetting illegal activities.
No one talks about Madoffs club.
He can run, but he can't hide. He's got some real powerful enemies now.
Palm Beach Country Club....LOL
Now a “pay for play” club
Clinton Libs and Dubya conservatives. Easy money going up and boohoo how could it possibly go down?
Real conservatives understand that you have to diversify, that you shouldn’t live beyond your means and that you won’t beat the market in the long run so anyone who promises otherwise is most likely a con man (and that pretty much includes all brokers and most mutual funds).
The only ones set to make out like the bandits they are are the LAWYERS?
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