MYTHS ABOUT MADOFF’S “PONZI SCHEME” – Bernie’s Game Wasn’t What They Tell You

Bernie Madoff’s colossal investment fraud is almost everywhere described as a “Ponzi scheme”. That echoes the very words Madoff, himself, used to describe it to the FBI agents who arrested him on December 11.

I’ve been running “basically, a giant Ponzi scheme,” he told investigators. But, that was quite misleading.

Madoff gives the impression that his scam was a classic, self-contained Ponzi, wherein the first investors see the payouts and later investors are the ones whose capital provides the payouts. In that scheme, Ponzi pockets the proceeds.

But, it didn’t really work that way. Madoff Securities was not designed to rip-off its own customers. Instead, it sustained itself over four decades by an infusion of money from “feeder fund” franchizes, the proceeds of which were methodically diverted into hidden accounts. It was part multi-level marketing, part money-laundering scheme, and part bleed-out fraud designed to provide a cover for conversion of funds that would be used by banks a continent or two away from Madoff’s Manhattan headquarters.



And, it really wasn’t an ethnocentric raid designed to impoverish any particular national or religious group – that would be killing the Golden Goose, but it may have had that effect. Madoff’s biggest clients were powerful banks and politically well-connected, philanthropic men who owned them. Their customers will get some of their money back through deposit guarantee insurance, law suits and other institutional safeguards. Madoff’s own customers get first crack at funds eventually recovered – there is no way that Madoff spent $65 billion on caviar and vintage wine.

An accounting of Madoff’s real estate and personal property, including that placed in the name of his wife, Ruth, amounted to no more than $67 million – not a lot by Wall Street standards. Bernie was smart, emotionally controlled, and personally frugal. His refusal to take the deal reportedly offered by the feds -- trade what he knows for allowing Ruth to keep most of their joint assets -- is telling. No, Bernie didn’t squander it all away. Most of the money his fund piled up over the years is still out there.

The answer to where that money is goes back to where it came from.


The Feeder Funds – Swiss Bankers, Aristocrats and Vultures Wrapped up in TARP


As for the feeder funds, seventeen of the 20 largest investors in Madoff Securities were banks or insurance companies. The others were huge “funds of funds”, unregulated hedge funds and private equity funds. It was the comparative small-fry who got scalded. The bankruptcy courts will have to come to the rescue of many of the 4500 individual investors and those who were attracted through smaller feeder funds.

Most of the biggest losses were sustained by large Swiss, Euro and Asian banks – but, they will survive, and their customers will eventually receive some sort of substantial recovery or part of a government bail-out. Like so many scandals of the era, this too will pass, and public attention will wane.

But, take a good look, anyway.

The third largest institutional investor in Madoff’s scheme — Tremont Group Holdings Inc., a fund of funds owned by Massachusetts Mutual Life Insurance Co. Tremont is attached to an institution so big that its customers are also likely to regain the $3.3 billion in reported losses as the result of investor law suits. A 2007 Hoover’s profile characterized the firm as follows: “Tremont Group Holdings wants to make you a tremendous amount of money -- and to make a tremendous amount for itself, as well....” http://www.hoovers.com/tremont/--ID__101157--/free-co-factsheet.xhtml



Prior to his well-timed resignation as Chairman in July 2008 after the Mass Mutual takeover, Tremont had been run by its founder Robert Schulman. Tremont was one of Madoff’s “early customers.” Schulman now runs a charity with his wife, and invests in real estate. He is named as a co-defendant in an investors’ suit along with Tremont, Mass Mutual and the company’s auditing firm, KPMG, which recently announced its bankruptcy. Déjà vu? http://www.bloomberg.com/apps/news?pid=20601087&sid=aCT_aoIRYqRg&refer=home ; http://newsblaze.com/story/2009020415373300001.pz/topstory.html

There were only three independent funds among the top feeders: Fairfield Greenwich Group, Walter Noel’s hedge-fund, ($7.5 billion in losses); Ascot Partners, headed by former GMAC Chairman Ezra Merkin ($1.8 billion); and Access International Advisors ($1.2 billion), a European investment fund

In 2007, AIA took over management of the Rothschilds family bank portfolio previously managed by UBS. AIA founder, Rene-Thierry Magon de la Villehuchet, committed suicide in his Manhattan office days after the Madoff scandal became public.


Villehuchet had carved a lucrative franchize for himself peddling access to the exclusive Madoff connection among Europe’s richest glitterati, including Bettencourt family heirs to the L’Oreal cosmetics family.

