Madoff trustee Picard in settlement talks with Fairfield Greenwich Group. As noted earlier today, Noel’s Fairfield Sentry Fund was dissolved yesterdayin the British Virgin Island, Attorney Boies is just one of dozens of lawyers clawing their way up the road to Walter’s house and, all in all, things look bleak for Walter and the Fabulous Five. Will they discover that “tomorrow is another day”? Will they have to leave Tara? Tune in, as the world turns.
Tag Archives: Bernie Madoff
While Walt Noel slurps Long Island iced tea at the Bathing Club in Southhampton on someone else’s dime, here’s a guy who is digging into his own pocket to replace the $5 million his employees lost in their 401ks due to their employer’s investment with Madoff. That gentleman, one Robert Lappin, says he feels that he’s doing the right thing. Walter does too, although he does feel his friends’ pain and is very sorry they have to suffer.
Fox News, burned out from wall-to-wall Michael coverage no doubt, has come up with a prison “expert” (that would be any bum who spent years behind bars) to opine on how Bernie’s gonna get shived by an inmate paid to do so by a burned investor. I understand the insane desire to keep up ratings – why do you think I’m all Walt, all the time? – but this is just silly. he dies, he dies, but wasting airtime on a loudmouth isn’t productive.
Besides, and getting back to Walter, isn’t it more likely that if there’s a cheesed off investor floating around out there angry enough to kill he’s a Colombian and wants revenge on Walter’s beloved son in law, Andres Piedrahita? Where is Andres these days, anyway? If he’s going to get whacked, I do hope he’ll have the decency to return to Greenwich for the final exit interview – we have standards to maintain here and his death in an obscure little Spanish village won’t help us at all.
The affable Greenwich developer Dom DeVito reports to Otisville Prison September 15th for a 51 -month stint of R&R. Bernie Madoff’s future home is uncertain (and would somebody please draw a cartoon of Bernie in his cell, marking off the days til release on his calendar?), but his lawyer is pushing for Otisville, too and now Fredric Bourke is looking at a stay, probably similar to Dom’s in length, at a similar site. Could all three end up in Otisville? Wow.
A friend of Dom’s, reflecting on Dominick and Bernie being together, said, ‘the dark intelligence of Dominick, and five years at Madoff’s knees? A monster!” He meant it as a compliment, I think. Imagine if Ric Bourke joins in on the tutorials – Dom’s intellect, Ric’s money, Bernies’ schemes – watch out, world.
With Bernie put away for good and Ruthie out on the street (without her fur coat) prosecutors are turning their attention to the feeder funds that made so much off of Bernie while their clients earned so little. Today it’s former penny-stock fraudster Sonja Kohn and her Austrian operation with the deceiving name of Bank Medici (Kohn is no Medici and barely a banker), but the allegations: $20 million payments for “research” and still more payments for funneling investors into the Madoff maw sounds like what might turn up during an investigation of Fairfield Greenwich Group. I have every hope that that investigation is proceeding as I write this.
As for the remnants of the Madoff family, a source tells me that he spoke with one of the boys and the two of them are convinced their lives are over and they’re facing a life of destitution. For what it’s worth, this source believes the boys were just doofs who play acted at running Daddy’s business and never learned or even questioned how it was that they could get so rich when their company turned no profits. Oh well, that’s too bad, but I’ll reserve my sympathy for more deserving victims.
Here’s what prosecutors are looking at in Austria:
U.S., U.K. and Austrian prosecutors are investigating a former Austrian fund manager they believe was paid more than $40 million in kickbacks to funnel billions of dollars of investments to Bernard Madoff.
Prosecutors from all three investigations believe Mr. Madoff paid kickbacks to Sonja Kohn while she was chairwoman of Austria’s Bank Medici AG via separate companies she controlled, according to affidavits detailing the investigations and hundreds of documents collected by Austrian prosecutors that were reviewed by The Wall Street Journal.In exchange for the kickbacks, prosecutors allege, Ms. Kohn turned three Bank Medici funds into “feeder funds” that supplied Mr. Madoff with an estimated $3.5 billion from European investorsThe three investigations, which are separate and at an early stage, offer a picture of how Mr. Madoff may have persuaded fund managers abroad to find investors for Mr. Madoff. The investigations don’t claim that Ms. Kohn knew the nature of Mr. Madoff’s $65 billion Ponzi scheme.
“I am actually the greatest Madoff victim. It is a tragedy for my family, my company and for me personally,” Ms. Kohn said by phone on Wednesday. She declined to discuss details of the allegations against her.
