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Old 12-13-2008, 06:25 PM   #1
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He Madoff with HOW much??

Fund Fraud Hits Big Names - WSJ.com

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Old 12-13-2008, 08:02 PM   #2
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Is all of this the economic equivalent of a mass extinction?
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Old 12-13-2008, 08:25 PM   #3
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Very possible - sadly my knowledge of evolutionary biology is not sufficient to make that allusion.
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Old 12-14-2008, 04:22 PM   #4
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This very well could have huge repercussions.


There could be a run (accelerated) on hedge funds.


There may be a large drop
in a already low market.


Also, this story does not add up.

His sons turned him in.

He is an old guy, his sons have worked with him for years.

The house of cards was collapsing, so lay it all off on 'old dad'.
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Old 12-14-2008, 06:38 PM   #5
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Quote:
Originally Posted by deep View Post
This very well could have huge repercussions.


There could be a run (accelerated) on hedge funds.


There may be a large drop
in a already low market.


Also, this story does not add up.

His sons turned him in.

He is an old guy, his sons have worked with him for years.

The house of cards was collapsing, so lay it all off on 'old dad'.

Yes I am thinking what you're thinking.
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Old 12-14-2008, 10:26 PM   #6
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One of the main problems with hedge funds is that there is no (legal) fiduciary duty imposed on activist minority shareholders. There have been some very influential publications in this field as of late arguing for a radical expansion of fiduciary duties as we understand them. The increased rights that are now afforded to shareholders in this "shareholder democracy" era have not been coupled with comparable fiduciary duties and this is the main LEGAL reason for why hedge funds have been able to control or at least influence transactions to the degree that they have done so.
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Old 12-16-2008, 02:25 AM   #7
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I am starting to hear talk of a Federal Bailout for Madoff's victims, it probably won't happen.

Quote:
Madoff Wall Street fraud threatens Jewish philanthropy

By Gabrielle Birkner and Anthony Weiss, The Forward
Tags: israel news, Jewish World

The arrest of Wall Street trader Bernard L. Madoff, who federal agents say defrauded investors of an estimated $50 billion, has had immediate consequences in the Jewish philanthropic world.

Madoff was arrested Thursday for allegedly defrauding his clients of $50 billion in a massive pyramid scheme over the course of several years. He was released on a $10 million bond.

A lawyer for Madoff told the Wall Street Journal: "Bernard Madoff is a longstanding leader in the financial-services industry with an unblemished record. He is a person of integrity. He intends to fight to get through this unfortunate event."

One charity already closed and insiders are worried that the ramifications of Madoff's financial demise may extend to the many organizations he supported and the wealthy Jews he advised.

On Friday, Madoff resigned from Yeshiva University, where he served as the chairman of the Sy Syms School of Business and treasurer of the board of trustees. Madoff and his wife, Ruth, had also endowed a "Presidential Fellowship" at the university.

In a statement, Yeshiva University spokeswoman Hedy Shulman said that news of Madoff's arrest had "shocked" university officials, adding: "Our lawyers and accountants are investigating all aspects of his relationship to Yeshiva University. We reserve our comments until we complete our investigation."

The same day, the Boston-based Robert I. Lappin Charitable Foundation, which had the bulk of its money invested with Bernard L. Madoff Investment Securities, closed its doors and terminated its seven staff members. A 16-year-old charity, the organization's stated goal had been "reversing the trend of assimilation and intermarriage."

It had funded teen trips to Israel, enrichment programs for Jewish educators, and interfaith outreach initiatives. According to a press release issued Friday by the foundation, all of its assets had been frozen by the federal courts. "The money needed to fund the programs of the Lappin Foundation is gone," the statement read.

"It's with a heavy heart that I make this announcement," the organization's trustee, Robert I. Lappin, said. "The Foundation's programs have touched thousands of lives over many years in our efforts to help keep our children Jewish."

Madoff also made charitable donations to other Jewish organizations, including the 92nd Street Y, where he and his wife were listed as "Benefactors" having given a gift of between $2,500 and $4,999 to the 2006-2007 annual campaign. He had also chaired a gala fundraiser on behalf of Gift of Life, a Jewish bone marrow registry and cord blood bank.

