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New Signs Madoff's Family Knew
In cases filed last week in U.S. Bankruptcy Court, Southern District of New York, Picard is seeking to recover $1 billion from California money manager Stanley Chais and nearly $558 million from Erza Merkin, who operated “feeder funds” in New York that funneled investors’ money to Madoff in exchange for lucrative commissions.
“We’re looking at money in, money out,” Sheehan said. “Given their knowledge, based on day-to-day operations, they had clear insight into what was occurring.”
Picard and Sheehan added that Madoff’s own behavior also should have put the money managers who advertised due diligence on notice. “Madoff was very, very secretive. He would not permit due diligence to take place,” Sheehan added.
In the complaint against Merkin, Picard says that Merkin ignored more than 500 trades supposedly done for his accounts by Madoff that were outside the range of prices for the stocks traded that day. Picard added Merkin also ignored advice from one of his advisers—a convicted felon—that Madoff was running a Ponzi scheme.
Many of the investors, such as relatives of Annette Bongiorno, who helped run Madoff’s investment service, and descendants of Saul Alpern, the father of Ruth Madoff, may well be innocent victims. Some of them had small accounts that may have been inherited. So far, few of the people who have received the letters have responded, although many are angry.
Dominick Bongiorno, a 58-year-old New Jersey resident who says he is disabled, is one of those angry investors who got a Picard demand letter. “I got laid off. I had to use the money to survive,” Bongiorno says. “ I lost my life savings.” He declined to comment to The Daily Beast about whether he is related to Annette, saying only that he got into Madoff because “I had a friend.” Without access to any money, Bongiorno says: “I am ignoring it [Picard’s letter]. I can’t afford to hire a lawyer, so I have to wait and see what happens.”
Last Friday, Picard announced a new “hardship” program to speed up possible recovery of the $500,000 per account guaranteed by SIPC. That would help those Madoff investors who cannot pay medical and housing bills or may soon face personal bankruptcy.
In fact, Picard tells The Daily Beast he is seeking to dispel the rumor going around on Madoff victim Web sites that he is motivated by a 3 percent override on money he is able to claw back.
“I do not get a percentage on any of the recoveries. This is not a commission case,” Picard said. “I am paid separately by SIPC and that has nothing to do with the money I recover or the money that is going to get distributed.”
Picard estimates that about $1 billion has been recovered so far. He and Sheehan declined to comment about whether Madoff—who is scheduled to be sentenced June 16—has actually told authorities where all the money he stole has gone.
Acknowledging that many investors are upset, Picard said that before last week’s Kentucky Derby, several investors called him, urging him to bet on one of the favorites. Unfortunately, the morning of the race, the horse was scratched with an ankle injury. His name: “I Want Revenge.”
Allan Dodds Frank is a business investigative correspondent who specializes in white-collar crime.
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duchess5
Not fair,if you can prove knowledge 90 days before Madoff came clean great.However to go back 6 years or even a year is rediculous.This guy is nuts.Get what you can and move on.Just like a lawyer to milk a case forever!!
citivas
The article didn't say Picard intends to go back 6 years, it merely said that the law made that an option. It's also possible he will only go back for interest they were paid above their principles, and that seems completely fair. Why should some actually profit off the stolen principle of others? I think your attack on Picard is unfair and not consistent with the facts.
greeneggs
While they should claw back every penny from those with inside information into the status of Madoff's fund, do remember that the 90 days prior to the uncovering of the ponzi scheme were the most difficult financially that most can remember. People were seeking liquidity anywhere they could get it. As relates to the feeders, it most likely was not the managers of the feeders taking money out but the end investors.
wiseone
If you were an invester with Madoff you would want every thing investigated in an effort to get justice. Anything less would be irresponsible.
missbike
duchess5- It says the law allows Mr Picard to go back six years. Mr Picard made no statement about such a time frame. Read the article and pay attention.
The law is written that way for a reason and it applies to more than just this one outrage. However, given that this Madoff criminal enterprise has run for years and many people have benefited that should have known something was fishy we may see six year clawbacks from people who took out big money. Like the family and friends. Looking the other way while those big checks come is just as bad as actively screwing over other investors.
If you don't like American justice there are many other countries you can emigrate to. I'm sure there are plenty of dictatorships where you will never have advice of counsel and can be endlessly imprisoned without cause. No lawyers to milk a case endlessly in plenty of countries- pack and go.
If you're worried about this investigation coming into your wallet that's tough titties. I pay my attorneys to wring blood from turnips and you should expect the same from the one your tax money pays, not say stupid things about a situation you apparently don't understand.
Bulldoglover100
Did anyone really have doubts that they knew??? I mean really????????
