Lots to come, and I hope one of them will be mine (I’m concentrating more on the Walter/ Greenwich side of the story because it’s more fun) but the Journal excerpts “Madoff With the Money” today. I particularly like this part where Peter Madoff, having known about the scam for at least 24 hours and spent that time discussing things with his lawyers and the FBI, announces that, to his shock and amazement, Bernie’s been arrested. It’s such a nice scene I may lift it and use it for when I have Walter admitting to his Round Hill Club investors that their money is gone.
Around 10 o’clock that morning, the boss’s younger brother, Peter, the number two in charge of the family-run firm— Bernie’s sidekick for some four decades— entered the trading room on the 18th floor and called for everyone’s attention.
His hands were trembling, and he needed to lean against a desk to steady himself. His voice was tremulous.
“I have some bad news,” he told the gathered workers. “Bernie’s been arrested.”
“He looked scared, teary-eyed, and everyone was suddenly in a state of shock,” vividly recalls one of those standing there, listening in utter disbelief. “Someone asked Peter what happened, and he said he did not know why Bernie was arrested, or for what reason—or whether it was personal, or whether it was business. He said he didn’t know whether it was for good, and he didn’t know whether it was for evil. (This was a claim that would later turn out to be untrue.) And he said, ‘Don’t discuss this with anyone.’
“When we found out later that day what Bernie had done, I remembered how sincere Peter had sounded that morning, and I thought, ‘In his next career he could win an Oscar.'”
Yesterday we noticed that Peter Madoff forced an underling to sign off on a lease for a new Mercedes for Bernie so that the underling, rather than Peter, would be liable for the payments when Madoff Inc blew up. Seemed suspicious to us. Now Bloomberg has noticed another telling bit from the same testimony of Harry Markopolos’ testimony: Only Peter Madoff was allowed to audit Bernie’s books. So he was on to the scam the whole time, wouldn’t you say? I don’t think a jury is going to disagree with this conclusion. All that’s left now is what those fly fishing fools, Mark and Andy knew about Dad’s operations and when they knew it (I figure Mom Ruthie was in on the deal from the beginning and has already reserved the Leona Helmsley Room at Bedford Women’s Prison).
Feb. 4 (Bloomberg) — Bernard Madoff rejected an investment fund demand for an outside audit of his performance, saying only his brother Peter was allowed to do that “for reasons of secrecy,” a certified fraud examiner testified to Congress.
Harry Markopolos, who sought for nine years to persuade U.S. regulators that Bernard Madoff was running a Ponzi scheme, told U.S. lawmakers today that “a fund of funds representing Arab money” had been told by Madoff that it could not have an international accounting firm verify his performance. The tip was contained in documents released as part of Markopolos’s testimony to a House Financial Services Committee panel.
The Trustee overseeing the dissolution of Bernie Madoff’s firms has come across $946 million in assets, which is not bad for a day’s work. But check out this tiny little drama. If Peter Madoff, Bernie’s brother, was kept in the dark about what Bernie was doing, why did he stick some poor underling with liability on a car lease when he could have signed it himself? No fool, he.
Craig Kugel, who worked in human resources at Madoff’s brokerage, said he shouldn’t be stuck with $58,000 in payments for a 2009 Mercedes once used by his ex-boss.
Kugel signed a lease for the car in October because Madoff refused to provide the necessary financial information about his firm to the car dealership, attorneys for Kugel wrote in a court filing. Madoff’s brother Peter, the firm’s chief compliance officer, allegedly designated Kugel as a director and told him to sign the lease on the firm’s behalf; now he’s being held personally liable for the lease, the attorneys wrote.
Bernie Madoff flunky Sonja Kohn lost the Russian Mob’s money and now she’s in hiding. I’m speculating she’s in Patagonia because (a) it’s summer down there and (b) the Madoff boys probably told her how good the fly fishing is. But wherever she is, she sent an email to Bloomberg, protesting her innocence.
Kohn’s e-mail came from an address verified by a Bank Medici spokeswoman. Kohn said Madoff was “trusted by the best and smartest” and likened his scheme to a tsunami or earthquake that strikes “unpredictably and devastatingly.”..
…“The Madoff fraud destroyed lives, life savings and companies that were the result of decades of hard work,” she wrote. Madoff’s firm “was not an obscure hedge fund; it was a 48- year-old, highly visible firm with approximately 200 employees and over $600 million in capital,” she wrote.
Peter? Mark? Andy? Do you see that last part, where she’s referring to all those employees and capital? She’s talking about your firm, the one that didn’t know what Bernie was up to. Gosh, how could she get such a wrong impression, how could she think you guys were involved? Sure hope no one else made that mistake, or you could be sued!
Bernie Madoff made exactly zero trades, ever, through Madoff Investments. He probably made no trades at all through anyone, investigators think. I don’t think this revelation helps brother Peter or sons Andrew and Mark – they knew Bernie was doing something involving trading and surely, in 30 years, they must have sneaked a peek at at least one client’s monthly statement and thus been aware of the volume of the supposed trading activity yet they never questioned why no trades went through their branch of the family firm? Never? When there were huge fees to be made from such trading? That makes no sense and certainly doesn’t pass the smell test.
Hoops, if you’re reading this, I’m free for coffee anytime, at your convenience. Let’s talk – the ice will be out of the upper Delaware in just a couple of months.
Can you spell “fraudulent conveyance”?
Transferred house to wife two years ago and she promptly filed for Florida’s “homestead exemption” which protects her from creditors. Could it be that Peter knew what was going on before last week?