Tag Archives: Bernie Madoff

Kochs and Other Madoff Investors Are Winners in Fight Over Profits Held Abroad

The company led by the American billionaire Koch brothers, along with dozens of banks and fund managers, kept billions of dollars in profit fromBernard L. Madoff’s Ponzi scheme in accounts offshore. As it turns out, that was a good decision.

Koch Industries and others who invested in the Madoff fund from offshore accounts won a key ruling in federal bankruptcy court on Monday, when the judge said certain funds held abroad — estimated at about $2 billion — could not be made available to victims of the Madoff scheme.

The ruling highlights the tug-of-war that has been raging between those who lost money when the scheme fell apart eight years ago and those who walked away before the fraud came to light, having recouped their original investments and then some.

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Madoff trustee reaches $277 million accord with money manager’s family

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 victims will receive at least $232 million of cash, and the rights to $30.7 million of assets that are expected to be sold.

A separate $15 million fund will pay claims by California investors, resolving litigation by that state’s Attorney General Kamala Harris, and which had been brought in 2009 by her predecessor, California Governor Jerry Brown.

Friday’s settlement requires approval by U.S. Bankruptcy Judge Stuart Bernstein in Manhattan, who oversees the liquidation of Bernard L. Madoff Investment Securities LLC. A hearing is scheduled for Nov. 22.

The cash payout would boost to $11.46 billion the sum that Picard has recovered for former Madoff customers, or 65 percent of their estimated $17.5 billion loss. Picard has said half of the 2,597 accounts with valid claims have been fully paid off.

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Panama Papers reveal yet another secretive aspect of hedge funds

HIGHLIGHTS

Bernard Madoff’s feeder funds show up in the Panama Papers

2 other managers who used offshores to hide assets find themselves in jail

One fund manager says there is room for more transparency

The kinds of secret offshore companies that have hidden political corruption and tax evasion around the world are often used by Wall Street’s biggest money makers — the $2 trillion hedge fund industry.

The now-famous Panama Papers leak offers rare insight into the workings of this exclusive investment club.

Hedge funds accept individual investors with net worths of $1 million or more and worker pension funds with $5 million or more. They and their investors often locate in tax havens such as the Cayman Islands or the British Virgin Islands.

The names found in the leaked files from the Panamanian law firm Mossack Fonseca include two now-imprisoned hedge fund managers, a major “feeder fund” that was part of the largest-ever Ponzi scheme run by Bernard Madoff and several anonymous investors whose offshore companies became tangled in the Madoff web.

In the aftermath of the Madoff scandal and the 2008 U.S. financial crisis, hedge funds have been forced to register with regulators, and they face severe penalties under a new “bad actor rule” if they take money from criminals or proceeds of corruption.“Most financial institutions do require considerable information on investors” today, said Robert Van Grover, an attorney with Seward & Kissel LLP in New York who thought the abuses found in the Panama Papers “would be very difficult in the United States” now.

But the hedge fund managers and their investors identified in the leaked documents by McClatchy and partners underscore what has been a weakness in oversight: They often used secret offshore companies, which hid investor fraud and potentially unsavory investors from U.S. regulators.

Trump finance chair was sued for Madoff fraud profit

And the plot thickens..

Donald Trump’s new national finance chairman – a former head of the mortgage department for Goldman Sachs – was sued in 2010 for the return of $3.2 million in fake profit from an account with Ponzi scheme mastermind Bernie Madoff.

Steven Mnuchin was named Trump’s fiancé chairman Thursday, according to Bloomberg. He was linked to Madoff through his late mother, who invested about $2 million with the financier and saw her investment grow to $5.2 million.

After their mother died in 2005, Mnuchin and his brother withdrew the money from her Madoff account. In 2008, Madoff was arrested. And in 2010, trustee Irving Picard, who filed multiple lawsuits seeking restitution for the victims of Madoff’s $17.5 billion fraud, sued for $3.2 million of the Mnuchins’ $5.2 million, saying that it was fake profit.

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Bernie Madoff: Book Says JPMorgan Chase Knew What Madoff Was Up To, Turned A Blind Eye

Say the name Bernie Madoff, and chances are everyone will immediately remember the Ponzi scheme that bilked investors of $64 billion. What likely won’t spring to mind is JPMorgan Chase’s role in the more than decadelong fraud.

