In the confines of his East 64th Street penthouse. CNBC reports the joyous news that Bernie Madoff, whose bond hearing was previously scheduled for yesterday at 1PM, then postponed 'til today at 2PM so he could find a couple of people to co-sign the thing, has been canceled. According to a sufficiently vague filing, the terms of the bail agreement "have been modified" and thus leave no need for this afternoon's meeting. Also, wife Ruth has agreed to surrender her passport. It's unclear if that is standard procedure (as of yesterday she was a signatory on the $10 million bond), or if it's 'cause authorities have realized she's the mastermind of the whole thing.
Update: Brace yourselves, as no one, ourselves included, saw this coming. Berns was apparently unable to find two more people, in addition to his wife and brother, to co-sign the deal. Instead-- since just sending him to jail wasn't an option...-- authorities allowed Ruth Madoff to put up two more properties for collateral (houses in Montauk and Palm Beach). Lady Madoff has also agreed to a 7PM to 9AM curfew. Mr. Madoff will have one of those electronic collars around his ankle, a la Martha. So that's fun.
Earlier: Bernie Madoff Needs Your Help
Posted by guest , Dec 17, 2008 11:03AM
"Mastermind sounds" so control freak-ish
Posted by guest , Dec 17, 2008 11:05AM
$10 BILLION bond? holy crap...
Posted by guest , Dec 17, 2008 11:05AM
Bess must have some inside info about Ruth. I have no idea if that's a joke.
Posted by guest , Dec 17, 2008 11:06AM
10 million
Posted by guest , Dec 17, 2008 11:07AM
The whole family is innocent! Don't forget, they had 1% of their total net worth in the funds! His sons and his son-in-laws only worked at the firm for 20-30 years so they did not have enough time to understand how Bernie ran the firm. Innocent I tell you!
Posted by guest , Dec 17, 2008 11:08AM
Both on the way to Venezuela. Fake passports and all. Chavez has the $$$ stash waiting for them. The bitch was the one who really ran the show. End of story till he's found with bullet in head on beach in Aruba.
Posted by MarshallStack , Dec 17, 2008 11:10AM
Nobody knows you when you're down and out.
Walter Noel couldn't throw him a bone for the millions he has tucked away? Oh baby.
How many times has EXTRADITION LAWS been Googled this week?
Posted by cy , Dec 17, 2008 11:11AM
Dear Dealbreaker community,
I have question about this whole Madoff thing that I cannot clear up. I have not read or heard anything about this angle anywhere. Please assist if you can...
What is the tax situation regarding Madoff's fund? Meaning--if you're invested in a fund that pays 10% a year, every single year, you have to pay a portion of that return to the government every year as well, correct? So even if the investment returns were ficticious, you still need to cut a real check every march to the treasury. My question- where did that money come from? Was Madoff continually recruiting enough new clients to make sure the older investors could pay their taxes? Were investors pulling cash from other assets/invesments to pay their taxes so they would not need to withdraw any funds from their madoff accounts? In either case, doesn't the US treasury make out like a bandit in a big way on this whole deal? Wasn't this esentially a giant transfer of wealth from Madoff investors to the US Treasury (with a solid chunk going to madoff as well)?
OK- Any thoughts on this would be helpful. Am I simply missing something about hedge fund tax accounting? Or was the government far and away the biggest winner in this scheme?
cy
Posted by guest , Dec 17, 2008 11:12AM
Weekends at Bernie's must be dead.
Posted by guest , Dec 17, 2008 11:15AM
Wideclops runs free as well
Citadel chopping heads today :(
Posted by guest , Dec 17, 2008 11:16AM
@2, No Dr. Evil, thats 10 MILLION dollars.
Posted by guest , Dec 17, 2008 11:21AM
@8 - people either took cash out of their Madoff account or (more likely) used other funds to pay their yearly taxes.
There should be symmetry in the tax system and if it were truly fair, all of the cheated investors should be able to take a deduction today for the theft losses and essentially get all of those taxes back (minus, of course, the interest-free loan they have given to Treasury).
Because the symmetry of the tax system is effectively broken, with phase-outs, AMT, limits on deductibility, etc., it's unlikely that anyone would be made whole by taking the deduction in 2008.
If they are lucky, these people will be able to prove that there was no income in those prior years and they'll be able to file amended tax returns.
Then again, Treasury stacks the rules against the taxpayer as generally there is a 3 year window to file an amended tax return and claim a refund.
Posted by guest , Dec 17, 2008 11:23AM
I just pre-ordered my copy of "Caged Wisdom or: Charles Ponzi was a Candy Ass" (box set includes bloopers and yarmulkes!) from Amazon.
Posted by guest , Dec 17, 2008 11:24AM
@8
Well put, an astute question indeed, allow me to elucidate. When one is invested in a sophisticated vehicle such as Madoff runs, annual returns are indeed taxed at various rates depending upon which stream of income they derive from, either as dividend stream, short term capital gains such as on Forex trades, or long-term gains such as on long equity positions. When one realizes the gain, one has the joy of contributing to the civic weal as prescribed by the friendly Internal Revenue.
Yes dear Cy, these are in fact real taxes paid on "real" returns, paid on a "real" investment.
