There have been some interesting developments in the Madoff business recently, all of which have confirmed my early insight that the Madoff fraud was much more than a solo effort.
[In my opinion, it is likely an international criminal conspiracy tied to the financial crisis. You can reference my Madoff posts through the search function and also through my last three articles at Lew Rockwell which indirectly address the issue].
The Madoff business is why I’ve come down squarely against nationalization. It’s not because of ideology. Or pig-headedness. Or from a desire to pander to the neanderthal crowd (is there any other kind?)….
It’s because as long as the ties between all these corrupt financial deals and dealers are not clear, any move made by the government is guaranteed to set precedents that will in the long run be against the public interest. To all the libertarians who will rush to tell me there is no such thing as the “public interest” but only the “aggregated individual interests of many people” – yes, of course, but we’ll do the abstract cud-chewing at another time. What I mean is that public money (tax money) will go to private interests.
Which is why unraveling the Madoff -banking cartel story is the most needful thing right now.
Here are some recent developments.
(1) Talking Points Memo, January 4
If the Feds ever get around to realizing Bernie’s brother and thirty-year business partner, Peter B. Madoff, was in on the scam, they might want to take look at his holdings.
Craig Kugel, a long time Madoff employee, is involved in Essex Realty Development LLC, registered in NYS on 12/10/07 to an address at 34 Pheasant Run, Old Westbury. 34 Pheasant Run is one of Peter Madoff’s primary residences along with a W. 53rd St apartment and a Palm Beach house.
While much has been made of Ruth Madoff, Bernie’s wife, being sole owner of her Palm Beach estate, no one has said anything about Peter and Marion Madoff transferring ownership of their Palm Beach property solely to Marion in 11/06 which is probably when the Madoffs got serious about giving it up.”
and
“David Kugel, I believe, is Craig’s father. They both live in the same North Shore neighborhood on Long Island and they may be related to the Madoffs.
Madoff Technologies, L.L.C. was registered in NYS in 10/98 in care of Craig Kugel at 885 Third Ave.
In 2003, Craig Kugel was identified in another Trader Magazine photo as being with Primex Trading. Primex was registered as Primex Holdings, L.L.C. in NYS in 10/98. Primex is a joint venture between Bernard L. Madoff Investment Securities, Goldman Sachs and other brokerage firms and involves a digital trading auction which operates out of Bernie’s 18th floor office at 885 Third Ave.
(2) The New York Daily News, March 12:
“The timing of her [Ruth Madoff’s] $15.5 million in withdrawals – as he was becoming aware of his problems, and then on the day before his arrest – is very suspect,” Massachusetts Secretary of State William Galvin told the Daily News. Galvin, the top securities regulator in the state, calls Cohmad a feeder fund in Bernie Madoff’s empire. Representatives for Cohmad didn’t return calls. Galvin ridiculed Bernie Madoff’s claim of having executed the complex, decades-long global banditry alone. “There are only two questions that exist right now: Where’s the money? And was there anybody else involved?”
Ruth Madoff has not been accused of wrongdoing. Still, she has fueled outrage by trying to claim a $69 million personal fortune unconnected to her husband’s booty, which will be subject to court-ordered forfeitures….”
(4) Talking Points Memo, April 8
[Steve ] Labaton [of the New York Times] understates the NSX case. According to a 5/19/2005 SEC administrative ruling, NSX openly and flagrantly violated SEC regulations year in and year out for more than six years. As a result, NSX brokers made untold millions cheating their customers.
NSX encouraged the cheating by failing to enforce “compliance by its dealer firms (known as “designated dealers”) with two important provisions of its rules: the market order exposure (“MOE”) rule and the customer priority (or trading ahead) rule”.
On top of trading violations, NSX destroyed email correspondence that was supposed to be retained for five years.
What punishment did Eric Swanson “aggressively” mete out to NSX for cheating customers and destroying evidence? NSX was required to set aside a million dollar reserve for an independent audit and David Colker, NSX CEO, was censured. A slap on the wrist.
As an aside, anyone who claims the Madoffs operated the brokerage side of the business honestly is full of crap. Bernie and Peter knew NSX was violating SEC regulations and they profited from those violations. Destruction of email correspondence is right up the Madoff alley, too, as we now know.
Peter and Bernie were certainly closely associated with NSX. In January 2004, NSX sponsored a Swiss ski trip for the Madoffs and a dozen of their friends and business associates……..
Labaton again understates the case. Peter Madoff was a member of the A.G. Edwards board of directors. A. G. Edwards is headquartered in St, Louis and, outside of New York, Missouri is the only other state where Bernard L. Madoff Investment Securities LLC is registered.
Shana Madoff wasn’t on the compliance committee of just any old industry group. She was appointed to the NASD Market Regulation Commitee in 2003..”
(4) The New York Daily News, April 18:
“Hedge-fund founder Ezra Merkin was warned years ago that Bernie Madoff wasn’t on the level but still invested and lost tens of millions in his Ponzi scheme, it was charged in court papers unsealed Friday. Among the documents were e-mails from former Merkin employee Victor Teicher who said he told Merkin several times in the early 1990s that Madoff’s consistently high profits weren’t possible year after year. The claimed profits “were inconsistent with what could possibly take place in reality,” he said. Teicher, a former financial analyst and convicted felon, also said Merkin’s former accountant Andrew Gordon reported that Madoff’s investment scheme “looked like a fraud to him.”