Ms. Kohn, a 60-year-old Viennese former Wall Street penny-stock broker, has repeatedly denied prior knowledge of Mr. Madoff’s $65 billion fraud or any wrongdoing. A judge sentenced Mr. Madoff to 150 years in prison on Monday.
According to an April affidavit from the Justice Department filed with Vienna prosecutors, Ms. Kohn is under investigation in the U.S. for potential criminal charges of conspiracy, fraud and wire fraud in connection with the alleged kickbacks.
Regulators have filed civil, but not criminal, charges against several fund managers who steered their clients’ money to the Madoff firm.
Two streams of alleged payments are under investigation. Early this year, U.S. investigators noticed a flow of payments totaling about $32 million over 10 years from Mr. Madoff’s advisory firm, Bernard L. Madoff Investment Securities LLC, to Infovaleur Inc., a New York company that was “owned by Sonja Kohn personally,” according to a U.S. affidavit filed on April 6.
The U.S. affidavit said U.S. prosecutors were unable to locate a registration for Infovaleur Inc.
“It does not appear that Kohn, or Bank Medici, ever disclosed to investors in the feeder fund that Kohn was personally receiving payments from Madoff at the same time as she was investing the feeder funds with [Mr. Madoff's fund],” the affidavit says. Mr. Madoff was “actually in full control” of Bank Medici’s investments, according to the affidavit.
Prospectuses for the Bank Medici funds that Ms. Kohn oversaw claimed they were investing in a basket of 35 to 50 Standard & Poor’s 100-stock index shares, as well as in U.S. Treasurys, the affidavit says.
The prospectuses didn’t mention Mr. Madoff or his company, when in fact all of the funds’ money was being forwarded to Mr. Madoff, the affidavits say.
Meanwhile, Grant Thornton U.K. LLP, the accounting firm liquidating Mr. Madoff’s London-based unit, Madoff Securities International Ltd., discovered a bank receipt that triggered a U.K. investigation, according to a March 24 affidavit filed with Austrian prosecutors by the Serious Fraud Office, a U.K. government agency responsible for prosecuting complex fraud cases.
The bank receipt referenced a check that Madoff International paid to a company called Erko Inc. and which was deposited in a Vienna bank account, according to the U.K. affidavit.
The affidavit said the Serious Fraud Office had determined that both Erko and the bank account were controlled by Ms. Kohn. The fraud office also said in the affidavit it was unable to locate a registration for Erko.
The U.K. affidavit alleges that Mr. Madoff’s London subsidiary paid about £7 million ($11.5 million) over five years to Erko. A British prosecutor alleges in the document that Mr. Madoff attempted to hide payments to Ms. Kohn by “falsely” declaring them in his company accounts as payment for research reports.
“It is suspected that the research papers were completely worthless and that the reports were never in fact used by [Madoff Securities International] for business decisions,” the affidavit said.
The Serious Fraud Office is investigating Ms. Kohn in connection with potential criminal charges of money laundering and falsifying documents to receive kickbacks, according to the affidavit.
U.S. prosecutors say Mr. Madoff depended on feeder funds run by investment advisers such as Ms. Kohn to recruit the large numbers of new investors needed to sustain the fraud.
The DailyBeast has unearthed a gallery of Madoff family pictures from an earlier time, when the SEC slept and Walter Noel was doing his job. Very touching.
[I]t’s probably just going to be a lot of monotony, which will be boring but let’s be honest– he’s a 71 and the alternative, had he not run into some legal troubles, would’ve been puttering around Boca with Ruth squawking in the background. With this new change in life plans, he’ll be mixing it up, making friends and actually making money. Between 12 and 40 cents an hour, depending on the gig and its seniority! He’ll also have the time to get in shape, since there’ll probably be a walking track and basketball court, where you just know he’ll be hustling guys twice his size on the regular. Finally, let us not forget that being thrown in the slammer will actually provide some measure of relief to Big B, who will be free, mentally-speaking, for the first time in his adult life, assuming that former employee wasn’t just blowing smoke re: Ponz Boy being obsessed with symmetry and straight lines.
Of course, Bernie’s obsessive need for cleanliness probably won’t jibe with the less than spotless conditions of wherever he ends up, but presumably fellow inmates will have no problem dressing him up in a French maid costume and scrubbing on hands and knees.
