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If I understand this forum section correctly, we can post scams that have 'run their course', so to speak. If I am incorrect, admin or mod please delete/edit/move.
So, I thought I would start by posting up a ponzi scheme:
Bernie Madoff Investment Securities LLC
Excellent topic. Madoff certainly made off with an astronomical amount of money and showed just how slow governmental agencies can be to act.
Soapboxmom
U.S. Securities and Exchange Commission - Wikipedia, the free encyclopediaQuote:
Christopher Cox, the former chairman of the SEC, has recognized the organization's own multiple failures in relation to the Bernard Madoff fraud.[19] Starting with an investigation in 1992 into a Madoff feeder fund which only invested with Madoff, and which, according to the SEC, promised "curiously steady" returns, the SEC did not investigate indications that something was amiss in Madoff's investment firm.[20] The SEC has therefore been accused of missing numerous red flags and ignoring tips on Madoff's alleged fraud.[21] As a result, Cox has said that an investigation will ensue into "all staff contact and relationships with the Madoff family and firm, and their impact, if any, on decisions by staff regarding the firm."[22] Approximately 45 per cent of institutional investors felt that better oversight by the SEC could have prevented the Madoff fraud.[23] Financial analyst and whistleblower Harry Markopolos complained to the SEC's Boston office in May 1999, telling the SEC staff they should investigate Madoff because it was impossible to legally make the profits Madoff claimed using the investment strategies that he claimed to use.
The only surprise to me is that he plead guilty, wonder why? Don't most people caught up in similar schemes profess innocence even after conviction?
Not only did he plead guilty, he actually confessed BEFORE anyone else had woken up to what he'd done.Quote:
Originally Posted by Lightbulb
Madoff confessed to his sons, saying he couldn't bear the stress and it was they who set things in motion.
Madoff Trustee Seeks $43.2 Million for Four Months’ Work
The trustee liquidating Bernard L. Madoff’s defunct investment firm asked a judge to pay him and his law firm $43.2 million for four months’ work, as well as about $5.5 million in fees deferred during the case.
Expenses of $1.1 million were claimed by trustee Irving Picard and Baker & Hostetler LLP from Oct. 1 to Jan. 31, according to a U.S. Bankruptcy Court filing in New York yesterday.
High fees in the liquidations of the jailed Ponzi-scheme operator’s firm and the Lehman Brothers Holdings Inc. brokerage might deplete the $2.5 billion fund of the Securities Investor Protection Corp., according to a March 30 audit report by the Office of the Inspector General at the Securities and Exchange Commission. The SEC watchdog recommended “systematic” inspections of SIPC by the SEC to ensure cost-effective processing of brokerage customer claims and liquidations.
Amanda Remus, a Picard spokeswoman, declined to comment on the report. In the filing, Picard said he and his lawyers bill the Madoff estate, not tapping the fund of customer property.
Picard, who has filed more than 1,000 suits seeking money for the con man’s investors, has recovered more than $7.6 billion, out of about $17 billion in principal lost, according to his latest calculations. By next month, the trustee will have determined almost every one of 16,518 claims filed in the case, according to the filing.
Total deferred fees for Picard and his firm since Madoff’s arrest in December 2008 exceed $23 million, according to the filing. The trustee asked the judge to reduce deferrals to 10 percent, from 15 percent, citing “results achieved for the victims of Madoff’s fraud.”
The main case is Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-ap-1789, U.S. Bankruptcy Court, Southern District of New York (Manhattan).
This one does not make SEC look very good either: Missing Madoff’s Fraud Gives Top SEC Lawyer Cover: Ann Woolner
Not that I am a big fan of Bloomberg but the article reveals info of SEC staff being involved.
Quote:
Just when the Securities and Exchange Commission might hope to shed some of the shame of missing the biggest investment scam in U.S. history comes news that its own top lawyer profited from the scheme.
He didn’t do it knowingly because, embarrassingly enough, the SEC didn’t know it was a scam. Still, David M. Becker, the agency’s former chief counsel, wound up profiting from Bernard Madoff’s investment pyramid. That’s according to Becker’s own explanation.
And so he is among the hundreds of people, funds and firms that bankruptcy trustee Irving Picard is suing to recover money for those who lost principal in the Ponzi scheme.
Becker became a beneficiary because his mother invested $500,000 with Madoff that became $2 million by the time she died in 2004, according to the suit. Her sons cashed it out in early 2005, almost four years before the pyramid collapsed.
However unwittingly they profited from the crime, there’s more than a little irony in the suit Picard filed against the three Becker brothers to recover the $1.5 million the family made off of other investors.
For one thing, Picard is claiming in other, more spectacular suits that sophisticated investors and banks, including JPMorgan Chase, knew or should have known they were pumping money into and reaping profits back from a massive scam.
But of all those who should have known that there was something deeply wrong with Madoff’s operations, the SEC tops the list. It’s the agency’s core job to know that sort of thing, yet it blew off the very idea.
Missed Clues
Beginning in 1992, the SEC repeatedly failed to take seriously “numerous credible and detailed complaints” and “never took the necessary, but basic, steps to determine if Madoff was operating a Ponzi scheme,” the agency’s inspector general concluded in a 2009 report.
The report blamed poor staffing and simple ineptitude.
Precisely because the SEC investigations never uncovered the fraud, Becker was spared any knowledge of the allegations. In a letter to inquiring House Republicans last week, he defended himself by citing the same inspector general report that slammed his agency.
“The report finds that the complaints were not reviewed and distributed as they should have been,” Becker wrote, which is to say they never reached his office.
Picard’s suit against the Beckers doesn’t claim that any of them “knew or should have known” Madoff was scamming his clients. They’re being sued because they took out more money than their mother invested with Madoff. The presumed profit that they and other net winners received was actually principal that other, newer investors were putting in.
Marketing Tool
If the SEC had done its job, there wouldn’t have been so many newer investors -- perhaps not even Dorothy Becker.
Pretty sleazy, but not surprising. I have worked with many enforcement agencies and though there are many wonderful people that want to help, the lack of funding and support staff leaves many scams and scammers free to carry on.
It is extremely maddening that the scammers are taking lavish vacations, eating out and spending like they are quite successful, while their victims do without food, lose their homes, drown in credit card debt and / or declare bankruptcy and really suffer.
Sadly, even when agencies openly admit they know something is wrong, they will say it is a matter that must be handled by a private attorney as the complaints are not high enough in dollar amount or number or they say one can expect an audit or investigation, but that it won't happen for at least two years. Sickening!
Soapboxmom