Cheat Sheet
A small cache of powerboats owned by Bernard Madoff and his associates fetched almost $2 million for victims of the $65 billion Ponzi scheme during an auction in Florida on Tuesday afternoon. The boats—named Bull, Little Bull, and Sitting Bull—sold for a combined total of $751,000, including a well-above-book bid of $700,000 for Bull, a 55-foot 1969 Rybovich Sportfish. A 1999 Mercedes Benz CLK 320 convertible with 12,827 miles on the odometer, previously owned by Ruth Madoff, sold for $30,000, while bidders paid $950,000 for a 61-foot 2003 Viking sport-fishing yacht owned by Madoff-associated Frank DiPascali. All 70 bidders, the crowd driven in part by Madoff's notoriety, paid an upfront registration fee of $100,000 to participate in the yacht auction.
A small cache of powerboats owned by Bernard Madoff and his associates fetched almost $2 million for victims of the $65 billion Ponzi scheme during an auction in Florida on Tuesday afternoon. The boats—named Bull, Little Bull, and Sitting Bull—sold for a combined total of $751,000, including a well-above-book bid of $700,000 for Bull, a 55-foot 1969 Rybovich Sportfish. A 1999 Mercedes Benz CLK 320 convertible with 12,827 miles on the odometer, previously owned by Ruth Madoff, sold for $30,000, while bidders paid $950,000 for a 61-foot 2003 Viking sport-fishing yacht owned by Madoff-associated Frank DiPascali. All 70 bidders, the crowd driven in part by Madoff's notoriety, paid an upfront registration fee of $100,000 to participate in the yacht auction.
A personalized Mets jacket went for $14,500, Cartier earrings sold for $70,000, and a diamond bracelet cost $50,000 in Saturday's auction of Bernie Madoff's personal items. The auction was held in the hopes of raising half a million dollars for the victims of the imprisoned investment manager. The sales brought in $1 million instead. Duck decoys taken from the Madoff's Montauk, New York, vacation home went for $11,500 while being valued at less than $80—a markup that only a Madoff could love. One woman bought a pair of Ruth Madoff's Chanel boots. "I'm going to walk one day in her shoes and then judge her," she told The Wall Street Journal.
Two more people have been arrested in the fallout of Bernie Madoff's Ponzi scheme and are being charged with conspiracy and falsifying books and records for the ex-financier. The two men allegedly created computer programs that helped Madoff hide evidence of the fraud, working with him from the 1990s on. "Jerome O'Hara and George Perez allegedly helped construct Bernie Madoff's house of cards," said an attorney for the case. Both men face up to 30 years in prison for their programs, which changed the names of account holders, created false reports and client statements, and created false documents to create the appearance of business transactions.
Jeffry Picower, who made billions of dollars through Bernie Madoff's Ponzi scheme, left most of his $7 billion fortune to a variety of charities, including MIT, the New York Public Library, and the Harlem Children's Zone. But his money—withdrawn over the last few decades from his accounts with the fraudulent investment manager—is still the subject of legal wrangling, with Madoff trustee Irving Picard suing Picower's estate, claiming victims of the Ponzi scheme are entitled to all $7 billion. Picower family lawyer William Zabel indicated that the family would be open to paying more than the $2.4 billion they claim to be required to pay by law, but still wants to ensure that Picower's charitable bequests are disbursed.
Looking for a unique way to show off your Mets fandom? Bernie Madoff's personalized Mets jacket is going on the auction block this weekend along with jewelry, furs, watches, and three boogie boards. The auction, which is being handled by Gaston & Sheehan, is expected to make more than $500,000 for Madoff's victims. The jacket is estimated at between $500 and $720, while the boogie boards—each marked with "Madoff" in black marker—should net about $80. For high rollers, Madoff's Monoblocco Rolex could get as much as $87,500, while a pair of Victorian diamond earrings (once belonging to Ruth, not Bernie) could sell for as much as $100,000. A spokesman for the U.S. Marshal said "there's huge interest" in Madoff's effects, in particular his duck-decoy collection. The auction will take place on Saturday at the New York Sheraton Hotel & Towers.
Ads have been appearing in local newspapers across the country promoting “Bernie Madoff Auction” sales, promoting art by Peter Max, Salvador Dalí, and Norman Rockwell as a result of the Ponzi schemer’s financial losses. But auction attendees have since learned what’s been billed as a Madoff auction may actually just be another scam. “They all thought it was Madoff stuff, and it's not,” one West Palm Beach, Florida, auction attendee told a local television station. Georgia-based Southern Star Auctioneers has arranged most of the sales, headed by Dion Abadi, who did not return calls regarding this story. His brother Gavin assured Time the merchandise does come from Madoff victims, most of whom, he says, have asked to remain anonymous. Though Gavin admitted to the magazine that the ads “my need tweaking,” his brother has a history of problems with the Florida Board of Auctioneers, which has cited him twice for violating its rules on disingenuous advertising. Making money off of Madoff victims is something critics say has been happening in many industries, from life insurance to real estate.