Robert Jaffe has been sued for fraud by the SEC. ”Bob” is the son-in-law of Carl Shapiro, the 96-year-old philanthropist who first started Bernie on his way in the 60s, made millions with him and, until recently, was depicted as Bernie’s last victim because he wired $400,000 to Madoff to keep the firm afloat. Now’s there’s some thought that Carl was in on the whole scam and sent the money in to preserve his good name, rather than to help his god friend Bernie. Whatever, perhaps his son in law will rat him out to shorten his own jail sentence.
I’ve been pretty excited about Walt Noel’s plan to open BJ’s Pub, especially since he’s promised me a job busing tables. But now I see that the Geneva (that would be in Switzerland, not upstate New York) public prosecutor has opened a criminal investigation into Banco Santander’s role as a Madoff feeder fund. The areas of investigation: failure to conduct due diligence and turning a blind eye to Bernie’s evil ways, sound exactly like what Walter’s Fairfield Greenwich Group is accused of. It’s possible that what is criminal in the land of chocolate is not illegal in the US – mere negligence, for instance, is not – but if that lovable son-in-law Andres sold FGG “investments” over there,and I believe he did, then this could be a worrisome development.
Of course, the prosecutor says it will take “at least two years” to complete his investigation and, at 78, Walter may very well not be around to hear the results. I don’t wish you ill, Walt, but you might be more comfortable in a 2X8 box than a 6X12 room. Just saying ….
The Wall Street Journal reports today (no public access, so no link) that federal investigators are looking into whether some of Madoff’s biggest investors were actually co-conspirators rather than mere victims. the name that most intrigues me (and, due credit where due, Franki Farricker, who raised this point with me this morning) is Carl Shapiro, the 90 – year-old Palm Beach retired garment worker who, until now, has been described as Madoff’s biggest sucker.
Federal investigators are reviewing evidence that they think suggests Mr. Shapiro also knew his returns were fraudulent, according to people familiar with the matter. Unlike Messrs. Picower and Chais, Mr. Shapiro, a women’s clothing entrepreneur, was never in the finance business. He is one of Mr. Madoff’s oldest friends and biggest financial backers and helped Mr. Madoff start his investment firm in 1960.
In 1971, Mr. Shapiro sold a clothing brand for about $20 million. Over the years, that sum grew to hundreds of millions of dollars and some say more than $1 billion, the vast majority of it from Mr. Madoff, according to people close to Mr. Shapiro.
Mr. Shapiro personally lost an estimated $400 million from the fraud, including $250 million invested with Mr. Madoff 10 days before the fraud collapsed, said people familiar with the matter. His foundation lost more than $100 million.
So that answers the question of how Bernie could rip off his oldest, closest friend as the wolves were closing in; he didn’t. That last $450 million contributed by Carl was not the dumb act of a befuddled old man – Shapiro was trying to keep the Ponzi from collapsing and his lifetime of crime exposed. Kind of kills my sympathy for the senile bastard.
And, speaking of which, no mention, so far, of Walter being investigated. Well, there are some cash laundering questions being addressed by British authorities, but that seems to be about son in law Andres’ machinations. It looks as though Walter might really have been the dumb F… his friends describe him as. Hey Walt, I’m sorry for the harsh suspicions I’ve voiced about your complicity. Subject to further revelations, maybe you’ll be getting off with just the loss of all your assets, and that’s not so bad: life in a Florida double-wide perched on a swamp, the Fabulous Five and Monica serving you cat food and Cheeze Wiz on crackers is a lot better than bologna on Wonderbread served by a prison trustee. Just ask Bernie.
The Bernie Madoff fraud Trustee has sent “claw-back” letters to Madoff investors who have received money from Bernie over the years, and those investors are hopping mad. Fair enough, though I’m not all that sympathetic with one “victim” who pulled out $440,000 of other people’s money and now resists paying it back, but what I’m really wondering is, has a claw-back letter been sent to Walter Noel? I mean, why chase down $20,000 in misappropriated funds when Walt’s Fairfield Greenwich Group made hundreds of millions of dollars? Yes Walt, I know, you were a victim too, but that doesn’t seem to count for beans with the Trustee or the applicable law. I’m looking forward to a number of new listings on Round Hill Road showing up son..
Madoff Trustee sues the west coast equivalent of Greenwich Fairfield Group, Chais, claiming he knew or should have known earnings were bogus. More suits against feeder funds coming, he promises. Wonder if he’ll sue the feeder fund that made the most money of them all?
That’s $10 million more than originally bid, but quite a bit less than the “hundreds of millions” Bernie himself said the company was worth. Of course, Bernie had some difficulty estimating the value of a number of his assets.