Nothing unique, nothing to worry about. Please send your reinvestments vouchers as usual.
Charles Ponzi.
Posted by guest , Dec 17, 2008 11:34AM
@8, @12 & @14.... go fuck yourSELF.
please.
Posted by guest , Dec 17, 2008 11:42AM
"In the confines of his East 64th Street penthouse."
"authorities have realized she's the mastermind of the whole thing."
Didn't this happen at the Bluth Company a couple years back?
Posted by guest , Dec 17, 2008 11:56AM
Obviously a Club Fed-type of arrangement was worked out, so this fucker can continue to live in the lifestyle he's been accostomed to on Park Ave. with all of the comforts. So what if he has to wear a monitoring bracelet, Martha managed to get through it! If this guy was sent to Rikers he would be dead meat within a few hours. He probably would be dead if he even ventured outside of his apt at this point. Can you imagine the hit contracts that have already been put out on Madoff's life? You don't fuck with Jews and their money on such a large scale and get away with it.
Posted by johnhhaskell , Dec 17, 2008 12:02PM
@ 15- you are a moron
@8- Madoff was making regular distributions. The supposed "scheme" was all short term trading therefore ordinary income. Carl Shapiro will have a lot of luck trying to amend his 1971 tax return (reported first year of his investing with Made Off) to reflect the fact that he paid income tax on fictitious profits.
Not to pick on Carl Shapiro, but he will also have to defend himself (as will many others) against claims made against his fictitious profits by others. So he gets slammed both ways- taxes paid and already gone, claims against whatever he has left.
Next question: pre 1982 there was a 70% income tax. Who in his right mind would have been interested in "earning" 10% with Madoff, minus 70% tax = 3% at a time when Treasuries yielded 14%?
Even with the top rate cut to 35% it barely made sense. Even less after you gave a rakeoff to these various bozos in Nyon, London or Greenwich who were doing "due diligence" in exchange for a quarter billion a year in fees.
Posted by AJ , Dec 17, 2008 12:03PM
@8 they get tax credits for the taxes paid since the gains were not real
Posted by cy , Dec 17, 2008 12:08PM
Thanks guys (and #17 from the other post)...
What I'm getting at, though, is this...
Let's say you invested $10 million ten years ago. Let's also say the fund made 10% a year, which you had to pay 20% of in taxes. Let's also say that you left everything in the madoff account, paying taxes with other funds. So at the end of year one...
y1- account balance $11mm tax $200k
y2- $12.10mm tax $220k
y3- $13.31mm tax $242k
y4- $14.64mm tax $266k
y5- $16.11mm tax $292k
y6- $17.72mm tax $322k
y7- $19.48mm tax $354k
y8- $21.44mm tax $390k
y9- $23.58mm tax $429k
y10-$25.94mm tax $472k
And then in year ten your account balance goes to zero. However, you've been cutting those checks all those years to the tune of #3,187,000 (approximately). So not only have you lost your original 10 million, but another 31.87% of that went to taxes as well. If you were invested long enough in this example, you would have lost more money on the taxes than the initial investment!
I guess my point is that getting back the fraudulently paid taxes is by no means an insignificant point, yet I've heard nothing in the MSM about the investors getting the taxes back.
Posted by guest , Dec 17, 2008 12:12PM
@16, She's probably safe. My lawyers tell me a husband and wife can't be arrested for the same crime.
Posted by guest , Dec 17, 2008 12:14PM
you don't pay taxes on unrealized gains big fella
Posted by cy , Dec 17, 2008 12:19PM
@22-
Please explain.
Posted by guest , Dec 17, 2008 12:39PM
@16
Ok, that was Lucille Bluth, the mastermind.
Posted by guest , Dec 17, 2008 2:33PM
@20
There is no such thing as "fraudulently paid taxes." You report what you owe and the IRS makes sure you pay. You could make $0 and tell the IRS you made $1M and you would have to pay taxes on that $1M. Now, let's say you made a mistake and you did not make $1M last year. You can then amend your return and get back the money you paid on your mythical $1M in income; however, you can only amend the last three years of returns. So, the Madoff "investors" could amend 3 years of returns (thereby triggering some massive audits) and get some money back. Everything past 3 years is water under the bridge. So, in conclusion, when you sign your tax return, make sure it is accurate and don't just trust Bernie's word.
Posted by guest , Dec 17, 2008 2:52PM
I still can't believe this prick is not locked up in jail! He seems content living out his days prepaying for his criminal trial while living in his luxury East Side apt. Lock him up now so that some justice is served while he is still alive. The sons should be indicted now too, just in case they try to make a run for it!
Posted by guest , Dec 17, 2008 5:13PM
@16, @21 - Beat me to it.
Disappointed that George Michael never got to give one to Maeby...
Posted by guest , Dec 17, 2008 6:44PM
can someone explain this to me?
all these fuctards claiming to have lost so much money (and i feel bad for them), did theys lose the imaginary money which their initial investment turned into? in other wordlings, did some fucdouche put 10K in this "fund" back in 1980 and watch it "grow" to $1 million and is now crying about their finanical "ruin"?
i feel bad for all the victims.
Posted by EyTinePoopies , Dec 18, 2008 11:23AM
I just pooped my pants