Most of these private hedge funds were not only rich, they had close ties to government officials and political figures, access to public money, and knew how to benefit from bailouts. Ezra Merkin was chair of two large American industrial corporations, GM and Chrysler, which have already received more than ten billion dollars in TARP bail-outs, and are currently seeking more.


J. Ezra Merkin is also owner of a large stake in Bank Leumi, the privatized national bank of Israel, which he acquired with partner Stephen Feinberg, founder of Cerberus Capital Management, which (like so many of the others) grew during the Sharon - Olmert era from a bank holding company into a large global hedge fund.

Accusations abound that Noel and Merkin failed to perform due diligence, and in some cases, allegedly deceived their own customers that they were placing client funds with Madoff. For well over a decade, Madoff had a reputation on The Street not only for phenomenally steady returns but also the whiff of illegitimate methods. The only thing that nobody could quite figure out was how he did it. Suspicions were quietly voiced that he was using insider knowledge gained from his proprietary trading platform that was adopted by NASDAQ brokers that Madoff headed.

But, if the preliminary findings are indeed correct, Madoff hasn’t been trading listed stocks in customer accounts for at least 13 years. But, Bernie nonetheless managed to consistently pay out tens of billions in dividends during that period. At the eight to 17 percent annual returns his investors were reportedly receiving, that would have depleted the fund’s capital in half that time. It is arithmetically not possible that Madoff was simply paying his older investors out of the funds gained from newer, and only from those funds. As one long-term investor who got out a couple years ago remarked, Bernie “never missed a quarter.” If he wasn’t trading, Bernie had to have another source of funds, someone who was. A feeder relationship can operate in both directions, if regulators aren’t looking very closely at both ends. And, in fact, as we are learning, regulatory authorities in several countries in the last decade have been legally blind.

Among the Madoff feeder-funds, closest attention has focused on Ascot Partners. But, J. Ezra Merkin also operates a hedge firm, Gabriel Capital, which partnered with Cerberus in the takeover of the distressed U.S. auto industry and made a big move into the defense sector during the Bush years. The partnership left companies in both sectors worse off for their attentions, but made these hedge funds owners hundreds of millions richer. Money lost in operating failing companies have been made up by lucrative government contracts and bailouts, a not entirely unexpected bonus. The new TARP loans now being sought are in addition to the $13.4 billion the US Treasury lent earlier to Merkin's GM, and Fineberg's Chrysler. In 2006, GM sold 51 percent of Merkin's GMAC to Feinberg's private equity firm Cerberus Capital Management LP (which also owns Chrysler). In May 2004, Feinberg's private equity group, Cerberus Capital Management, LP (Cerebrus is the three-headed dog that guards Hades), became majority owner of IAP Worldwide Services, Inc, one of the US Army’s largest contractors in Iraq. IAP was at the center of the Walter Reed Army medical center privatization scandal. For the sordid details of this fetid corner of pirate capitalism, see, http://www.dailykos.com/story/2007/3/10/21556/5045

Other key parts of the business model pursued by Madoff’s private feeder funds has been political influence-peddling and its financial partner, money-laundering, facilitated by bank secrecy. Merkin and Feinberg are major campaign contributors to GOP candidates and backers of the Likud Party and other right-leaning parties in Israel. Merkin is involved in the same fundraising network for Israeli charities as Morris Talansky, a secretive financier and philanthropist. Talansky’s illegal campaign contributions to Israeli PM Ehud Olmert led to the Israeli Prime Minister’s resignation. Haaretz reports, “Olmert's close associates called Talansky ‘the banker’ or ‘the launderer.’” http://www.haaretz.com/hasen/spages/981755.html

Cerberus-Gabriel has earned a global reputation as a politically-connected “vulture capital” firm. As a hedge fund, it plays the downside, and swoops in on distressed firms considered essential to the national interest. Characteristically, it breaks companies up and sells off their assets when it cannot successfully green-mail governments, extracting huge concessions and cash incentives in several countries. “Crash and burn,” in the parlance.



Walter Noel, like Merkin, is well connected, both financially and politically. According to the WSJ, his fund was part of the fund of funds of the Swiss private bank Union Bancaire Privée (UBP), “one of the world's largest managers of funds of funds. As of June, it managed some $124.5 billion.” http://online.wsj.com/article/SB123058674048040525.html UBP pioneered the use of hedge funds in private equity, and is currently the world’s second largest hedge fund manager. Because of Swiss resistance to international efforts to stem money-laundering, the Madoff scandal has offered the first opportunity to peek inside some of the inner workings of this most secretive of major global financial operators. Noel was also an active contributor to conservative political parties in the United States and Israel. Noel and his wife have contributed to the presidential campaign funds of John McCain, George W. Bush, Dan Quayle and George H.W. Bush.

