Ponzis don't last for 40 years, which is how long Bernie's been operating his investment funds. What stood out about Bernie's operation was the consistency of remarkably high returns, 15-20 percent, year-in, year-out, regardless of market conditions. Those returns were unreplicable by those who tried to reverse-engineer them. If this were a true Ponzi, the principal would have been gone after 5-6 years. Reports state that the trades reported to clients were not the ones he actually carried out:
http://abajournal.com/news/madoff_made_no_trades_for_perhaps_13_years_trustee_says/"The work done to date indicates that for some substantial period, perhaps as much as 13 years ... we have found no evidence that securities were purchased for customer accounts," the trustee, New York lawyer Irving Picard, told the meeting in an auditorium at U.S. Bankruptcy Court.
The meeting for Madoff creditors -- including individual investors, banks, charities and others -- was attended by about 100 people and was at times emotional.
Picard was confirming statements made by the Financial Industry Regulatory Authority in January that there were no trades made by the Madoff firm. Examinations had also shown no evidence of trading by Madoff's investment fund.
That means Madoff either placed trades through other brokerages, a move industry officials have considered unlikely -- or he was not executing trades at all.
Picard said at a news conference after the meeting that although no securities were bought or sold, customers still received statements showing trades.
"We know how that was done but we can't tell you now," said Picard, citing a criminal investigation by U.S. prosecutors.
Citing "privacy" concerns, the Judge in the case has refused to reveal what offshore banks kept Bernie's funds. To pay out such high returns to so many people would have required a huge amount of capital, at least $50-$60 billion. What kind of bank has accounts of that size sloshing around, unaudited so that their sources and disposition are not known accurately? Bernie had billions going in and regularly drew out billions to pay off his customers. Bernie was skimming principal - that's called a bleedout. What kind of bank would permit itself to used for a bleedout of that size?
That's the real story that hasn't been told yet.
Madoff is reported to have had accounts at Chase Manhattan Bank and at least a dozen offshore firms:
http://www.nytimes.com/2008/12/31/business/31offshore.html?ref=business ;
http://www.iht.com/articles/2008/12/31/business/madoff.php At least a dozen offshore entities were involved with Madoff's firm, according to several regulatory filings. They include funds linked to the Fairfield Greenwich Group, a fund of funds that lost $7.4 billion of its investors' money after entrusting it to Madoff.
Other offshore entities involved are affiliated with Tremont Group Holdings, which had $3.3 billion invested, and several Swiss banks, including Union Bancaire Privée and Banc Benedict Hentsch & Cie.
Fairfield Greenwich operates affiliates in offshore havens like the Cayman Islands. At another affiliate, in Bermuda, Amit Vijayvergiya, Fairfield Greenwich’s chief risk officer, managed flows into Sentry, its largest fund that was a main recipient of money that had been invested with Mr. Madoff. It also runs Fairfield Sentry in Ireland, one of Europe’s largest offshore havens.
Another European bank, the Bank Medici, was seized by Austrian authorities in connection with the scandal. Several large banks operating in Switzerland, Luxemborg, Spain and France are among the long list of Madoff's major investors: www.privatebanking.com/user/newsDetails.jsp;jsessionid=8BCB7EE10DC7A2DE19A0D9DF139B4E2F?ite...
BNP Paribas SA, France’s biggest bank, lost two lawsuits seeking to force UBS AG to release a combined 2.5 million euros ($3.1 million) that had been invested with two funds linked to Bernard Madoff. A Luxembourg court rejected BNP’s requests in two rulings today. BNP had sought funds that UBS held for separate funds that had invested money with Madoff, who is accused of running a $50 billion fraud. The ruling is the third from a Luxembourg court to side with UBS over investors’ claims for immediate redemptions from funds linked to Madoff. More than 15 Madoff-related cases have been filed in Luxembourg courts by investors seeking repayments or documents to establish liability.
In addition, according the NYT, Madoff used a number of "feeder funds" that may have been involved in diverting funds for tax evasion and other possible reasons:
Of particular interest is whether Madoff and some of his investors used funds based in offshore tax havens to evade U.S. taxes, according to a person briefed on the investigation.
Also under scrutiny is whether certain charities that invested with Madoff had improperly allowed their donors to shift money offshore and whether foreign banks had withheld U.S. taxes on Madoff accounts, as required by the IRS, according to this person, who was given anonymity because of the delicate nature of the investigation.
The largest of these feeder funds is run by Ezra Merkin, who resigned in recent weeks as Chair of GMAC Capital. He also serves as Chairman of Gabriel-Cerberus, the bank holding company that holds a large stake in Bank Leumi, the privatized national bank of Israel. In addition to its 51% stake in GMAC, Cerberus also owns Chrysler Corp., which are the largest industrial beneficiaries of the TARP bailout funds. Merkin is a major benefactor of a number of charities in Israel and the U.S. as well as a big contributor to both Likud and the Republican Party.
Printer-friendly format
Email this thread to a friend
Bookmark this thread
(1000+ posts)
Send PM |
Profile |
Ignore
