Walter Noel’s “I’m just a moron” defense still working

Writer  Erin Arvedlund, who first exposed Bernie Madoff’s Ponzi scheme in Barrons in 2001 (and was ignored, of course), spoke in Palm Beach Saturday to promote her new book.”Too Good to be true”. 

Financial journalist Erin Arvedlund was working for Barron’s in the spring of 2001 when she started hearing things about a hedge-fund manager name Bernard Madoff.

He supposedly ran a billion-dollar-plus fund and used a very exotic strategy called “split-strike conversion.”

She found it “very strange” that no one on the trading floor knew him or did business with him, yet he traded billions of dollars of options and made money every year.

Through one of her expert sources — whom she describes as a “turbo nerd” — Arvedlund found that Madoff’s returns seemed to be manufactured.

After further investigation, she discovered several red flags, including Madoff telling investors to keep quiet about him managing their money.

“As in any business, someone who’s doing well wants to brag about it,” Arvedlund said. “I found this very odd that he didn’t want anyone to know that he was running their money. This guy was running one of the biggest hedge funds on Wall Street. That didn’t make any sense.”

In her May 2001 article “Don’t Ask, Don’t Tell,” Arvedlund was the first financial journalist to question the mystery surrounding Madoff’s investment practices.

After Madoff’s arrest, Arvedlund wrote the book Too Good to Be True: The Rise and Fall of Bernie Madoff (Penguin/August 2009).

 Arvedlund spoke Thursday night to more than 60 people at the North Palm Beach home of Georgie Duber.

[Snip]

Fast forward eight years. Arvedlund left journalism in 2005, went to work at a hedge fund and was laid off in early December.

On Dec. 11, she was sitting in her Philadelphia apartment, wearing sweat pants and wondering what she was going to do with the rest of her life, when she heard on CNBC that Madoff had been arrested.

“I thought, ‘Holy s—-, they finally got him,’” she said.

“I didn’t know it was a Ponzi scheme. I didn’t know that it had grown to what he said was $65 billion in assets. All I had known all along was he wasn’t doing what he said he was doing.”

Arvedlund predicts there will be more indictments in the next couple of months.

“I think Peter Madoff (his brother) is most likely to get indicted, possibly before the end of the year,” she said. “He was signing off on phony statements, so right there he could go to jail.

“And then there’s the sons. … I think the Madoffs were a family built on theater, a huge Kabuki Theater. Bernie Madoff would bring in potential clients and they would see this bustling brokerage firm and they would think, ‘Wow, this guy’s doing great. I’m going to plunk down my life savings.’ And why wouldn’t they? Who do you ask for referrals? You ask your friend. You ask your family. On the other hand, there were some basic red flags and, sadly, the SEC didn’t pick up on those. I liken them to CSI meets The Office.”

Arvedlund: “Did Ruth (Madoff) know? I think Ruth was a very smart lady. She had a degree from college in an era when it was unusual for women to go to college. She ran the business with Bernie from day one. She kept the books for the legitimate brokerage firm. Bernie didn’t even need the (phony hedge fund). He was wealthy already (from the legitimate business). So why did he bother?”

Arvedlund:“There’ve been rumors around the last couple of weeks that the sons may be indicted. I think the reason that Frank DiPascali will not be sentenced until May is they’re trying to get as much information out of him as possible and that probably includes giving up family members.”

Arvedlund: “There’s some evidence that some of the bigger investors who were also fundraisers were using Madoff as a tax shelter. I think the reason they haven’t been indicted is because they don’t know what to charge them with yet. It might be a case like how they got Al Capone on tax evasion. Robert Jaffe was not a registered investment adviser, but it wasn’t illegal to raise money.”

Arthur K. Salomon, retired partner of Salomon Brothers and Citigroup: “I knew Bernie Madoff the day he started business … I knew Bernie and his wife … These people couldn’t cross the street by themselves. Your next book is to find out who did all this. His wife was smart, but she couldn’t have run it herself. Bernie couldn’t have run it. His friend, Walter Noel, he couldn’t cross the street either.”

Keep it up, Walter – if you’ve got Solomon fooled, surely the SEC will fall for the ruse too.

5 Comments

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5 responses to “Walter Noel’s “I’m just a moron” defense still working

  1. Inagua

    Being a moron does not help Walt with the charge of lying about due diligence. Which is why he settled with Massachusetts. And why he will settle the other charges as well. The only question is how much he will be allowed to keep. I suspect he will get to keep only one residence, and that it will be Greenwich. You might be stuck with this lying fool as a full time neighbor until he dies.

  2. Fake Monica

    People should feel sympathy for our family. We did not try to rip anyone off, but were in fact victimized as well by Madoff. We are essentially decent, trying very hard to succeed, overachieving at times, but running up against “blue bloods” who would not ever accept such commoners into their ranks (that is what inbreeding will do to you). The people who come off in an unsympathetic light are those same in-bred “blue bloods”, who seem to be overly sensitive, hyper-critical, and downright nasty. I suspected that they weren’t going to accept us, no matter what my family tried to do in order to fit in. Our behavior wasn’t anything less pervasive, rambunctious, pointed, or calculating than what you might find from say, the Kennedy’s. We are nice people, surrounded by small people. I have no doubt that with all of our misfortunes, we are going to be ok in the end.

    Off to Paris

    Kind Regards,

    Fake Monica

  3. Are there any set of circumstances where the Noels will ever be accepted in Greenwich (were they ever really accepted in Greenwich?)? If not, why on earth would they want to continue to live there? Why not move back to Tennessee or South America? Why stay in a place where they not only won’t be accepted, but despised? Further, will they be able to afford to live there after all the settlements? What are taxes on a house like theirs?

  4. kanisa

    Look, the Noels were accepted. You don’t get into Round Hill Club as they did and as several of their kids did too without being accepted. I know because my parents are members of RHC, and no, I would never get in, although lucky for me, I don’t want to. The Noels were part of the Greenwich blueblood elite as much as there is such a coherent group. By the way, Walter and Monica have been asked to resign from Round Hill, which is exactly the same thing as being forced to resign. One of the daughters is still a member though.

    • christopherfountain

      I had a run in recently with a bitter little man and his equally bitter wife and it struck me that, while they were focusing their hatred and rage on me and saw me as the cause for their ruined life, what was really wrong was that hubby has lost his money and with it, his “friends” in the Back Country and the social acceptance he thought he’d earned. He’d led a shallow, temporary life contingent on his bank balance and the result was sad to witness. Rocky Raccoon, checked into his room….