***

Look Closely, and You'll See a Snake Swallowing Its Own Tail

Recall that Madoff’s Securities was actually a network of banks connected to hedge funds connected by “funds of funds”, drawing from a half-dozen major large feeder funds and about 30 smaller brokers. Many of them escaped official scrutiny, and were virtually self-regulating. The scam went on for at least 14 years, yet no one blew the whistle, and they all kept depositing funds in Bernie's accounts. See TABLE below.

These funds accounts were deposited at a number of U.S. and foreign banks. At that point, a curtain has been drawn down on what happened to the $64.8 billion principal and reported earnings in the fund. The strange secrecy about Madoff's foreign bank accounts has been imposed by the court - in itself, this is a red-flag that this was no conventional Ponzi scheme.

Table 1: “Madoff’s Victims: A List of Reported Victims and Their Exposure” , in Wall Street Journal, December 17, 2008. p. A14.
(Victims For Whom No Exposure Amount Is Available Are Not Shown.)

Fairfield Greenwich Advisors (investment management firm): $7500 million.
Tremont Capital Management (fund of funds run by Tremont Group Holdings): $3300 million.
Banco Santander SA (Spanish bank): $2870 million.
Ascot Partners (hedge fund founded by GMAC chief J. Ezra Merkin): $1800 million.
Access International Advisors (New York investment firm): $1400 million.
Fortis Bank Nederland NV (Dutch bank): $1350 million.
Union Bancaire Privee (Swiss bank): $1000 million.
HSBC Holdings PLC (British-Chinese bank): $1000 million.
Natixis SA (French investment bank): $560 million.
Carl Shapiro (former chairman Kay Windsor Inc.): $550 million.
Royal Bank of Scotland (British Bank): $492.76 million.
BNP Paribas (French Bank): $431.17 million.
BBVA (Spanish bank): $369.57 million.
Man Group PLC (British hedge fund): $360 million.
Reichmuth & Co. (Swiss private bank): $327 million.
Nomura Holdings Ltd. (Japanese brokerage house): $303 million.
Maxam Capital Management Inc. (fund of funds based in Dairen, Conn.): $280 million.
EIM SA (European investment manager with $11 billion in assets): $230 million.
Aozora Bank Ltd. (Japan bank in which Cerebus Capital owns majority stake): $137 million.
AXA (French insurer): $123 million.
UniCredit SA (Italian bank): $92.39 million.
Nordea Bank AB (Swedish bank): $59.13 million.
Hyposwiss (Swiss private bank owned by St. Galler Kantonalbank): $50 million.
Banque Bendict Hoetsch & Cie SA (Swiss private bank): $48.8 million.
City of Fairfield-Connecticut (town pension fund): $42 million.
Bramdean Alternatives (asset manager): $31.2 million.
Haredi Insurance Investments & Financial Services Ltd. (Israeli insurer): $14.2 million.
Societe Generale (French bank): $12.32 million.
Groupama SA (French insurer): $12.32 million.
Credit Agricola SA (French bank): $12.32 million.
Richard Spring (individual investor): $11 million.
RAB Capital (hedge fund): $10 million.
Banco Populare (Italian bank): $9.86 million.
Korea Teachers Pension (Korean pension fund): $9.1 million.
Jewish Community Foundation of Los Angeles: $6.4 million.
Neue Privat Bank (Swiss bank): $5 million.
Clal Insurance Enterprise Holdings Ltd. (Israeli financial services): $3.1 million.
Mediobanca SpA (via its unit Compagnie Monegasque de Banque): $671000.

Now, squint, and it becomes a snake swallowing its own tail.

the giant money laundering firms operating that are blatently scamming to grab all the taxpayer bailout money they can...

but nothing, nothing sums up the entire horrifying, greedy, insider, "global financial elite" that is operating at warp speed to strip all of us of our last remaining dollars, like this article.

Breathtaking. Outrageous. This OP should win the prize for most recs at DU, bar none. Thank you for posting it.

