Daily Archives: January 13, 2009

Catherine Hooper: “I wuv you Andy, but now it’s time to go back to your wife.”

The noose is growing tighter around the Madoff boys and Uncle Peter, all of whom claim no knowledge of Dad’s evil plan to bilk investors. The authorities are investigating Cohmad Securities, the Madoff feeder fund of all feeder funds.

Regulators probing aspects of Bernard Madoff’s alleged fraud are intensifying pressure on Cohmad Securities after Robert Jaffe, a Cohmad executive and partner of Mr. Madoff, failed to testify before Massachusetts officials.

Cohmad, a small brokerage firm registered in New York, operates out of the same Manhattan office as Mr. Madoff’s stock-trading operation. A spokesman for Mr. Jaffe said he did not know of the alleged fraud.

While Cohmad executed some trades for Mr. Madoff’s funds, its primary purpose appears to have been recruiting customers for Mr. Madoff’s now-fallen advisory business, according to company filings and interviews with current and former Madoff employees. Many such Madoff “feeders” have come under scrutiny in the days since Mr. Madoff’s admission to a $50 billion investor fraud.

Cohmad, a conjunction of the last names of investor Maurice “Sonny” Cohn and Mr. Madoff, carried especially tight ties. Cohmad was filled by employees with long-term or family relationships with the Madoffs, and its operations were enmeshed in the main Madoff businesses, interviews and records show.

Robert Jaffe

Greer Gattuso/Palm Beach Daily News

Robert Jaffe, pictured above in his vintage MG, didn’t know about the alleged Madoff fraud, according to a spokesman.

Cohmad has recently come under scrutiny of the Massachusetts Secretary of the Commonwealth, whose securities division has begun an investigation into Cohmad, saying the investigation is designed to protect Massachusetts investors.

After Cohmad vice president Mr. Jaffe failed to testify Tuesday morning in response to a subpoena, the office said it was “preparing to enforce the subpoena and take all other necessary actions to protect Massachusetts investors.”

A spokesman for the state said Mr. Jaffe was offered a two-day extension as long as Mr. Jaffe agreed to appear Thursday. The spokesman said Mr. Jaffe, who helped bring Palm Beach, Fla., investors to Mr. Madoff, refused to make such a guarantee.

Regulators also are keeping an eye on Cohmad’s trading. Cohmad long cleared its trades through Bear Stearns, now part of J.P. Morgan Chase & Co. J.P. Morgan has been asked by the Securities and Exchange Commission and the U.S. Attorney’s office to monitor Cohmad’s trades and is cooperating, a bank spokesman said.

A spokesman for Mr. Jaffe said Mr. Jaffe is under doctor’s care and had notified the state. The spokesman said the state had agreed to an adjournment, adding that Mr. Jaffe had no knowledge of Mr. Madoff’s alleged fraud and was a victim himself.

Cohmad’s sales representatives appear to have played a key role in the evolution of Mr. Madoff’s hunt for clients starting in the early 1990s, according to investors and documents. The company was formed in February 1985 as a venture involving Mr. Madoff and his longtime friend, Mr. Cohn.

At least since the 1990s, Mr. Cohn would at times act as a gatekeeper to Mr. Madoff partnerships, who promised investors unspectacular but steady returns, say investors. Individual investors who wanted to invest with Mr. Madoff were told to contact Mr. Cohn. Mr. Cohn would then pass the lead on, and potential clients would then either hear back from Mr. Madoff or Frank DiPascali, who worked closely with the advisory business, according to people close to Cohmad.

Mr. Cohn is listed as Cohmad’s largest stakeholder, according to current regulatory filings. Bernard Madoff owns between 10% and 25% of the partnership, these records show, while his brother Peter Madoff also owns a share. Other owners include Mr. Cohn’s daughter, Marcia, who held the title of president and chief compliance officer, and Mr. Jaffe, whose ownership was less than 5%, according to the filings.

Up until a few years ago, Cohmad employees sat in a small group near the main Madoff stock trading desk on the 19th floor of its midtown Manhattan headquarters.

Somehow, a defense that “we never noticed they were there, we never asked them why they were there and they told us they were doing nothing bad, nothing bad at all” is beginning to seem unconvincing. Anyone interested in a couple of houses on Cherry Valley Road and Tomac Avenue?

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What will happen to Bush Derangement Syndrome sufferers when Bush goes away?