And the link is all the more egregious, Helen Davis Chaitman, an attorney who represents 1,600 of Madoff’s victims, and Lance Gotthoffer write in “JPMadoff: The Unholy Alliance Between America’s Biggest Bank and America’s Biggest Crook,” because the federal government has failed to prosecute any of the bankers involved.

Democratic presidential candidate Bernie Sanders may rail about the necessity of breaking up the big banks to rein in financial abuses, but Chaitman said in an interview with International Business Times that criminally prosecuting one or two top bankers would do a lot more to clean up Wall Street.

Madoff, who started out as a penny stock trader with just $5,000 in the 1960s, was a successful Wall Street trader who once chaired the Nasdaq and whose company was responsible for making 10 percent of the trades on the New York Stock Exchange on any given day. In the early 1990s he formed an investment advisory division within his legitimate operations that turned into the largest Ponzi scheme in history. It came crashing down Dec. 11, 2008, and six months later Madoff was sentenced to 150 years in prison and ordered to pay $170 billion in restitution.

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As Madoff Airs On TV, Two Anonymous Whistleblowers Are Pounding On The SEC’s Door Again

Submitted by Pam Martens and Russ Martens via WallStreetOnParade.com,

Last night ABC began its two-part series on the Bernie Madoff fraud. Viewers will be reminded about how investment expert, Harry Markopolos, wrote detailed letters to the SEC for years, raising red flags that Bernie Madoff was running a Ponzi scheme – only to be ignored by the SEC as Madoff fleeced more and more victims out of their life savings.

Today, there are two equally erudite scribes who have jointly been flooding the SEC with explosive evidence that some Exchange Traded Funds (ETFs) that trade on U.S. stock exchanges and are sold to a gullible public, may be little more than toxic waste dumped there by Wall Street firms eager to rid themselves of illiquid securities.

The two anonymous authors have one thing going for them that Markopolos did not.They are represented by a former SEC attorney, Peter Chepucavage, who was also previously a managing director in charge of Nomura Securities’ legal, compliance and audit functions. We spoke to Chepucavage by phone yesterday.  He confirmed that two of his clients authored the series of letters. Chepucavage said further that these clients have significant experience in trading ETFs and data collection involving ETFs.

Throughout their letters, the whistleblowers use the phrase ETP, for Exchange Traded Product, which includes both ETFs and ETNs, Exchange Traded Notes. In a letter that was logged in at the SEC on January 13, 2016, the whistleblowers compared some of these investments to the subprime mortgage products that fueled the 2008 crash, noting that regulators and economists were mostly blind to that escalating danger as well. The authors wrote:

“The vast majority of ETPs have very low levels of assets under management and illiquid trading volumes. Many of these have illiquid underlying assets and a large group of ETPs are based on derivatives that are not backed by physical assets such as stocks, bonds or commodities, but rather swaps or other types of complex contracts. Many of these products may have been designed to take what were originally illiquid assets from the books of operators, bundle them into an ETP to make them appear liquid and sell them off to unsuspecting investors. The data suggests this is evidenced by ETPs that are formed, have enough volume in the early stage of their existence to sell shares, but then barely trade again while still remaining listed for sale. This is reminiscent of the mortgage-backed securities bundles sold previous to the last financial crisis in 2008.”

The authors also note in this same letter that they have been presenting their evidence of “significant red flags” and “fundamental flaws” to the SEC since March 2015 and that the industry has not disputed the evidence. However, disclosures of these risks in the product offerings has not been forthcoming either.

U.S. appeals court ruling revives whistleblower suit against JPMorgan

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The 2nd U.S. Circuit Court of Appeals reversed a lower court’s decision to throw out Jennifer Sharkey’s whistleblower suit and ordered the judge to consider whether the case should be allowed to continue under a more lenient standard of whistleblower protection.

The ruling from the three-judge panel was unanimous.

JPMorgan has rejected Sharkey’s allegations and a bank spokesman declined to comment on Thursday.

Sharkey claims bank executives ignored concerns she began voicing in January 2009 about whether an Israeli client was engaging in fraud and money laundering, just weeks after Madoff’s multibillion-dollar scheme became exposed.

Madoff was a client of JPMorgan for more than 20 years, sending deposits and transfers from his investors totalling about $150 billion through the bank.

In January, JPMorgan agreed to pay $2.6 billion (1.61 billion pounds) to the U.S. government and Madoff victims to settle allegations it failed to alert authorities to its suspicions of fraud at Madoff’s firm.

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