I would quibble however that the snake is swallowing itself. Nobody at the top (except maybe Madoff?) is getting "bit" in this elaborate money grab.

looking for a Batman and Robin episode. When you see how widespread the game is, and how many players...many of the same players that have been involved in the same kind of schemes in the past...what is it you expect Batman and Robin to do? Take out the Joker?

won't let it, and the rest of our Govt. doesn't give a shit either

Or don't they have a part in this series? I was under the impression that Congress legislated. Any Batman and Robins there?

something, he'll be thwarted or he maybe a part of the whole sickening deal

so much for that 'we the people' thing, eh? If 'we' can't even call our Congressperson and have them do the right thing, what good are 'we'? I guess it's all about the show. Sure is entertaining.

the rest we'll have to see

Honestly, it's impossible to ignore the facts anymore - that they're ALL involved in this.

If Spitzer was truly the lone wolf baying at the danger (as many DUers have theorized), his take-down fits right into their teevee plot as well. Unfortunately, Batman's (Spitzer's) downfall is pretty damn well permanent and I don't even see a "Robin" to come round rescuing the situation anywhere in sight. Do you?

a mere mortal, and it takes way more than even Superman to go up against it. Spitzer, or anyone in such a position has to have some back-up, or he/she wouldn't be there in the first place. Seems to me too many people are too eager to let others twist in the wind when the going gets rocky, as it most certainly always will, while they wait for a cleaner, newer, less mere mortal, version of Superman. Even Elliot Ness had a posse.

I am pretty grim about him being "innocent". He's a player in these waters and I am deeply, deeply troubled that Obama has kept him on - especially after reading all this.

The AIG bonus $$ should have been a huge red flag for Obama a long time ago, along with the disclosure of full reimbursement for the counterparties for AIG - Geithner "smells". He doesn't pass the bullshit meter anymore and if Obama doesn't dump him soon, AND begin to seriously re-direct "our" financial house, he'll utterly lose my support. Geithner had to have known what was going on behind the scenes. It's impossible he wasn't privy to that level of deal making, even just so he could report that stuff to his bosses.

Like I said, I hope Obama begins to make tracks on figuring this all out and taking some action. If nothing changes, and the great financial rip off of our lifetime proceeds, it will indicate he's as corrupt (or has been corrupted) as the rest. I'm pretty sick at heart reading this OP.

when did that come to light? I'm not really concerned over anyone's 'support', but I am interested in learning exactly how this all played out. I read Elliot Spitzer's piece at Salon and I think the questions he posted that require answers would probably help me a great deal in understanding some of this nonsense. The worst part of it..to me..is that there is too much noise, and not enough information.

Treasury Attempts to “Blame Dodd” for AIG Bonuses
By: Jane Hamsher Tuesday March 17, 2009 1:15 pm


As Geithner tries to get out of the way of the AIG bonus train wreck, it looks like the designated sin eater is going to be Chris Dodd:

The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.

So Treasury says Chris Dodd did this? In a word. . . no.


http://firedoglake.com/2009/03/17/treasury-attempts-to-blame-dodd-for-aig-bonuses/

Many, many thanks to both of them.

Re Between leveymg and Time for Change we don't need the media.

Who is Bernard Madoff, the man behind the $50 billion fraud ... Understanding the Fundraising Scheme Surrounding Bernie Madoff and the Missing $50 Billion. Update: March 10, 2009. By Christopher Bollyn ...
www.bollyn.info/home/articles/911/another-massive-zionist-fraud-surfaces/ - 82k - Cached - Similar pages

Who Is Bernard Madoff? - By Christopher Bollyn By Christopher Bollyn. Tuesday, 30 December 2008 02:22. December 2008. "It's all just one big lie." - Bernard Madoff to his sons about his $50 billion ...
www.futurefastforward.com/financial-analysis/797-by-christopher-bollyn- - 24k - Cached - Similar pages

Subject: Try these links about Madoff
Message:
Who is Bernard Madoff, the man behind the $50 billion fraud ... Understanding the Fundraising Scheme Surrounding Bernie Madoff and the Missing $50 Billion. Update: March 10, 2009. By Christopher Bollyn ...
www.bollyn.info/home/articles/911/another-massive-zioni... - 82k - Cached - Similar pages

Who Is Bernard Madoff? - By Christopher Bollyn By Christopher Bollyn. Tuesday, 30 December 2008 02:22. December 2008. "It's all just one big lie." - Bernard Madoff to his sons about his $50 billion ...
www.futurefastforward.com/financial-analysis/797-by-chr... - 24k - Cached - Similar pages

"I imagine that right now, we're feeling a bit like Alice. Hmm? Tumbling down the rabbit hole? "


"This is your last chance. After this, there is no turning back. You take the blue pill - the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill - you stay in Wonderland and I show you how deep the rabbit-hole goes." The Matrix

they highlighted what we now know: there wasn't a single transaction (none) on behalf of investors.