Who said anything about him going away? House Democrats demand investigation of Bush Administration abuses. These people can’t afford to let Bush retire to obscurity in Texas. When, speaking to a liberal friend about Obama’s Sunday interview in which he admitted that Guantanamo’s prisoners were a more complicated problem than many had thought, my friend immediately changed the subject to Bush’s “garbled, bizarre press conference – than God we’re going to have an articulate president again.” Their poor minds just can’t grasp nuance, I suppose.

But it’s all good – with the economy rolling and the world once again a safe, secure place to raise our children, the entertainment provided by trying members of the past administration will prove priceless.

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California nightmares

There’s already plenty of documentation about the collapse of California and how its citizens legislated it from a land of opportunity to a hell hole that punishes anyone with ambition and a dream. In the annals of its decline, this small item will surely pass unnoticed but it’s emblematic of what happened. In fact, I think it sums up the whole sorry saga quite neatly.

Under a California law enabling people to sue for violations of the disabilities act, here’s a wheelchair-bound cripple who makes “in the low six figures” by suing companies for, say, having an outside towel dispenser too high off the ground. Each suit is for a few thousand dollars – to small to make it worthwhile defending against, to expensive to pay and stay in business. I again urge readers to give their kids a copy of Dr. Seuss’s “Thidwick, the Big Hearted Moose”. He described what was coming just around the same time Ayn Rand wrote “Atlas Shrugged.” Maybe it was the fallout from open air nuclear testing – who knows?

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Charleston South Carolina – Greenwich, CT

Same inventory glut, same problem.

The local real estate industry is beset by the glut of homes on the market. A five- to seven-month inventory is considered a healthy neutral market. The inventory now: 15 months.

At the end of 2007, it was about 10 months’ worth.

With 10,005 homes to choose from in the tri-county region, it is an extreme buyer’s market. The problem is that buyers aren’t making many moves, anticipating a further fall to the bottom. Still others might have trouble accessing lines of credit.

“Would people buy with access to credit? As an economist, I’ll have the answer for you in 10 years,” Hefner said.

A bright spot, inventory is down somewhat from a few months ago, when it peaked at 11,191 homes in November. Because so little turnover has occurred, people presumably are making other decisions about what to do with their homes. The two big options: live in them or rent them out.

“Most people can’t take a loss. That’s why you see rental numbers going up,” said Gettys Glaze, general manager of Coldwell Banker Real Estate and president of the Charleston Trident Association of Realtors multiple listing service.

Despite the sales slump, home prices remained relatively steady in 2008.

The median price of a home sold in 2008 was $203,270, down 3% from the previous year’s $209,742.

Meanwhile, median home prices are up almost 7% from 2005, when home sales were 45% higher than 2008 numbers.

“The current inventory level remains more than double its level on the first day of 2006,” Vince Graham, president of I’On Group, said in a recent 2008 market review. “Prices have not fallen sufficiently to allow the market to begin to clear.” [emphasis added]

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More Ponz scum surfaces

When the Madoff fun hit some pundit predicted that, just as a horrible market flushed out Bernie, it would also expose tons more Ponzi schemes, all of which had been hiding out nicely while assets were appreciating. As it turns out, that pilot who parachuted from his plane and fled the other day was a minor league Bernie. Minor league, that is, unless you were one of the small investors who lost millions. Some details here, courtesy of DealBreaker.com. More soon.

Fugitive money manager crashes plane, flees.

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Orvis

 Gideon Fountain (no relationship that he’s willing to admit to but “Brother Gid” to me) alerts me to a warehouse sale being conducted by Orvis through January 24th up on Route One, in Norwalk. Not at their store, if one still exists, in Darien, but in the shopping center with a Supermarket – perhaps where Compu US was? Anyway, they’re selling stuff for pennies, including fly rods for 80% off. Why would I need another fly rod? There’s always room for a fly rod – especially since another  brother seems to have disappeared my Powell custom 3 weight. I’ll go check it out and when I find the place I’ll report its exact location here. Of course, a better bet might be to just wait for either Andy or Mark Madoff to hold a garage sale which I’m sure is coming in the near future. But by then, I’m sure I’ll have discovered still more gaps in my arsenal. 

Funny thing – I seem to have rekindled quite an interest in fly fishing lately, even in the dead of winter. Can’t quite figure out why.

 

Hoops catches another one, Seychelles

Hoops catches another one, Seychelles

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Some sellers are finally getting it, but only after a great deal of pain

49 Pecksland Road: Originally priced way back when at $3.850, eight price cuts later, reduced today to $2.350. It still has a swamp for a backyard, but very nice inside.

25 Dorchester Lane: original price, $2.950, six price cuts before today’s, down to $2.190. Purchase price 2004? $2.150 million. I think we’ve fallen below 2004 pricing, myself.

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