We are in real trouble if anyone think differently.
AmericanPravda
It is totally inconceivable that a considerable number of people in BM's company did NOT know about this scheme. Simply stated, the scheme could not have worked, could not have operated, for so long and with so much efficiency, if there had not been a considerable number of accomplices.
Plantagenet
Madoff was a big contributor to the democrat party and to Obama before this all blew up, so his family is being protected from prosecution now.
jessieabby
Really? Of course someone would have to make this inane statement... blame the democrats!
empressaw
Keep your anti-Democrat and anti-Obama propaganda out of this and put it where it belongs; in the gutter...
barkleyg
2000-2008I think GWB was King back then. What party was running the country into the ground when Bernie was ripping off people and our country. Sixteen years of no trades, and you is complaining about no indictments for the rest of his family in 6 months? I have a good feeling that within a month, your ignorance will be revealed, or I will be revealed as the one who has no idea of what is going on!
TavernWench
Do you do stand-up comedy, too?
wiseone
You have no proof of that, quit lying.
TrueRed
Plantagent, you embarrass yourself.
jrjenki
6 years is not back far enough. Madoff had been cheating longer than that and all benefits are ill gotten gains. Madoff's family should be homeless unless they have a job and have been paying their own bills for 10 years. They are all crooks. Homeless is too good for them and not fair to the homeless.
salgrasso
I agree, jrjenki!
kblog123
I look forward to the rest of the lawsuits. I was surprised that the suit against Merkin did not produce more chatter on this site and others. If you read the complaint, embedded in the NYT Dealbreaker story, the facts in the Merkin case were more disturbing than most would think. There are almost 500 instances where trades were reported that simple auditing should have shown as a big problem. Merkin had 2 employees warn him Madoff was a fraud. There is also a clearing house where trades can be checked on. I do not know how to get there but a guy of Merkin's standing sure should have.
Merkin is BIG on the upper east side. As of Friday he was still on the board of his Temple. If the claims are true, this guy is a thief. Worse than that he stole from his friends and used religion and family heritage for a shield. He and his ilk should be prosecuted.
I know NYC, especially the upper east side worships money but this matter shows an absolute lack of morality amongst its most prominent members. Read the complaint- it may be a little dry but the facts alleged are shocking. ( I personally thought it was quite juicy, but hey)
barkleyg
Hows cum no on mentions: What happened to the mighty, and FEARED IRS during the period between 1992 and 2008? This guy must be declaring millions or hundreds of millions in income, and neither he , his CROOK wife( who issued monthly statements to the "ignorant suckers") or his supposedly golden firm?
How does this scmuck make what was thought to be worth 780 million in his lying, thieving career(?) without ever getting audited?
Hell, Bernie don't need no stinkin Tea Party Day; he had his own Tea Party for the last 16 years. Remember, in the initial findings, his fund had not had a stock trade for the last 16 years. Billions(?) of funds profits, no trades, and no IRS audits.
Man, if you is rich, you have got to love America, where only those Not connected have to worry about audits and being honest!
Annie57
I think the Daily Beast's coverage of the Madoff scandal is outstanding!
scough
Thanks, Tina. I know you do.
oliverckerr
I want a spoon.
melpol
Getting in and getting out at the right time is the nature of Capitalism. Most of Madoffs investors knew that it would one day go bust. They enjoyed over twenty years of profits. It would be wrong to penalize those that were wise enough to leave a sinking ship.
kblog123
Melpol, you are absolutely correct if you were talking about the stock market or any other legit investment. Your logic is flawed when discussing the Madoff situation. If an investor was aware the entire scheme was tanking, we would all like to know what they knew and when they knew it. In fact I think that is exactly what officials are investigating........
deputydawg
Take a look at this http://www.syracuse.com/news/index.ssf/2009/03/how_warning_signs_eluded_ber na.html
It's proof that the Madoff kids were out proactively pitching the funds (and thus aware of all the machinations of the fund) There is NO way they could raise $$ without having the knowledge of how the $$ was managed.
shariyn3
I don't think anybody knew he was running a Ponzi scheme. I think people thought he was working with inside information. Not that that makes it okay.
DreddBlog
He is chump change compared to TARP territority ... and someone has to know. Shhhhhhh UAE says ...
http://blogdredd.blogspot.com/2009/05/thanks-for-bailout-america-dubai.h tml
YARROW
How can anyone doubt that his family knew. I have great doubts that that lady that was his secretary, didn't know. I also think a GREAT many others knew.
boredwell
Ok. Why didn't he warn his family to withdraw PRIOR to his confession? Being a sociopath, Madoff might have wanted to punish them, too, eh?
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