I wish someone would draw a graph and how it all links up...

and Madoff screwed the big banks.

And the people. Madoff was a tool. That's the message here.

Oh they've taken a hit but big players, the biggest of them - the ones in on the whole rip off - are getting their bonuses, their bail out money (that they aren't using for the little guys but to do things like, oh, buy up other banks!)

Some of them are even saying (now!) that they'll just give back the bailout money if it means they can't just take whatever they want out of it, or do whatever they want with it, without scrutiny or oversight. WTF?? How much do you think they made just "holding" that bailout money for even a month or two? I'd laugh at our (the collective "our" being the taxpayers) gullibility if it were so fucking mind-blowing at the level of greed and avarice.

I don't see anyone who has the stature to call this game, at the international level, if they had a conscience and wanted to put an end to it. Buffet could but he's not. Spitzer's initial swipe at the players landed him in prostitute purgatory. As another poster asked above, whose the Batman in this scenario? Obama's persistent "faith" (damn, I feel way too cynical now) in Geithner is freaking me out. Geithner is in on it, at the highest levels, as far as I can tell.

FDR never really took them down, even after a group around Morgan Bank and Brown Bros. Harriman (including Prescott Bush and George Herbert Walker) were caught plotting a coup in '34.

If Obama refuses to go after them, he's following in a long tradition. Maybe, in 2052 we'll be facing another Bush Presidency.

of the current financial crisis.

sentence or two. Much appreciated!

Thanks for the thread, leveymg.:thumbsup:

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One person's money laundering may be another's charitable giving. But, I haven't seen these dots connected elsewhere in the U.S. media, since, despite the fact that Madoff was convicted of money laundering, among other things, and the damage which association with him to many legitimate charities is often highlighted.

I'll find that article, and link it in the next installment of this article.

Thanks for that info.

The political and financial corruption may just be two sides of the same face of global banking, I'm afraid.

That's a common characteristic among the major non-institutional "victims."

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As quoted on a DU thread in 2004:

http://www.democraticunderground.com/discuss/duboard.php?az=show_mesg&forum=104&topic_id=3627538&mesg_id=3627575

SE: These are organizations that might have a legitimate front – say as a business, or a cultural center or something. And we've also heard a lot about Islamic charities as fronts for terrorist organizations, but the range is much broader and even, simpler.

CD: For example?

SE: You might have an organization supposed to be promoting the cultural affairs of a certain country within another country. Hypothetically, say, an Uzbek folklore society based in Germany. The stated purpose would be to hold folklore-related activities – and they might even do that – but the real activities taking place behind the scenes are criminal.

Bernard Madoff, the Mafia, and the Friends of Michael Milken

February 3rd, 2009 by Mark Mitchell

In 2005, Patrick Byrne, the CEO of Overstock.com and future Deep Capture investigative reporter, began a public crusade against illegal naked short selling (hedge funds and brokers creating phantom stock to manipulate stock prices down). He said, over and over, that the crime was destroying public companies and had the potential to trigger a systemic meltdown of our financial markets.

Soon after, I began to investigate a network of short sellers, journalists, and miscreants. I concluded that many of the people in this network were connected to two famous criminals – “junk bond king” Michael Milken and his associate, Ivan Boesky. I also began taking a close look at the Mafia’s involvement in naked short selling.

In my last installment (click here to read), I described some of the strange occurrences that attended this investigation. Where the story left off, I’d recently been threatened in a bookstore, and then ambushed by three thugs who told me to stay away from this story. My unwitting employer had been bribed by short sellers, Patrick had been told by a U.S. Senator that his life was in danger, and a Russian matryoshka doll had appeared on the desk of an offshore businessman.______________________________deep capture website

This article speaks at great length the genesis of Feinberg and the ties to crime syndicates. A MUST read,and intersects with much of levey's extensive,superlative research.

Bernard Madoff, the Mafia, and the Friends of Michael Milken ... In 2005, Patrick Byrne, the CEO of Overstock.com and future Deep Capture investigative reporter, began a public crusade against illegal naked short selling.
www.deepcapture.com/bernard-madoff-the-mafia-and-the-friends-of-michael-milken/ - 302k - Cached - Similar pages
More results from www.deepcapture.com »

GMAC and Gabriel Fund(Madoff feeder fund)
Tue., February 17, 2009 Shvat 23, 5769 | | Israel Time: 10:28 (EST+7)

web haaretz.com


Tshuva taking aim at Bank Leumi

By Eti Aflalo



It looks like real estate and energy baron Yitzhak Tshuva is now eyeing the banking sector.