The Madoff Trustee is demanding that all withdrawals made from Madoff funds in the past six years (presumably, from December 12, 2008, when he was arrested) be returned. I imagine that Andy Madoff’s place at 57 Tomac and Mark’s at 21 Cherry Valley are going to be heading for the block anyway, but what about Mark’s ex-wife in Old Greenwich, who pulled out her money at some point? I think their divorce occurred in 2000 and so perhaps she cashed out then and is safe from this demand, but her new house was built in 2006. If she waited until then to retrieve her money, the Trustee will want a word with her. And how about Marc Fisher up on Dewart (?) I’d think, given the size of his reported losses with Bernie, there would have been some sizable withdrawals,too. The Trustee’s position, as yet unchallenged by victims’ lawyers, is that the money must come back, regardless of net gains or losses. Ow.
Photographers captured Ruth Madoff leaving the MCC with a bag of cash, presumably investments made by new investors Bernie’s been cultivating behind bars. Ya gotta have a plan, I always say, and Bernie obviously has one.
Bernie Madoff is finally showing his kinder, gentler side (no doubt his stay in the Manhattan Correctional Center is doing wonders in that regard) and has started up a website devoted to the defense of his friends. Walt sent me the link to this beautiful testament to friendship and I’m glad he did. It makes me warm all over, or at least, as Chris Matthews might put it, down my leg.
A Connecticut judge has frozen the assets of Madoff’s wife, Ruth, his brother and two sons, and has also frozen the assets of Sandra Manzke the founder of Maxam Capital and Walter Noel Jr. a partner at Fairfield Greenwich Group (FGG is also being sued separately in the case) both feeder funds to Madoff’s former operation.
Apart from, “normal living and business expenses”, everything is on pause for the entire family and even some of Madoff’s top business associates. Fairfield Greenwich Group was a “feeder-fund” which funneled approximately $7 Billion to Madoff. The court order was brought about after the Fairfield Pension Fund (which currently has 1,500 members) requested it – the pension fund had as much as $42 Million with Madoff placed through the aforementioned Maxam Capital. The lawsuits are alleging that both FGG and Maxam Capital were negligent in placing funds with Madoff and while they may not have specifically know that Madoff’s operation was a ponzi scheme they were certainly involved in the criminal actions as a related party.
I can see the courts freezing the family’s assets, but is it too much to freeze these firms’ assets as well? I think so. I think it’s a reach and, unless you can prove to me that these feeder funds actually knew what Madoff was up to then its not proper to throw them in his realm, as they are victims as well.
Madoff has proved to be a cunning liar and creative schemer who fooled the SEC, his investors, and others for decades. Is it a stretch to think that these other feeder funds were also lied to? Madoff’s key defense to questions about his operations was to either dodge the questions or just lie – that’s it! Let’s remember this guy was not a criminal mastermind, he was just a good liar who covered his tracks well and was able to get away with something for a long time. Also remember that for the last thirteen years he never actually invested a single dollar in any stock at all!
My fear hear [sic] is that the tar and feather routine will get out of hand. While its necessary and appropriate to punish those involved and who assisted Madoff in perpetrating his perpetual ponzi scheme it is not right, nor practical to blast the flame-thrower at everyone who was in Madoff’s vicinity. These feeder funds were lied to as well. They received fake information, or none in some cases, but chose to invest anyway because Madoff was supposed to be this “genius”. How many times have you bought stock on a friends tip and it backfired? The only reason you bought the stock is because you thought it was a “hot tip”
What I’m driving to hear [sic] is that the greed perpetuated the frenzy. The feeder funds wanted to make their fees for “managing” money and the clients wanted to get “in” to the markets and as long as they were being told they were making money no one really checked.
Everyone was negligent. It was negligence through greed. Should everyone be sued? Should you sue your own accountant who looked through the Madoff prospectus and didn’t ask a lot of questions? How about your friend’s cousin who turned you on to the hedge fund who, through another third party channeled money to Madoff? You see where I’m going, right?
Let’s hold the parties who are directly involved and truly responsible accountable and let’s not whip the revenge buzz-saw around because we’re all upset.
From the best bridge playing realtor in Minnesota, Peg, comes this link to a NYT story detailing the woes of Palm Beach retailers in Bernie’s aftermath.
LONG before the number was redolent of bailouts and bank failure, David Neff decided that Trillion was the perfect name for his clothing store here on Worth Avenue, this town’s boulevard of luxe retail.
The idea was to brace customers for the you’ve-got-to-be-joking price tags — $6,800 for a sport jacket, $800 for a button-down shirt — and to convey unparalleled opulence.