Bernie Madoff's longtime accountant, David Friehling, pleaded guilty Tuesday to abetting one of the most devastating Ponzi schemes in history, which brought down thousands of victims and more than $21 billion in lost funds. Friehling, who verified Madoff's accounts for nearly 20 years, admitted that he never legitimately audited the brokerage firm and acknowledged his conflict of interest as an independent auditor because of his own investments in Madoff's operation. Friehling still maintained, as he has since the day of his arrest, that he was not aware of the Ponzi scheme. Friehling is cooperating with federal investigators in hopes of a more favorable sentence. His guilty plea to nine criminal charges could land him in jail for up to 114 years. Madoff is serving a 150-year sentence in North Carolina.
Convicted Ponzi schemer Bernie Madoff didn't think much of the SEC, but even he was stunned that they missed so many opportunities to catch him. In a prison interview released by the SEC's inspector general, David Kotz, Madoff said investigators hassled him over minor email exchanges while failing to examine basic questions about how he conducted his business. In particular, he was stunned never to have been asked about his Wall Street central clearinghouse account: “If you’re looking at a Ponzi scheme, it’s the first thing you do,” he said. Madoff described being constantly worried that the jig was up whenever dealing with investigators and two close calls in 2004 and 2006 had him convinced he was going to jail—only they passed without incident. “That was the nightmare I lived with,” he said. “I wish they caught me six years ago, eight years ago.”
Jeffry Picower, Bernie Madoff’s suspected accomplice in his Ponzi scheme, died of drowning after suffering a massive heart attack, according to autopsy results revealed Monday. Toxicology reports will determine if Picower, who was found in his pool on Sunday, ingested anything that might have contributed to the heart attack. Picower was considered by some to be Madoff’s “partner in crime” in constructing the enormous Ponzi scheme, and actually made about 30 times more money—close to $7 billion—than Madoff from the shady financial dealings. He was expected to be charged with criminal activity prior to his death. A spokesman for the family revealed that Picower suffered from several heart-related issues as well as Parkinson’s disease.
Jeffry Picower, a tax-shelter lawyer and accountant accused of making more than $7 billion through longtime friend Bernard Madoff's giant ponzi scheme was found dead Sunday—his wife pulled the 67-year-old's body from the pool at their Palm Beach mansion. Police are currently investigating the death as a drowning, but have not yet ruled out any cause of death. Picower had poor health and suffered from Parkinson's disease and heart problems. A group of jilted Madoff investors had sued Picower to recover more than $7 billion he withdrew from the bogus fund over three decades, charging that he should have recognized that his accounts were "riddled with blatant and obvious fraud," as the trustees' lawyer put it, because he was a seasoned investor. Attorneys say that the death could make the lawsuit more difficult or easier to settle.
The body of Jeffry Picower, the tax-shelter lawyer and accountant who made $7 billion in Bernie Madoff’s Ponzi scheme, was found dead in the swimming pool of his Palm Beach, Florida, mansion Sunday. According to the city’s fire department, Picower’s wife called 911 after discovering her husband’s body at their oceanfront home shortly after noon and pulled him out with the help of a housekeeper. She had reportedly seen her husband swimming 15 minutes prior to finding him dead on the floor of pool. Picower benefited the most from Madoff’s scam, according to the bankruptcy lawyers who alleged he’d taken out $7 billion more than he’d originally put in—a felony, for which, investigators say, he would have likely faced criminal charges. “He made 30 times what Madoff did from the scam and about a third of the missing money went to Picower,” one investigator said, suggesting he may have been the mastermind behind the con or Madoff’s equal “partner in crime.” Investigators say Madoff documents prove that Picower frequently offered instructions as to how he could create false trades. Police said they did not know the cause of death and are awaiting the results of a full autopsy and toxicology tests.
Bernie Madoff's life may have been even wilder than previously imagined. New additions to a lawsuit against Madoff filed Tuesday night in Manhattan Supreme Court allege that Madoff presided over an office so inundated with cocaine that it was known as the "North Pole." The suit also alleges that as far back as 1975, Madoff employed two street toughs to set up a pipeline for blow into the Madoff Securities offices and that the firm's headquarters enjoyed "a culture of sexual deviance" that included parties featuring topless waitresses. The suit, originally filed in June, has added additional corporate defendants, including JPMorgan Chase, KPMG, the Bank of New York, Oppenheimer, and Massachusetts Mutual Life Insurance.
Madoff may have burned his bridges in the free world, but behind bars he's got friends. A lawsuit filed by Bernie Madoff's victims has offered a surprising snapshot from the fallen Ponzi schemer's jailhouse life, including his social life. Court documents say Madoff bunks with a drug offender (Bernie sleeps on the bottom) and eats pizza cooked by a child molester. His closest friends are a pair of white-collar fast-talkers: Mob boss Carmine Persico and convicted spy Jonathan Pollard, whose late-'80s imprisonment for Israeli espionage ignited a media storm over what Pollard’s wife called Jewish-Americans’ “moral obligation” to Israel.
Another Goldman alumnus joined the public sector on Friday as Goldman Sachs Business Intelligence Group Vice President Adam Storch was named the first chief operating officer of the enforcement division of the SEC. Storch’s responsibilities will include the enforcement division’s project management and operations, as well as the supervision of the Office of Market Intelligence, which collects hundreds of thousands of tips for the SEC. He’ll report to the SEC enforcement director, former federal prosecutor Robert Khuzami, who said that Storch, with strong a background in technology systems and project management, will help the SEC—recently criticized heavily for letting Bernie Madoff’s Ponzi scheme continue for 20 years—become “more efficient and nimble.” Before his time at Goldman, Storch, a CPA, was a senior consultant at accounting firm Deloitte & Touche.
Bernie Madoff may be in jail for earning fake profits, but it appears he’s committed to earning “cred” the real way: The New York Post is reporting Madoff, currently serving a 150-year sentence in North Carolina, was part of a “prison-yard tussle”—and that he was the winner. The fight with another senior-citizen inmate was over, of all things, the stock market. “The shouting match got so heated that the inmate pushed Madoff, who shoved back harder with both hands, causing his attacker to stumble,” the Post writes. “As the attacker tried to stand up straight, Madoff hovered over him red-faced and glaring.” After that, Madoff’s foil apparently “went chicken” and ran off. The next day, the two men made up.
With Bernie Madoff already behind bars, members of the famed Ponzi schemer's family are now being brought into court. Irving H. Picard, a court-appointed trustee who has previously sued Ruth Madoff, filed suit on Friday against four more members of Madoff's family, seeking nearly $199 million, which would go to Madoff's defrauded customers. All four Madoffs held top-level positions as senior executives at Bernard L. Madoff Investment Securities, and though the complaint doesn't implicate them in any criminal activity, they stand accused of extreme negligence that allowed the massive Ponzi scheme to thrive. "Simply put," states the complaint, "if the family members had been doing their jobs—honestly and faithfully—the Madoff Ponzi scheme might never have succeeded, or continued for so long."
Life for the Madoffs just got worse. The trustee winding down the Madoff firm said that Bernard Madoff's two sons, brother, and a niece will be slapped with a $198 million suit this week, Reuters reports. The suit alleges that the family members, who held executive positions within the firm, should have known about the world-wide, decades-long, multibillion-dollar Ponzi fraud perpetrated by Bernie, and accuses them of negligence, breach of fiduciary duty, and making tens of millions of dollars from the scheme. Furthermore, the trustee, Irving Picard, and his chief counsel, David Sheehan said investigators are looking for hidden funds that could be worth up to $18 billion.
Looks like another corrupt New York businessman will enjoy the luxuries of house arrest this year. Iranian-American financier Hassan Nemazee pleaded not guilty to $292 million in bank fraud charges in a federal court hearing in Manhattan on Wednesday morning. Earlier this week, Nemazee was indicted for conning the money from three different banks in the form of fraudulent loans. Prosecutors have painted a Madoff-like picture in which Nemazee used the money to live in luxury and fund Democratic political campaigns. Nemazee’s lawyer Paul Schetman emphasized that his campaign donations were “modest and lawful” and should not be the focus of the case. Nemazee was released to his home after today’s hearing and his trial date has not yet been announced.
Half of Bernie Madoff's victims weren't really victims, according to prosecutors. Federal officials are claiming that at the time of Madoff's arrest last December, half his active investors didn't lose money in his elaborate Ponzi scheme because they'd already withdrawn more than they contributed to the accounts, the New York Daily News reports. The less-lucky half of investors contributed more than they were able to withdraw. However, this model doesn't take into account how much investors thought they'd made, or the money they could have made if they'd invested their funds in a legitimate firm. In court papers, prosecutors told a judge that Madoff's assets—luxury apartments, cars, yachts and millions in corporate holdings—would be enough to distribute to his victims and that no restitution was needed.
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