Tshuva owns the controlling interest in the Delek group of companies, which encompasses real estate, energy and vehicle importing, and also owns the controlling interest in the Phoenix insurance company. Now Tshuva apparently has his eye on a 5% interest in Leumi, Israel's biggest bank in terms of market cap.


The 5% share at hand is currently owned by Ezra Merkin's hedge fund Gabriel Capital, and several local market players have been expressing interest.
In December 2008 Merkin said Gabriel would be selling its holdings and closing shop in the wake of the Bernard Madoff fraud. Since then, Leumi's top brass have been receiving calls about Gabriel's stake in the bank.

The timing isn't fortuitous, from Gabriel's perspective: Leumi shares lost 42% of their value last year.

The Cerberus-Gabriel Group bought 9.9% of Leumi about three years ago, when the government decided to privatize the bank. The group wanted the controlling stake, but found its bid foiled because of regulatory constraints. Ultimately, the group was forced to split the interest equally between the two hedge funds, Cerberus and Gabriel.

Another rumor is that whoever buys Gabriel's share of Leumi would try to buy Cerberus' stake, too. Forget it, say sources near Cerberus: It isn't selling. Not right now, anyway.

The Gabriel management might be just testing the waters, trying to find out what price it could get for its Leumi holding and the chances that the Bank of Israel would approve the sale.


If he really wants to buy both Gabriel's and Cerberus' holdings in Leumi, he'd have to sell part of Phoenix: The rules won't let him own more than 10% in more than one financial institution, including banks and insurance companies.

"There has been no decision to buy Leumi shares from Gabriel," was all a spokesman for Tshuva would say._______________________


PS> : Cerebus is the investment group that included John Snow and Dan Qualyle-the firm owns 51% of GMAC.

here's the link :

http://www.haaretz.com/hasen/spages/1064448.html

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When Miami's Hamilton Bank collapsed in 2002 amid allegations of fraud and money-laundering, half of its accounts were taken over by Israel Discount Bank. (The never-entirely-reliable Wayne Madsen claims that Hamilton had been involved in US-Israeli intelligence and money-laundering operations, but I've never been able to confirm that elsewhere.)

In 2004, the New York City branch of Israel Discount Bank was found to have been involved in Brazilian money-laundering -- in the Triple Border region -- amounting to $2.2 billion over 5 years.

Oddly enough, both Hamilton and Israel Discount were represented by Greenberg Traurig, which wound up having to pay the FDIC $7.6 million dollars for having helped Hamilton Bank cover up loan losses related to the Russian debt crisis of 1998.
http://blogs.wsj.com/law/2007/01/03/greenberg-traurig-reaches-76-million-settlment-with-fdic/

Former Greenberg Traurig attorney Carlos E. Loumiet was also charged in that Hamilton Bank case -- and Loumiet has an interesting history of association with Sir Alan Stanford. He was with Greenberg Traurig from 1988 until at least 1999, when he was described in a Washington Post story as Stanford's attorney. (http://www.washingtonpost.com/wp-srv/inatl/daily/oct99/banker11.htm) His name also shows up in a story from 2001, when Greenberg Traurig was representing Stanford Financial Group. (http://www.bloomberg.com/apps/news?pid=10000103&sid=a.0EEBl4oTSA&refer=us)

Then in 2002 he is described in a campaign donation listing as an executive with the Stanford Financial Group, and since October 2002, he's been with the lobbying firm of Hunton & Williams, where his clients still include Stanford Financial.

Woo Hoo, Starroute,thanks for that info.

I have contended for a long time that Abramoff was a conduit to launder casino gambling money to Israel.Kinda like the bagman.

levey did some fabulous pieces here on DU about Abramoff and foreign political contributions!

Look for the next money laundering location to be the newly formed Caribbean Financial center- TTIFC.
Trinidad Tobago International Financial Center.It was created last year,and Saudis were a big player.

BTW,Stanford was manuevering to create his OWN tax haven in Antigua,last year.

Incidentally, there is a site called the Tax Justice Network-SUPERIOR info-especially the blog section.Check it out!

Thank you.
Is there anyway of knowing how much of the money went to AIPAC?

The whole sordid business is unfolding. Get your torches and pitchforks ready. We'll meet in the public square!

although I guess almost everyone is trapped in tax withdrawal jobs at this point!

You are answering the who, what, when where and how more completely than any other source I've found, and believe me, I've been looking!

alot of the money.