“We wanted people to know that this is a lot,” Mr. Neff says, gesturing to the clothing, “and we didn’t want anyone to open next door with a store that sounded like it might be more.”
Until last year, this idea actually seemed reasonable.
Then the meltdown vaporized the portfolios of multimillionaires here and, soon after, a beloved Wall Street wizard and Palm Beach homeowner named Bernie Madoff was unmasked as a fraud.
For years, Mr. Madoff’s elusive genius act beguiled his Jewish neighbors, as well as friends of those neighbors, and so on, and so on, until vast chunks of local money were hoovered into his Ponzi scheme. Life savings, dreams, and countless inheritances, gone.
“A guy stood right there and cried,” says Mr. Neff, pointing at a table covered with $800 cashmere cable knit sweaters. “And he told me he’d lost it all, his wife lost it all, his daughter lost it all. He said to me, ‘I had everything with Bernie.’ ”
A lot of regular customers haven’t been seen in Trillion since Hurricane Madoff struck in December — including, of course, the hurricane himself.
The last time he was here, he fell for a $2,000 pair of worsted spun cashmere pants, which Trillion didn’t have in his size, and had to be ordered from Italy.
After the slacks arrived, but before Mr. Madoff could come by for a fitting, he was arrested.
“I remember I heard about the arrest and I went directly to the store to charge those pants on his credit card,” recalls Mr. Neff, a fit, gray-haired man in perpetual motion. “But the card had already been canceled.”
One familiar note: realtors in Palm Beach can be counted on for the same soothing calm reassurance that most Greenwich agents engage in. “Fifty cents on the dollar? Not in Palm Beach – hah!”. Ha ha ha.
Andres Piedrahita sits down with a Journal reporter and denies knowing anything. He sold, got rich, and never questioned a thing. Smart guy, just like Corina’s dad.
After graduating from B.U., Mr. Piedrahita knocked around New York working variously as a commodities broker, selling penny stocks and as an investment adviser. His budding financial career was almost clipped in the early 1980s. At the time, Mr. Piedrahita, who was working for a small commodities dealer then called Balfour Maclaine, got a number of his father’s Bogota friends interested in investments that quickly went south. Many of his investors “stayed quiet and lost their money with dignity,” says one of the investors. “They valued their friendship with the father over their investment.”
But one investor didn’t. He says he asked Mr. Piedrahita frequently for information on how his investment was doing. Mr. Piedrahita avoided the issue, even claiming on one visit to Bogota from New York that he had forgotten to bring along the client’s accounts. Growing suspicious, the client says he hopped a plane to Manhattan, went to Mr. Piedrahita’s office and confronted his boss, asking for the information Mr. Piedrahita had avoided providing. “It was catastrophic,” the client says, remembering the state of his account.
Bottom line: Mr. Piedrahita lost his job, says the client, who recovered all his money. Mr. Piedrahita says eight clients lost a total of about $600,000. “Everybody has some bounces,” he says. “I sold something that turned out to be bad. I sold it with the best intentions, and it didn’t work. That’s the nature of commodities.” He disputes the client’s claim that he was fired from Balfour. “Not true,” he says. “I moved to Prudential Bache.”
Here’s an intriguing bit of history:
Friends say Mr. Piedrahita settled down after his marriage to Ms. Noel. He merged Littlestone with Fairfield Greenwich in 1997. Shortly after, he moved to London to a mansion on Chester Square. In Madrid, where he moved in 2003, Mr. Piedrahita’s lifestyle became even grander. He commuted between Madrid and London on a private Gulfstream jet which was parked at a military base close to Madrid. He was invited to a costume party at a Russian estate where everyone dressed up as czarist-era aristocrats. He went hunting for pheasants with the cream of Spanish society.
Relatives of Piedrahita have told me that he “had to leave Greenwich” and then “had to” flee London. Why? So far, no one’s talking.
But here’s the bottom line. The man was dirt poor, living above a delicatessen in New York, and sold penny stocks. No one sells penny stocks who isn’t a crook because, by their very nature, those securities are solely vehicles for fraud and price manipulation. So a poor, penniless crook meets up with Walter Noel, starts peddling Madoff “investments” and within a few years is flying around in Gulfstream II jets and hunting with the aristocracy. When crooks get rich, I suspect the worst, but Piedrahita denies everything:
“I look at myself in the morning, and I’m very proud of what I have done, and so are my partners,” says Mr. Piedrahita. Then he adds, referring to the Madoff scam: “Nobody knew anything about anything.”
Somehow, I think litigation and criminal investigations will eventually prove otherwise.