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The Next Targets in the Madoff Case
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Shannon Stapleton / Reuters
UPDATE, 6/30: Confirming a story by The Daily Beast's Lucinda Franks from March, the Associated Press reports that at least 10 associates of Bernie Madoff-possibly including family-could soon face charges.
Two days before Bernard Madoff enters an 11-count guilty plea in Manhattan federal court, the investigation into his giant Ponzi scheme has broadened to include a number of suspected co-conspirators, according to federal officials involved in the case. Madoff’s lawyer told a judge today that there was no “deal” connected to Madoff’s confessing to money laundering, mail fraud, and other counts that will likely result in a life sentence.
Ruth Madoff, who was considered “innocent at first,” is believed to have received at least $70 million from her husband and is now therefore an object of the investigation.
That tallies with the revelation, from another source involved in the probe, that Madoff has not been cooperating in good faith with investigators. “He is not reliable. He’s jerking everyone around,” said the source. “Every day he changes his tune about where the money went and where it is. He’s trying to protect his family.”
A source close to the Madoff defense team agreed that Madoff’s main concern was to preserve as many assets as possible for his wife and children and to keep them from legal entanglements. “The US attorney’s office is still trying to resolve what is tainted or clean money, what real property in the US is appropriate for the Madofffs to keep,” the source said.
That may prove difficult. Sources say new information has surfaced that suggests several members of Madoff’s inner circle transferred assets to their wives, transactions thought to be laundered through an English bank.
Ruth Madoff, who was considered “innocent at first,” according to this source, is believed to have received at least $70 million from her husband and is now therefore an object of the investigation. That is one reason why she recently decided to retain her own lawyer, leaving Ira Sorkin, who has represented both of the Madoffs since December, when the Ponzi scheme was revealed.
Investigators are focusing their attention on three groups of possible co-conspirators. “There should be at least 20 indictments, between the three groups, if the feds are doing their jobs,” said one highly placed lawyer involved in the case. “Some will be conspiracy, the ones who were deep into it with Madoff, and others will be civil cases sent to the SEC for prosecution.”
(Lawyers and prosecutors who spoke to The Daily Beast for this article declined to go on the record, citing their legal involvement in the case.)
In the first group are employees of Madoff’s firm who concocted false trades and sent out phony statements to thousands of unsuspecting clients.
The second group is comprised of principals in feeder funds such as Cohmad Securities Corp. and Fairfield Greenwich Group, which funneled investor dollars to Madoff and received large fees for steering this business. If they were aware of Madoff’s fraud, they could face criminal charges; if they were not, they could be hit with civil charges for a lack of due diligence.
“It’s a question of state of mind,” said a lawyer for a Madoff employee. “If the feeder fund principals like Walter Noel of Fairfield Greenwich or Robert Jaffee of Cohmad didn’t ask Madoff any questions, if they simply turned the money over to a Madoff account without doing the work they were supposed to do to make sure their clients were well-protected, they would be guilty of fiduciary violations, which is a civil matter. But if they knew about the Ponzi scheme, if they had the intention to deceive, that is a felony.”
One attorney close to the defense team of Walter Noel, who is reported to have offshore bank accounts, says the belief is that Noel could be indicted in England on money laundering charges.
The third group is the target of an investigation that's still in its early stages into money laundering through British banks, in which US and British authorities are cooperating. This group consists of solicitors, accountants, and others in London who may have assisted Madoff in transferring funds from client accounts to a Madoff entity that lists Ruth Madoff, brother Peter Madoff, and sons Mark and Andrew Madoff among its board members.
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Jacob Bernstein is a senior reporter at The Daily Beast. Previously, he was a features writer at WWD and W Magazine. He has also written for New York magazine, Paper, and The Huffington Post.
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Lloyd Grove is editor at large for The Daily Beast. He is also a frequent contributor to New York magazine and was a contributing editor for Condé Nast Portfolio. He wrote a gossip column for the New York Daily News from 2003 to 2006. Prior to that, he wrote the Reliable Source column for the Washington Post, where he spent 23 years covering politics, the media, and other subjects.
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Jeff Madrick is a contributor to the New York Review of Books and a former economics columnist for the New York Times. He is editor of Challenge Magazine, visiting professor of humanities at Cooper Union, and senior fellow at the New School's Schwartz Center for Economic Policy Analysis. He is the author of Taking America, The End of Affluence (Random House) and The Case for Big Government.
Sources: Madoff Indictments Imminent
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
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Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
Ruth's $45 Million Stash
Allan Dodds Frank is a business investigative correspondent who specializes in white collar crime. He also is President of the Overseas Press Club of America, one of the many journalism organizations that protests the arrests of journalists abroad and repression of freedom of speech.