And I hope the bastard rots in jail.

The interesting thing is, he didn't take a plea to leave his wife out of it: He screwed her, too. Wonder why?

If anyone can figure that out and explain it in english, I'll be sure to read it.

One thing's for sure: The corporations and governments knew what was happening and no one blew the whistle.

Makes you wonder if you can trust anyone anymore.

protect something or someone. I can't see how his reluctance to talk about where the funds went can be attributed to anything else.

What I don't get is why the government doesn't arrest his wife and kids--they surely knew--and tell them they won't see the light of day unless Daddy Madoff sings. That's the only leverage they can get. The guy's going to spend the rest of his life in Club Fed, so why would he talk otherwise?

The Feds should also consider Bernie's safety and lock him up tight. No sense in taking chances with dangerous, big-money people all pissed off at him. Send him to a secure setting. Maybe he'll have a change of heart.

there's more on the line than his freedom and his wife's standard of living.

Thanks for the short answer. That's why I'm addicted to DU. :smile:

$50 billion is more than your own parking spot at the club. It is government shaking money.

AIA founder, Rene-Thierry Magon de la Villehuchet, ( Can't be the founder of AIG, or not b very likely........AIG was founded in 1909, that makes him 100 years old????)

AIG founder = Cornelius Vander Starr...CV Starr.

It's too much to digest. What do you think actually happened?

Funds were diverted. Bernie's trying to protect the who and what of it. He couldn't do it all alone. His clients -- the "victims" -- are a good place to look first.

As you contemplate where the money came from, where it went, and why no one stepped in, consider the primary sources of money involved. I have seen global investment banking having money laundering as its main function, moving capital from place to place and eventually making it be "legit".

Here is my list of sources; assume "illegal" as applying to almost all items on this list:

1. Arms sales.

2. Drug trafficing.

3. Looting the treasury and the natural resources of various countries.

4. Looting companies.

5. Hising assets from the tax man.

How about counterfeit money?

How about illegal gambling monies?

How about laundering money for government sanctioned,secret ops?

If someone isn't paying you for this, then they should be.

On another note, why do the megabucks always ALWAYS seem to support Right Wing causes?

Wait. Don't answer that. I know already.

One of the best posts ever, and I, too, have been following Madoff closely.

Now watch some "journalist" come along and copy leveymg's work.

Cher

This article should be on the front page of the Washington Post, the NYTimes and several other major newspapers! There has been no other reporting on the Madoff scam that has described everything so clearly and in context.

Do they give out Pulitzer Prizes for DU posts?

I applaud your tenacity and your ability to put everything into perspective.

This certainly deserves wider circulation than DU.
Kudos..

:applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause: :applause:

That I try to never miss!!!

Wow what great reporting!!

fly

this all sounds like a conspiracy to me. Shouldn't this go to the dungeon? Oh wait, this is one of those conspiracies we here at DU are allowed to talk about in the open.:banghead:

N/T

We do have to be careful when mentioning conspiracies around here, don't we?

Such a shame.

Message removed by moderator. Click here to review the message board rules.

not one of them so-called 9/11 wacko conspiracies you mention :sarcasm:

theory is real, meaning the true explanation for seemingly mysterious or unrelated events, in part even though other parts turn out not to be true.

It takes patience to solve a mystery or difficult puzzle. One step is to hypothesize, take facts you know and organize them into a tentative story that might explain what happened.

You can call hypotheses of that sort "conspiracy" theories if you wish. But, there is nothing wrong with them. They serve an important function in finding out the truth. Hypotheses (conspiracy theories if you will) provide a framework for identifying, looking at and organizing facts -- and finding out how they may be linked.

The OP does not go too far. It examines evidence and draws a rather vague conclusion: there is more here than meets the eye, and the links suggest that there may have been some sort of collusion and money laundering on the parts of some very wealthy individuals, banks and companies.

The OP's theory may turn out to be "true." Time, and more facts will tell.

The OP is one, but not the only, starting place for looking for more facts. Eventually, we will find out more facts and then which of the many "conspiracy" theories likely to be voiced about the Madoff scandal is best supported by those facts. At this point, we don't have enough facts.

This conspiracy theory will help other people identify more facts. And eventually, we will put together a lot more of the puzzle, although maybe never all of the pieces.

Conspiracy theories are not evil. They should not be condemned outright. They should be viewed as possible explanations. We all have the right to question anything we want and to believe pretty much what we want.

