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To: Liz

http://www.thedailybeast.com/blogs-and-stories/2009-06-25/did-bernie-madoff-get-a-billion-dollar-kickback/full/

Jeffry Picower, a seldom-seen philanthropist, investor and confidant of Bernard Madoff, stands accused by the Madoff bankruptcy trustee of extracting $5.1 billion from Madoff’s enterprises during the last two decades. Now a lawyer representing 100 Madoff victims suggests it was no accident that Picower was one of the few Madoff customers who made a substantial profit.

(snip)

(snip)

Picower may have deposited $1.6 billion with Madoff, while withdrawing as “profit” more than $6.7 billion, for a net profit of $5.1 billion “of other peoples’ money.”

(snip)

While coverage of Picower has been scant, on various occasions, The St. Petersburg Times, Forbes, and most recently Pro Publica have raised the question of whether he used his charities to mine information—especially about the medical developments—that he then used in chasing deals. He was the biggest shareholder in Alaris Medical Systems and collected more than $1 billion when it was bought by Cardinal Health in 2004.

(snip)

//

http://www.forbes.com/forbes/2002/1014/068_print.html

http://www.propublica.org/feature/madoff-client-jeffry-picower-netted-5-billion

(no link)

Complex web benefits foundation founder
St. Petersburg Times - Sunday, July 8, 2001
Author: MARY JACOBY
A decade ago, a wealthy Palm Beach investor met a world-renowned scientist for dinner at an Italian restaurant on New York’s upper East Side.

They were celebrating a promising new partnership.

Jeffry M. Picower had decided to endow a non-profit medical research institute. His Florida-based foundation would give $10-million in initial funding to find cures for the maladies that afflict humankind. Dr. Anthony Cerami, internationally acclaimed inventor of a revolutionary diabetes test, would run it.

“My mother suffered from diabetes even before my birth and died at an early age of it,” Picower told the New York Times. He pledged that profits from new drugs discovered at the institute would flow back into its coffers to pay for more discoveries.

“It’s just for the benefit of science, and my family will not get anything back, no matter what happens.”

Over the next 10 years, as the assets of the Jeffry M. and Barbara Picower Foundation swelled to $658-million, making it the second largest foundation in Florida, its benefactor was spinning an unusual web of business relationships between it, the Picower Institute for Medical Research and two for-profit pharmaceutical companies.

When the spinning was over, a for-profit drug company owned largely by Picower was left holding license to many of the most important discoveries of the Picower Institute.

Humankind, it seems, would not be the only beneficiary of the spending and investments of the non-profit Jeffry M. and Barbara Picower Foundation.

Jeffry M. Picower would, too.

Because Congress wants to encourage charitable giving, it has given foundations significant tax advantages. Donors can deduct the amount of their gifts from their taxable income, an important incentive for wealthy people to establish foundations. And foundations pay virtually no tax.

The law forbids people who create or manage foundations from profiting, even indirectly, from the endowments.

“The sweep of the self-dealing rules captures direct as well as indirect business relationships,” said Marcus Owens, former director of the IRS’s tax-exempt organizations division. “With private foundations, the self-dealing proscription is very tight.”

The penalty for self-dealing is a 25 percent tax on the amount of money involved in the improper activity and return of the money.

But if you are a wealthy person running your own foundation, the chance you will face scrutiny is practically nil. The IRS regularly audits less than 1 percent of private foundation returns; of 61,185 returns filed in 1998 for foundations that held about $390-billion in assets, the IRS audited 191.

Neither is the public likely to question the work of a foundation such as Picower ‘s, whose gifts have included $533,000 to the Intracoastal Health Foundation in West Palm Beach, $2.3-million to New York public libraries, $200,000 to Teach for America - and at least $22.5-million over the years to the Picower Institute.

But behind the velvet drape of Picower ‘s philanthropy is a story different from the usual script. The backstage is cluttered with angry lawsuits, cowed scientists and bitter former business partners. It is the turmoil left behind when one man plays all the leading parts in and directs his own charitable production:

Picower runs the Picower Foundation.

Picower runs the Picower Institute.

The Picower Foundation funds the Picower Institute.

Researchers at the Picower Institute discover a drug that they hope will alleviate the suffering of a whole universe of people: victims of arthritis, multiple sclerosis, stroke and inflammatory bowel disease.

A deal is cut. A merger creates a for-profit pharmaceutical company that gets the license to develop this potential blockbuster drug and other promising Picower Institute discoveries.

This company’s largest shareholder? Jeffry M. Picower .


15 posted on 10/25/2009 5:47:18 PM PDT by maggief
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To: maggief; CutePuppy; GOPJ; Just mythoughts; stephenjohnbanker; Landru
A seldom-seen philanthropist, investor and confidant of Bernard Madoff, Picower is accused by the Madoff bankruptcy trustee of extracting $5.1B from Madoff’s enterprises in two decades.......making a 950% profit. A lawyer representing 100 Madoff victims suggests it was no accident that Picower was one of the few Madoff customers who made a substantial profit.......

Investigators may be looking at the legal parameters of prosecutable crimes including making false statements to state and federal officials, filing falsified documents, obstruction of proceedings before state and federal agencies, fiduciary negligence, and obstruction of US justice. The tax exempts might have facilitated IRS fraud by integrating:

1. Secret control over tax exempt fund-raising committees.

2. Requiring only one signature on tax-exempt bank checks.

3. Utilizing pre-signed tax-exempt bank checks.

4. Using secret bank accounts to keep secret the actual financial position of tax-exempt "charities."

5. Assigning bank deposit and account reconciliation functions of tax-exempts to one person.

6. Conspiring to hide oversight of expenses and supporting vouchers from public view.

7. Having no outside auditor to review tax-exempt statements.

8. Cashing unusually large amounts of tax-exempt checks.

9. Having no official deposit and withdrawal control system.

10. Arranging kickbacks to other "charities" in exchange for donations.

======================================

THE MODUS OPERANDI: ....behind the velvet drape of Picower‘s philanthropy is a different story........cluttered with angry lawsuits, cowed scientists and bitter former business partners. It is the turmoil left behind when one man plays all the leading parts in and directs his own charitable production. Picower runs the Picower Foundation. Picower runs the Picower Institute. The Picower Foundation funds the Picower Institute. Researchers at the Picower Institute discover a drug that they hope will alleviate the suffering of a whole universe of people: victims of arthritis, multiple sclerosis, stroke and inflammatory bowel disease. A deal is cut. A merger creates a for-profit pharmaceutical company that gets the license to develop this potential blockbuster drug and other promising Picower Institute discoveries. This company’s largest shareholder? Jeffry M. Picower ......

Fraudulent "charitable" activities might involve passing checks from one "charitable" account to another in multiple conspiracies to launder monies and evade taxes. Authorities should investigate the Picower's tax-exempts' US Postal Service mailings, wire transfers, computer transfers, electronic submissions, and unregulated money transfers, and all bank transfers connected to tax-exempt bank accounts.

20 posted on 10/26/2009 5:09:09 AM PDT by Liz (ALL FOX---ALL THE TIME---24/7)
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