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Posts Tagged ‘Madoff fraud’

The Madoff Trial: Conflicts of Interest

Posted by Larry Doyle on October 7th, 2013 10:30 AM |

Close to 5 years after Bernie Madoff turned himself in to authorities for running the largest acknowledged Ponzi scheme on Wall Street, America still knows little as to what truly transpired within those offices in the Lipstick Building on 3rd Avenue in midtown Manhattan.

Do you find it decidedly suspicious that the government has not brought the case against assorted individuals in Madoff’s operation for close to 5 years? I do.

Recall that none other than Harry Markopolos said that it took him little more than 5 minutes to know that Madoff was running a Ponzi scam.

Has the government employed stall tactics in just now bringing this case to trial so as to protect itself and its friends on Wall Street fromg its failures to properly regulate Madoff’s operation and protect investors? How so?  (more…)

Bernie Madoff Deserves Special Treatment

Posted by Larry Doyle on June 23rd, 2009 4:13 PM |

Bernie Madoff

I may stand outside of the mainstream, but I believe Bernie Madoff deserves special treatment when his sentence is handed down on June 29th.

No surprise that Bernie stays true to his cowardice form in begging for mercy from the court, as the Wall Street Journal offers Madoff Seeks Leniency in Sentence:

Bernard Madoff asked a federal judge on Tuesday to sentence him to as little as 12 years in prison after he pleaded guilty earlier this year to operating a massive, decades-long Ponzi scheme.

Talk about chutzpah. Wow!!! Does Bernie think he was involved in a pedestrian white collar financial scam? His lawyer, Ira Sorkin, also provides comic relief in his request:

In a letter filed late Monday and made public Tuesday, Ira Sorkin, a lawyer for Mr. Madoff, asked U.S. District Judge Denny Chin to sentence his client to less than a life sentence.

“Mr. Madoff is currently 71 years old and has an approximate life expectancy of 13 years,” Mr. Sorkin said. “A prison term of 12 years — just short of an effective life sentence — will sufficiently address the goals of deterrence, protecting the public and promoting respect for the law without being ‘greater than necessary’ to achieve them.”

In the alternative, Mr. Sorkin said a sentence of 15 years to 20 years would effectively achieve those goals. “Indeed, such a range will appropriately eliminate concerns for disparate treatment among similarly situated nonviolent offenders,” Mr. Sorkin said.

Is Mr. Sorkin serious? Let’s review his statement: ” . . . eliminate concerns for disparate treatment among similarly situated nonviolent offenders.”

Who has a concern that Bernie will be treated worse? What crimes and criminals bear any resemblance to the Madoff fraud?

Nonviolent offenders? When will our judicial system properly dispense justice for emotional abuse inflicted upon victims in the course of white collar crimes? Why has our judicial process allowed white collar criminals to define their crimes as nonviolent and thus deserving of lessened penalties?

I strongly believe that white collar crimes and criminals are treated far too gently in our judicial sentencing process.

Thus, if I were to sentence Bernie Madoff, I would first want to know how many investors were in his fund. If there were 1000 investors, I would recommend one life sentence per investor, that is, 1000 concurrent life sentences. Why?

I believe each investor is now in an emotional jail cell and likely will be for the remainder of his/her life. Thus, this sentence is the only fair sentence to address that emotional pain and torture.

I do not consider myself a vindictive individual. In fact, I consider myself honest, charitable, and fair. I would welcome hearing the rationale as to how true justice may otherwise be dispensed. That sentence strikes me as fair for all involved.

I have to believe there is a special place in hell for Bernie Madoff.

LD

Who Protects Investors from Regulators?

Posted by Larry Doyle on June 19th, 2009 2:44 PM |

Is there anything worse than being violated by an individual in a position of trust? Crimes perpetrated by regular citizens are one thing, but crimes perpetrated by individuals in a position of public trust, in my opinion, are the most heinous. I am speaking of members of the clergy, teachers, law enforcement, and public servants.

When engaged in private business, individuals typically remain on guard from fraudulent and criminal behavior. That innate defense mechanism is usually relaxed when engaged with a public or quasi-public official. Given that vulnerability, the violation is far more painful due to the emotional damage even if the actual financial costs are minimal.

As I go down this path, let me emphasize the obvious – that is, the presumption of innocence and due process.

1. Today we learn that as part of the case against Allen Stanford, an indictment has also been handed down against Antiguan financial regulator Leroy King. Bloomberg reports that King not only took bribes from Stanford but also showed Stanford information relating to the government’s developing case.

If in fact these allegations are true, King aided and abetted the fraud which is speculated to be of a magnitude of $1-7 billion dollars.

2. In regard to the Bernie Madoff Ponzi scheme, we have no evidence to indicate criminal intent or activity on behalf of anybody at the SEC. That said, the SEC – by its own admission – failed to perform its duties. For those impacted by the Madoff fraud, the lack of accountability by the SEC is no less damaging than if there were criminal activity. Why is that? The length of time over which Madoff perpetrated the scheme along with the amount of evidence provided by Harry Markopolos was so overwhelming and should have minimized the damage, both financial and emotional.

3. We do have evidence of potential culpability on behalf of FINRA in the Auction-Rate Securities fraud. FINRA was headed by Mary Schapiro, current head of the SEC. This fraud is MANY MULTIPLES the size of the fraud perpetrated by Allen Stanford. Professionals, both inside and outside of the financial industry, have estimated that there are anywhere from $80 billion to $175 billion ARS (of a $330 billion market) still outstanding.

Let’s take the midpoint of those estimates, $125 billion, as a best guess of outstanding ARS positions. These securities do not actively trade, like government bonds, but in speaking with Kevin O’Connor of Second Market, he shared that bonds trade around 75 cents on the dollar. Thus, we are looking at approximately $30 billion in losses on a mark-to-market basis.

FINRA’s potential culpability stems from the fact that they liquidated their own ARS holdings in 2007. I have asked repeatedly and will put forth once again, for the benefit of those thousands of investors and billions of dollars:

-what was the exact trade date of FINRA’s ARS liquidation?
-through whom did they liquidate their ARS position?
-what price were they paid for their ARS position?
-did they possess material non-public information about the ARS market failing and act upon it?

The U.S. attorney and SEC are investigating executives from Lehman (Gia Rys, Alex Kirk) for potentially front running the ARS market in 2007. Will we ever find out if FINRA did the same? FINRA is charged with protecting investors. They certainly failed to protect investors in Auction-Rate Securities.

4. Given the fraud involved in the marketing and distribution of ARS, I am blown away by the fact that the SEC, now headed by Ms. Schapiro, blessed the marketing and distribution of the new version of municipal ARS, known as x-Tender, or henceforth called Porky Pig here at Sense on ¢ents. Please see my post earlier today, An Auction-Rate Pig by Any Other Name Is Still a Pig.

Sad but true, as we enter the Brave New World of the Uncle Sam economy, investors need to remain diligent and should not assume that regulators are necessarily protecting them.

LD






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