And to think I felt guilty about taking an extra 15 minutes for lunch the other day.

speechless. I'm gonna have to mull this over in my mind for a day or so. Re-read and absorb this shit. Unbelievable. I can't get over the media, either. They're doing an outstanding job of keeping the public in the dark and as you so aptly put it, just wait for the interest to wane and back to business as usual. I don't care what anybody says, this country thrives on conspiracy. Not theories. Conspiracy.

leveymg. I'm gonna keep reading in hopes that I'll get it one day.

Recommend.

It is not over.

List of World Trade Center tenants, has everything to do with the Banking System and Wall street.

http://www.cnn.com/SPECIALS/2001/trade.center/tenants1.html

Would Madoff been able to keep his Scheme going, would AIG been able to screw the USA in the same way, would any of this happened if 9/11 never happened?

Ameriquest Mortgage, the Architect Roland Arnal, Conspirator’s Market Crisis

http://www.democraticunderground.com/discuss/duboard.php?az=view_all&address=103x428142

"No, Bernie didn’t squander it all away. Most of the money his fund piled up over the years is still out there."

If the money were still out there he would be sitting in his office writing checks instead of sitting in a jail cell.

We will never really know what happened. Particularly with regard to the international funds involved. Bernie Madoff may not really know.

All anyone knows for sure is that he ran out of funds with which to continue to pay the investors with. At some point whatever he was doing, some suspect the "overnight money markets" were involved in addition to hedge funds, it was no longer bringing in more than what he was paying out. Rather than reduce the percentage of return he kept hoping the right fund or the right money market would balance it all out and he could recoup what he was losing. And suddenly he only had, per what was filed with the court, around $700 million left in capital. If the total amount invested was $65 billion a 5% annual return, which represents half of what he was reportedly offering his investors, would be $3.25 billion that he would have to disburse in the coming year. And he only had $700 million. The bottom fell out.

the entire time I have been visiting this site.

mark

I can understand an individual making a mistake with Madoff, but how could a large investment firm allow itself to be conned? Remember according to the Feds, Madoff invested nothing, from the very beginning. That means everyone who handled finances and "investments" for his company must have been in on the con. The suspicion is that he told his sons to "turn him in" so they could claim innocence.

The big question is to all the investment companies: Were you really that stupid, or were you part of the scam?

mind-boggling. thanks for posting

:kick:

Outrage over the bonuses is boiling all over the world... it would be great to get this information out there quickly, before attention wanes.

Because this is making me dizzy.

The lead in to this article seems to suggest that Madoff actually made the returns he claimed! Given that people have been saying for a while that there was no way that Madoff could be making these returns and the trading in the securities Madoff claimed to be investing in was not seen in the markets, this article seems to possess some very strange commentary.

Madoff need not have bled himself out with his high dividend payments. When people are making large returns (17% dividend as suggested), people will often reinvest - particularly if there is no charge for reinvesting and the money manager continues to make these "great returns".

Basic finance tells us if one person invested $1 billion with Madoff 15 years ago, if the account was growing at 20% per year, that account would now have over $15 billion in it. I do not believe the billions disappeared - I simply believe they never existed - they were lies on paper. That is much easier to do than what is being suggested.

"Their customers will get some of their money back through deposit guarantee insurance, law suits and other institutional safeguards. Madoff’s own customers get first crack at funds eventually recovered – there is no way that Madoff spent $65 billion on caviar and vintage wine."

Deposit guarantee insurance typically does not work for even money market funds - are you stating that Madoff was a bank supported by FDIC insurance? The investors may be able to get something from SIPC, but SIPC has roughly only $1 billion in reserves.

It is true Madoff likely did not spend $65 billion - the more likely case is that he never had $65 billion in the accounts.
There was simply no way he was generating the returns that Madoff was claiming to generate. If he lied about the returns, well, he lied about the amount of money in there.

Claiming he made the returns and siphoned them off to people simply does not match the evidence to me.

While the latter part of this article is interesting, the first half makes so little sense that I feel it does an injustice to the main argument. I am curious as to how people with billions of dollars invested did so little monitoring.

As to Ponzi vs Non-Ponzi: the people who got out first in a Ponzi scheme do the best - that seems to be the case here. Feeder funds are what keep Ponzi schemes going - funds are needed to pay out the money. How is this not a ponzi scheme?

Please explain to me what I am missing.

www.dailykos.com - It's on the Rec Page now

Your issues are substantially addressed at revised para 7. Also, in more detail in the long chain of responses that follow.

Thanks Leveymg! I will take a look. :)

:kick:

for those that missed this very important info...

:kick: