Cold Weekends in NY.....if you were a Bernie Investor....(Interesting Read)

[KoKo]

12/15. Cold weekend in New York; almost winter.

Knowing Bernie Madoff; Gilt by Association. Bernie Madoff was a big deal, especially in New York and Palm Beach. Although I’d never heard of him until this scandal broke last week. Which is one of the things I love about New York: there’s always more to learn.


Bernie Madoff
One reason I wouldn’t have known Bernie Madoff was because I don’t have any money. It turns out, however, that I do know a lot of people who know Bernie Madoff, and even a lot of people who had their money with Bernie Madoff. (For those of you looking for karmic clues, the name is pronounced Made-off, and for extra universal luster, he even had a 55-foot sailboat which he named “Bull.”)

He was a legend in his social and financial circles, a giant; like a rock-star in that world, that financial realm. His clients thought he was a genius. People literally begged him to take their money. Why? Because he delivered. 10% or so a year, year in year out.

He wasn’t some fly-by-night. He had solid relationships with clients of twenty and thirty years. They held him in the highest esteem. You could retire with only ten million and have that $600,000 - $700,000 a year to live in Palm Beach, in New York, as sure as the Sun comes up and the Moon goes down.

There were those – smart financial people, investors – who weren’t so sure. One man told me he had some money with Bernie a long time ago but couldn’t figure out “how it worked,” so he took his money out, recalling the sage advice of an elder who warned: “if it sounds too good to be true, it probably is.”


Ezra Merkin
Playing golf at the Palm Beach Country Club, knowing Bernie put you in class by itself, even if you had only ten million. Ezra Merkin, the deeply respected hedge fund owner, business executive and philanthropist thought so highly of Bernie that his Ascot Fund became a feeder fund for Bernie Madoff and his genius jillions.

Not everybody could invest with Bernie, you see. It was a most exclusive club. That was part of Ezra Merkin’s genius: those who couldn’t get Bernie to take them could buy into Merkin’s fund and get the same treatment. Ascot, according to the reports circulating, had a $1.8 billion participation in Bernie Madoff’s genius. So Ascot had many millionaires and billionaires who have lost it all.


Walter Noel
There were others like Merkin deeply invested with Bernie Madoff. Walter Noel’s Fairfield/Greenwich Group with more than $7 billion was said to be another feeder fund for Bernie. The rock star.

And why would they do this, given that the investor was smart and shrewd (which turns out to be a very generous given)? Because it was a no-brainer: The hedge (feeder) fund takes the money from the investor, charges its annual fee as well as percentage of the annual appreciation and simply hands the dough over to Bernie and pays his brokerage fees. Let your fingers do the walking, as they say, and everybody wins.

But that was then, before last week when Bernie evidently confessed that it was just one great big Ponzi scheme. The greatest Ponzi scheme in the history of the world. So far.

“He’s God’s avenging angel,” remarked a man close to the situation who had family and friends invested with Bernie.


Frank Lautenberg
“Many of these people were arrogant and thought they were smarter because they were with Bernie and making money all the time. They were tempted by something that their greatest instincts must have told them didn’t add up. It’s a dybbuk -- unfortunately taking a lot of innocent people with it.”



more......at...

http://www.newyorksocialdiary.com/node/139183