In addition, the Madoffs were such significant contributors to UJA-Federation of New York that the charity placed a death notice in the New York Times, extending sympathies to the Madoff family following the death of a family member. The notice mentioned Bernard Madoff, and referred to the family as "cherished friends and leaders whose deep commitment to the New York Jewish community profoundly impacts millions of lives."

The investor was close to a number of prominent Jewish donors, both on Wall Street and elsewhere. The Wall Street Journal reported that members of the Boca Rio Golf Club in Boca Raton and the Palm Beach Country Club in Palm Beach were heavily invested with Madoff's firm. Both clubs are heavily Jewish.
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Old 12-17-2008, 11:34 PM   #8
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Psychopath. That's all I got to say.

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Old 12-19-2008, 07:07 AM   #9
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Apparently it should have been pretty obviously fraudulent to those who understood the investment processes supposedly used. Of course, they had to want to know whether it was the real deal of fake.


Quote:
BOSTON - His repeated warnings that Wall Street money manager Bernard Madoff was running a giant Ponzi scheme have cast Harry Markopolos as an unheeded prophet.

But people who know or worked with Markopolos say it wasn't prescience that helped him foresee the collapse of Madoff's alleged $50 billion fraud. Instead, they say diligence and a strong moral sense drove his quixotic, nine-year quest to alert regulators about Madoff.

"He followed through on everything he ever did. He never let up," said his mother, Georgia Markopolos, in an interview Thursday. "Some kids just let it go if it's too hard, but he wouldn't do that."

"He feels very sorry for these people that got taken," she added. "It wouldn't have happened if they would have listened to him long ago."

Markopolos waged a remarkable battle to uncover fraud at Madoff's operation, sounding the alarm back in 1999 and continuing with his warnings all through this decade. The government never acted, Madoff continued his ways, and people lost billions.

Markopolos reached his conclusion with the help of mathematicians like Dan diBartolomeo, whose analysis of the Madoff's methods in 1999 helped fuel Markopolos' suspicions.

"People should have seen the writing on the wall," diBartolomeo said.

Markopolos did not respond to multiple e-mail or phone requests for an interview.

The 52-year-old resident of Whitman, about 20 miles south of Boston, grew up in Erie, Pa., the oldest of three siblings.

His mother said her son was a little nerdy as a child, as well as occasionally mischievous and unfailingly honest. She recalled an incident where he pelted his elementary school with eggs in the middle of winter, but no one saw him. Time passed with no confession from anyone, until Markopolos stepped forward, admitted he did it, and cleaned the school himself.

Markopolos became an adept hunter and fisherman as he grew up, like many from the rural area, but also showed early aptitude at academics, as well as a willingness to question authority.

"He used to challenge the teachers," his mother said with a laugh. "He'd tell them he had the right answers, but they had the wrong questions."

Markopolos graduated from Cathedral Prep in Erie in 1974, then in 1981 from Loyola College in Maryland, which his mother said he paid for on his own. After time in the Army and in the financial services field, he earned a graduate management degree from Boston College in 1997.

By 1999, he was working for Rampart Investment Management Co. and charged with doing competitive research on Bernard L. Madoff Investment Securities, which was using a similar investment strategy as his company, but far outperforming it. Part of Markopolos's research included a visit to diBartolomeo, whom he knew from his professional circle.

"I think he was curious about how his competitor was doing so much better than they were," diBartolomeo recalled.

Researching Madoff's numbers, using data the firm distributed to prospective investors, diBartolomeo concluded within hours that it was impossible for Madoff to get the returns he reported while using the strategy he said he used.

"As the market goes up and down, this strategy should have done a little better or a little worse, just like everybody else," he said. "Instead, it appeared to be indifferent as to whether the market went up or down. They made money all the time."

Markopolos complained to the SEC's Boston office in May 1999, saying it was impossible for the kind of profit Madoff was reporting to have been gained legally.

But Madoff continued to thrive, even as Markopolos continued to pursue the case.

In 2005, he submitted a report to the SEC saying it was "highly likely" that "Madoff Securities is the world's largest Ponzi scheme." In the report, he says he knew his research could ruin people's careers and asked the SEC be discreet about circulating the report and his name.

"I am worried about the personal safety of myself and my family," he wrote.

The report highlights 29 "red flags" about Madoff's business, among them the returns of a third-party hedge fund managed by Madoff's firm which had negative returns in just seven on the 174 months Markopolos analyzed.

"No major league baseball hitter bats .960, no NFL team has ever gone 96 wins and only 4 losses over a 100 game span, and you can bet everything you own that no money manager is up 96% of the months either," he said.

His warnings were heard too late, and he's become a symbol of a botched oversight of Madoff by the SEC. His mother says the father of three boys under 5 has been bombarded by media requests. Now, a man who tried to be heard for years is going to lay low for a bit, she said.

"Right now, he's out relaxing some place," he said. "I can't even get in touch with him."
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Old 12-19-2008, 09:36 PM   #10
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WHY?? Why did he do it?? WHY??? If you live to be 105, will you ever understand?

I assume he was already fairly rich, or had the talents to be so, he didn't need to be a fraudster. He has fucked up so many lives. is it wrong to feel sympathy for the rich? I think, yes, if they're reduced to penury overnight through no fault of their own.

Maybe the answer, as Purpleoscar suggests, lies in psychology.

Stuff like this makes it so much harder for people like me to defend the capitalist system.
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Old 12-19-2008, 10:36 PM   #11
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A lot of investigation needs to be done still, but I don't think it was a 100% Ponzi scheme. IMO he used the Ponzi aspect to cover up trading losses. Had the market not crashed, he would probably still be going strong. I think there is an element of Ponzi scheme in many hedge funds - i.e. the ones that don't reveal their positions, have lock-out periods (where you can't withdraw cash), and consistently great returns. Other red flags are high leverage and offshore basing (which is common).
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Old 12-21-2008, 01:29 PM   #12
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Quote:
Originally Posted by financeguy View Post
I assume he was already fairly rich, or had the talents to be so, he didn't need to be a fraudster. He has fucked up so many lives. is it wrong to feel sympathy for the rich? I think, yes, if they're reduced to penury overnight through no fault of their own.
The more I read about this, the less blameless some of the victims come across.

There were definitely sophisticated investors, some of them even former brokers themselves. There were some who were even told at the turn of this decade that their returns were impossible (read the article in the Times from the former editor of Marhedge). Facts like 72 straight months of positive returns, some averaged 10-14% (!!) consistently for nearly two decades, the fact that multiple analysts couldn't get these results regardless of the regressions they used, etc. There is a difference between being innocent and being willfully blind.
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Old 12-21-2008, 02:24 PM   #13
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Quote:
Originally Posted by anitram View Post
The more I read about this, the less blameless some of the victims come across.

There were definitely sophisticated investors, some of them even former brokers themselves. There were some who were even told at the turn of this decade that their returns were impossible (read the article in the Times from the former editor of Marhedge). Facts like 72 straight months of positive returns, some averaged 10-14% (!!) consistently for nearly two decades, the fact that multiple analysts couldn't get these results regardless of the regressions they used, etc. There is a difference between being innocent and being willfully blind.
He had a great reputation on the other hand, as a former Nasdaq chairman. And reputation is one of the top criteria when selecting hedge funds to invest with. I am sure there are other Madoffs out there, and they may be uncovered eventually. Many other hedge funds (and even some mutual funds) have returns that seem too good to be true. Some popular mutual funds even have a "mini-Ponzi" element to them - e.g. if you withdraw from the fund within the first few months you are assessed a fee (which apparently goes to the other clients).

I also don't think the money simply vanished. He probably hid a large stash overseas to provide for his family for many generations.
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Old 12-23-2008, 05:20 PM   #14
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From WaPo:

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Multiple news outlets in New York are reporting that a hedge fund manager who reportedly invested heavily with Bernard Madoff was found dead this morning in his Manhattan office.

Thierry Magon de la Villehuchet, 65, was pronounced dead at 8 a.m., according to a Reuters report that cited New York City Medical Examiner spokeswoman Ellen Borakove. The cause of death is not known yet.

He was co-founder of Access International.

De la Villehuchet's fund reportedly invested $1.4 billion with Madoff.
Several of the man's friends have told media sources that he killed himself.
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Old 12-23-2008, 05:23 PM   #15
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he cut his wrists and bled out at his offices
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