Lucinda Franks is a Pulitzer Prize-winning journalist and author who was on the staff of the New York Times and has written for the New Yorker and the New York Times Book Review and Magazine. Her latest book is My Father's Secret War, about her father, who was a spy for the OSS during World War II.
This is getting more intriguing by the day. MF couldn't have done it on his own. Can't wait for the next chapter!
Catwoman
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POOR BERNIE MADCOW
Yes he finally got caught ---- so what???? Where is the money Bernie???? I have got a remedy for those that steal big bucks then have selective memory defaults. OK bud--- off to solitary confinement you go with bread and water as your fine meal ticket once a day ----till your memory gets far better than it is now or until your fines are paid that account right now to the tune of $35 billion.
As a gentile, I'm not sure I understand your comment "opedanderson": You think no one did anything because Madoff was Jew? The SEC covered up because he was a Jew? You say "had it gone well, gentiles would have never heard of Bernie Madoff" . " How could it have ever "gone well"? It was a Ponzi scheme, for goodness sake, sooner or later, it would have blown up! There are nogoodniks of every religious stripe; Bernie set upon his own, but "anti-semetic thoughts" about the people who were hoodwinked by this putz? Go see your priest or minister or mullah or monk -- you need to be shriven.
I don't know why it would be hard for you to keep from blurting out an anti-semitic rant unless you are anti-semitic in the first place. I had heard of him, I'm not Jewish, I just read a lot about finance. Unless you have been under a rock you must know how well known he was on Wall Street and in the financial world. I think it is sad that people like you decide that it's okay to come out of your bigoted closet at times when people are down. I never heard of OJ Simpson before he killed his wife, because I was too young to know who he was, but it didn't make me suddenly want to attack all black people. Why don't you just own up to the fact you are a bigot and leave it at that?
Yum. I began reading DB for the Madoff coverage.
I think the fact that the participants are Jewish is incidental.
re: investigators are zeroing in on at least 20 people, including family members.
It looks like this is only the tip of the iceberg!! also, re this:
"The US attorney's office is still trying to resolve what is tainted or clean money, what real property in the US is appropriate for the Madofffs to keep," the source said.
Hint: It's all TAINTED!! Ten years doing this and EVERYTHING they own is tainted. Spending time resolving something as ridiculous, with all of the people suffering in the wake of this big-story
Well said Justbreathe!
WHERE ARE THE OTHER PERPS?
Bernie Madoff is an easy target. He's a thief, we know his face, we've met some of his victims (individuals and non-profits) and he's been left to sit up in his $gazillion condo instead of pissing in a hole shared by some other dudes. I've ranted about Madoff on my blog Consenting Adult (www.suekatz.com) many times.
But how come we don't know the faces and personal stories of all the other criminals of capital that have done so much more to bring the world down? What about the heads of those banks that introduced nasty mortgages? What about those in charge of AIG or Freddy/Fanny? Can you tell me much about them? What about the Bush finance team? Why are some of them still in powerful positions after all their devastating deregulation, misrepresentation and inability to to notice what was happening on their watch? What about Henry Paulson passing around the billions on the basis of a short application and no conditions?
There's a lot of blame to go around - and I'd live to see just that.
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opedanderson,
As a "gentile" myself, I have to say, your comment is some vile junk you are spewing, not even to mention absurd.
The list of suspects, victims and others involved in this epic fraud, as well as blind, deaf and stupid federal and institutional participants is far from limited to those of the Jewish faith, to even suggest otherwise is ignorant and repugnant.
Hey, opedanderson, Madoff was the CEO of the Nasdaq Stock Exchange, fahchrissake! He was well known. Give us all a break with this bigoted bullshit that nobody heard about this because they were all Jews.
I don't think that old, bigoted farts like you can get senile and put in nursing homes fast enough (BTW, I'm 71). Then maybe the world will govern itself like adults.
"The US attorney's office is still trying to resolve what is tainted or clean money, what real property in the US is appropriate for the Madofffs to keep"
Can someone explain to me why Madoff would be allowed to keep ANY money or property? If he stole $50 billion, then anything up to that amount should be confiscated and liquidated to pay back the victims. I don't get it.
Please, what does being a thief ------- has to do with what race you were born to? How many of the mobsters have been of JEWISH ancestors? How many BIG SHOTS in HITLER's reign OF TERROR were from JEWISH HERITAGE? I must be missing something about BIGOTED VIEWS? Would somebody clue me in? To many and me it makes no matter who or what you are if you ---- offend the law and people regardless of what the offense is ---- you are defined as a felon.
I'll leave the absurd, bigoted remarks alone, except to point out that two of the biggest feeders--in the billions--were Walter Noel of Fairfield Greenwhich and Banco Santander. Both owned and controlled by Gentiles--that shouldn't make anyone dislike Gentiles.
I want to talk about what a poor quality article this is. Except to say that the investigators are focusing on the laundering through European banks, it is hard to see what is new here.
The fake trades were reported earlier this week, in greater detail, by the Wall Street Journal. Meanwhile, I realize this is a blog post, but it is full of bad grammar:
"as much assets as possible" should be "as MANY assets as possible"
"second group is comprised of" should be "second group is COMPOSED of" or "second group COMPRISES"
Sorry, hit send before I could also point out that Sonja Kohn is not just a "broker" she was the owner of Bank Medici of Austria that was taken over by the government. Her role, and the money she received, were also reported elsewhere. Please stop publishing "exclusives" that merely rehash old news and are poorly written to boot.
Forget all the nonsense about religion. It all falls under RICO. Take it all from anyone who is involved with the criminal enterprise.
Twist all the little piggies until they squeal. Perfect first step in demonstrating a revitalized American Judicial System.
Jhub, I may be off the mark here, but I think if Madoff's wife owns something solely in her name, it *may* be considered off limits.
Of course, that flies out the window if she's indicted as well -- which I hope is the case.
And can anyone explain to me how all these thieves can sleep at night?!? Madoff took money from Elie Wiesel!!! A 90-year-old man has had to go to work in a supermarket because of his antics!
The 150 year sentence is just window dressing. He's 70 years old. With the right doctor, he might not serve a day.
What I find most troubling about what's happened so far is that it's all taking place behind judicial curtains. The only way to shed light on this mess is to have a trial in open court. Plea deals are used mainly to get small time stuff off the prosecutors' plate to make room for the important stuff. THIS is the important stuff, and we won't know what really happened unless we can hear witnesses questioned -- probably for months -- in a lengthy criminal proceeding. This took years to concoct and excute. It will take weeks, certainly to unravel through the questioning of witnesses
The last thing the victims need is to have Mad-Man take his secrets with him to the grave, and to have Madoff descendents left with a Rockefeller-sized dynastic fortune. But that's what's in the cards unless there is a full scale trial.
$50 Billion is a lot of Gelt. I know there are a lot of Mad People to go with all the Guilty Co-Conspirators. A Huge Shit Sandwich for the Madoff family. Solitary confinement?? Was it worth it Bernie? 20 years of decadent opulence for what? 5 years of Hell. God and the Satan are just LAUGHING !!!
DON'T THINK SO
They would be guilty of fiduciary violations, which is a civil matter.
There is a body of Federal Law about fiduciary duties.
Q: Why did Bernie Madoff plead guilty to 11 counts and agree to face jail until his death?
A: Because he wanted to spare his wife the same fate?
NO
A: Because he wanted to spare his sons?
NO
A: Because he would rather die in jail than ever ever have to face the friends that he ruined. A true escape artist.
SueKatz,
Let us not forget where all this began. If we look back far enough we see the oil companies charging $4 a gallon for oil. This caused people who were just barely making their mortgages to be unable to meet them. This started the fall that we all share today. If not for them, the banks wouldn't have so many bad mortgage loans and wouldn't have failed. Everything started snowballing from then on. Bernie would still be doing what he was doing and everyone would still have a blind eye to reality. Come to think about it, maybe the oil companies did us a favor?
Chapoff
All this bandering about. Jew, non Jew. This isn't Russia or
some Arab state. We really couldn't care less in America. But we do care about stealing. It's like John Thain and his huge bonus, maybe he earned it in his eyes, but has earned
AND kept many hundreds of millions before. So why, in the midst of so much pressure and people looking at him closely, why would he take that big bonus ?? Where is he going to spend it ? I am sure his kids are already set up from the previous millions, But back to Madoff. I spent time in a Federal Prison, with big shots and little shots, and it is a very equalizing place. Like "Dwightbaker" said before: Put him in Solitary (known as "the hole") for a few months. Skip
the bread and water, just feed the crap any inmate gets. One
hour a week in the cage for "fresh air" and two showers a week. After a few weeks he will tell the Feds everything, even stuff they know nothing about. Squeeze him the BOP (Bureau of Prisons) way. Oh, and his rights ? He lost them
the first time he stole someone's investment.
The Madoff Scam was "A Family Affair". Stage 1 of the fraud was the Ponzi scheme itself. Stage 2 of the fraud is the effort to make it appear as though it was simply Bernie acting alone. The entire family was involved along with an inner circle. These people all deserve to hang in some old fashioned street justice.
Thank you.
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