AG eyes LI Ivy's poison; Hid Madoff scam

..... hedge-fund firm Ivy Asset Management is accused of hiding "disturbing facts" about Madoff from clients on fears the truth would crimp their revenue.....a civil lawsuit claims former CEO Lawrence Simon and ex-CIO Howard Wohl, were aware for some 10 years that Madoff's operation was suspect, but they "kept clients in the dark," pocketing $40M in advisory and due-diligence fees between 1998-2008 that led hundreds of investors, and dozens of NY union pensions and welfare plans, to lose a combined $227M.

The court appointed trustee looking into Madoff's assets unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth...... with assets and businesses in 11 places overseas. Madoff traveled overseas frequently, ostensibly to his villa on the Riviera----the suitcases he carried were probably full of cash .....not leisure wear.

Madoff needed lots of sucker money. He was able to dupe people into subsidizing his operations. Madoff was running multiple scams with the knowledge and consent of wealthy businessman:

(1) a Ponzi fraud that made him personally wealthy;

(2) laundering tax-free money for wealthy businessmen with "foundations and charities" posing as philanthropists,

(3) IRS fraud facilitation for wealthy businessmen;

(4) a protection racket (shielding his investors from federal scrutiny);

(5) laundering tax-free money that was donated to Democrat candidates (campaign fraud).

Sounds like Andrew Cuomo is going after people who actually did their due diligence and tried to warn others... SEC and FINRA workers, who were warned on several different occasions about Madoff, were just "inexperienced and untrained", according to IG David Kotz. Cuomo is just following in Spitzer's footsteps, it's all about making him look good to unions and a "legal" extortion via nuisance lawsuits...

Firm did not act strongly enough on Madoff suspicions, N.Y. attorney general says - S-S / AP, 2010 May 11, David B. Caruso

In the late 1990s, executives at the financial advisory firm Ivy Asset Management decided something about Bernard Madoff didn't add up and began urging clients to back away from the man later revealed to be Wall Street's greatest fraudster.
Those warnings weren't loud enough, New York's attorney general now says.
The state sued Ivy and two of its former executives Tuesday, alleging they had "disturbing" evidence years ago that Madoff was lying about his investment methods but played down those suspicions because they feared losing millions of dollars in management fees.
Ivy's customers, which included several union pension funds, lost $227 million when the scheme collapsed, according to the suit.
"Ivy and its former co-principals saw the trouble with Madoff coming around the bend, but instead of guiding their clients through the financial waters, they sold them down the river," Attorney General Andrew Cuomo said in a statement.
The company and its two former executives, CEO Lawrence Simon and CIO Howard Wohl, vigorously disputed the charges.
Simon's lawyer released several e-mails sent to some of Ivy's customers between 1997 and 2001 in which he urged them to reduce their Madoff investments.
"Despite Madoff's stellar record, we continue to be concerned by his unwillingness to be fully forthcoming about capital under management and other aspects of his business, and we reiterate our strong recommendation that the outsized allocations to this strategy be reduced," Simon said in a memo to one client in 2000.
In another memo a year earlier, Simon told another investor that "we cannot 'close the loop' [on Madoff] in a manner that gives us total comfort."
Ivy's chief restructuring officer, Douglas Squasoni, said the company would defend itself against the suit.
"Ivy informed its clients that it had questions about Madoff that it could not answer and recommended to its clients that they reduce their exposure to Madoff," he said in a written statement. The clients who lost money were primarily other investment advisers who chose to ignore the firm's warnings, he said.
Ivy is now owned by Bank of New York Mellon Corp. Mellon had previously acknowledged in public filings that it was a subject of an investigation by Cuomo's office and said it was in discussions about a possible settlement. .....

G/S traders and salesmen would boast about 'ripping the faces off their clients' -- structuring and selling complicated deals that G/S clients did not understand, that generated huge profits for the bank that was brokering the trade."

N-i-c-e take.

Keep in mind----these financial geniuses are all "licensed." Financial licenses can be lifted for any number of reasons:

If licensees fail to disclose ownership in investment vehicles.

If licensees fail to file proper documentation with state agencies.

If licensees fail to file reports with State Division of The Treasury.

If licensees fail to file state and federal tax returns (stolen money is taxable).

If licensees fail to pay state and federal taxes on hidden profits.

If licensees fail to account for investment proceeds.

HERE'S HOW JUDGES PREDICATE SENTENCING GUIDELINES: (1) Amount licensee lost to the investors, a pension fund, the taxpayers, state pensioners, etc. (2) What role a licensee had in conspiracy schemes to defraud. (3) Whether a licensee obstructed justice in the course of investigations or, later, during trial.

CONTACT Financial Industry Regulatory Authority (nongovernment regulator of US securities firms)
CALL (866) 776-0800

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When you realize the scope of Madoff’s fraud, there is no other conclusion one could draw......even an imbecile could have determined that Madoff was not making trades. He was merely sending out falsified statements on outdated computer equipment.

The court appointed trustee looking into Madoff's assets unearthed a labyrinth of interrelated international funds, institutions and entities of almost unparalleled complexity and breadth...... with assets and businesses in 11 places overseas. Madoff traveled overseas frequently, to his villa on the Riviera----those suitcases he carried were probably full of cash .....not leisure wear.

Madoff was running several simultaneous scams:

(1) a Ponzi fraud that made him personally wealthy;

(2) laundering tax-free money for wealthy businessmen posing as philanthropists,

(3) IRS fraud facilitation for wealthy businessmen;

(4) a protection racket (shielding his investors from scrutiny);

(5) laundering tax-free money that was donated to Democrat candidates (campaign fraud).

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I SUGGEST A CONGRESSIONAL QUESTIONNAIRE The G/S higher-ups needed entry-level employees help to facilitate these frauds. Grassley or Issa should send out questionnaires to entry-level employees, as follows.

Do you know anyone at G/S:

(1) engaged in secret backroom deals?

(2) who falsified work reports labeled “overtime”?

(3) who used two sets of books?

(4) who made computer entries to falsely collect “overtime” that were later deleted?

(5) who list phantom employees that are receiving paychecks at PO boxes?

(6) who took kickbacks from vendors?

(7) who wire-transferred govt funds to numbered offshore accounts?

(8) who has hidden equity positions in vendor companies?

(9) who engaged in accounting fraud?

(10) who inserted phony budget line items "building costs, administration, legal fees, upkeep," and the like, into tax-financed budgets?

(11) that (a) loaned, (b) sold, (c) exchanged, (d) or leased gov’t property to insiders?

(12) who did not disclose all their income to the IRS?

(13) that colluded to siphon off and kickback government funds?

(14) who is retiring into a government job?

(15) that gave family members govt jobs and pensions?

(16) who failed to return tax-paid cars, cell phones, electronics, computers, Blackberry's, pagers and the like?

CONSEQUENCES Returning falsified information could be prosecuted and incur felony charges for first-degree tampering with public records, first-degree offering of a false instrument for filing, fourth-degree grand larceny, and first-degree falsifying of official records.

It would also negate all other compensation since the individual did not negotiate in good faith.

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