At which southern Connecticut hedge fund did the following conversation recently take place?
Third party (making routine inquiry): How many PMs do you have?
Manager: 75.
Investor Relations: No, 80.
Manager: (surprised, confused though that could’ve been the low blood sugar) Really? (composes himself) Hm…go fire some.
And scene.
Archive for January 2009
CNBC touched on a dirty little rumor. “Hedge fund manager” Nicholas Cosmos once owed $139k to the Genovese crime family, an amount that was at least partially paid by members of the Gambino family.
This could mean he was seriously connected. Or just that he was in the construction business and an obsessive gambler. Take your pick. Says a friend of Dealbreaker “Yes, yes, you can see it in the eyes.”
Says CNBC in a Charles Gasparino exclusive:
A former Genovese family associate, Michael Durso, who is now in the federal witness protection program, and another associate met Cosmo in in the late 1990s, sometime around 1997, and it was at that time when they put pressure on Cosmo to pay around $139,000 owed to loan sharks connected with the Genovese family, according to people with knowledege of the matter.
At one point, members of the Gambino family intervened on Cosmo’s behalf and paid some of the debt, these people said.
Durso, these people say, has been in contact with the FBI about his alleged involvement with Cosmos. An attorney for Cosmo when informed about the alleged connections with New York crime families had no comment.
On Friday, Wharton held its annual private equity and venture capital conference. Unfortunately there was no need for cops to intervene this time around, though there was a DEA officer on hand keeping an eye on speaker Andrew Sorkin. We sent correspondent Jeff Horwitz to check it out. Here are his findings.
The depressing state-of-the-industry talk at Wharton’s Private Equity conference starts in the line for coffee. The title of this year’s event is “Multiplicity without Rhythm,” which is an M.C. Escher allusion meaning that everything is going to hell at once.
At the morning networking session at Philly’s Park Hyatt Bellvue Hotel, a number of attendees swapped stories about last year’s excitement, when angry SEIU activists with bullhorns bawled AT Carlyle’s David Rubenstein for profiting on the backs of the poor and sick.
In hindsight, being vilified for making money doesn’t seem so bad. Wharton has a cop posted outside the main ballroom of the Bellvue Hotel this year, but there weren’t any protesters to be found. Still, you can’t be too careful: It’s always possible some belligerent pension funds might have shown up to demand their money back.
But that’s getting ahead of things.
We are annoyed that more white collar criminals have not been reading the first part of the Dealbreaker guide: How To Properly Escape Capture Following Your Massive (or Relatively Massive) Financial Fraud. The latest slacker is Arthur Nadel, the Sarasota “hedge fund adviser” who skipped out with such ninja-like disappearing skills that the local constabulary decided to give up the chase when it was clear that he “did not want to be found.” Those skills apparently were insufficiently honed to carry him in the big leagues, as he surrendered to the FBI in Tampa earlier today. (Florida is an interesting choice as his green Subaru was found in the airport parking lot- we were not fooled by the “park the car in the airport and take no flight” trick).
Bloomberg hints that Madoff, and the attention to scandal around it, may have indirectly contributed to the discovery:
The fraud may have been uncovered because of the unrelated arrest on Dec. 11 of fund manager Bernard Madoff for duping investors out of $50 billion, the FBI said in a criminal complaint.
After years of rebuffing requests from an unnamed partner for an independent audit of his funds, Nadel agreed to one on Jan. 8, FBI agent Kevin Riordan said in a criminal complaint. Nadel fled six days later after telling his wife how to survive financially without him, Riordan said.
Ah yes, the dreaded “independent audit.”
Nadel, Missing Hedge Fund Adviser, Arrested by FBI [Bloomberg]
It’s bonus day over at the marginally less tax-evading Swiss bank in town! Unfortunately, we were only sent a cryptic note that the treats were “not good,” leaving us to wonder if this means flat year-on-year or 2 free passes to the Shake Shack (the latter being preferable). Know something (Dougan)? Let us know.
Charlie Gasparino reports that John Thain’s inner circle at Merrill “is in the process of being purged.” Dun-dun-dun. The circle jerk includes Noel Donohue, head of risk management, Mary Lee, JT’s chief of staff, and Margaret Tutweiler, head of communications and corporate affairs. All are gone as of today. The fluffer and Mariachi band, who are said to travel with JT at all times, are rumored to be on the way out themselves. In related news, Gasparino is hearing about emails regarding who knew what and when, that Andrew Cuomo is said to be interested in.
We have spent a lot of time pondering the Made-off case, as you well know. And several things are very suspicious. Key among them, how much did Ruth Madoff know and when did she know it? How many toner cartridges does it take to produce 20 million documents? Who stores documents in a warehouse in Queens? What exactly was this secretive seventeenth floor? Given that Bernie and Ruth were reportedly a very tight couple, how could she be in the dark, really?
But investigators have discovered, according to a person close to the case, that the funds from the advisory business were in fact comingled with Madoff’s personal funds and with a market-making fund in which he, as a broker-dealer, executed orders for customers. It was Ruth Madoff who oversaw the books on all three of these accounts, and it was the comingling of money from them–contrary to regulations that require such accounts to be kept separate–that enabled the elaborate shell game. It also meant that some investors’ money was not invested for their own benefit but went into Madoff’s personal assets.
Behind every great Ponzi scheme, there is a scheming wife?
There are, of course, a great number of mysteries remaining still. Consider:
The Financial Industry Regulatory Authority has reported that there is no record of Mr. Madoff’s investment-advisory firm placing any trades. “What did all those people do on the secretive 17th floor if they weren’t executing trades?”
I mean, do we have to spell it out for you?
Partners in Crime? [The Daily Beast]
From: vikrampandit@citi.com
Sent: Tuesday, January 27, 2009 11:53 AM
Subject: Realignment Leadership Team
Dear Citi Colleagues,
By now you’ve had some time to learn more about our plan to reduce our balance sheet and simplify our organization. The realignment we announced on January 16th will give Citi the widest range of options going forward as we continue to strengthen our core franchise. You can learn more about it here.
We’ve made quick progress on this reorganization and I thank you for all of the hard work that has already been done.
To ensure our success, we need the right people in charge who will be accountable for the performance of their business. I’m pleased to announce some of the members of the leadership team who will be directly responsible for driving and managing excellence in each of these business units around the world.
First, storm the offices. Then, smack your alleged perpetrator right in the mouth. Then, when you are really mad, jump on http://www.scamvictimsunited.com (which bears a very artsy logo that looks like it was lifted from an autism support website and includes the cautionary label: “Warning – Our site is being used in scam emails!”) Make sure to peruse their message board when you visit. It’s sort of the Yahoo Message Boards of fraud and the collective content there is enough to make you cut up all your credit cards, shred all your checks and move to an isolated cabin with no phone or internet just outside of Lincoln, Montana.
It seems the subject of our story yesterday, convicted scamster Nicholas Cosmo of Agape World (no, I’m not kidding) had piqued the curiosity of prospective investors before. Reuters dug up a post on Agape World from March 2008: “Has anyone invested with Agape World Inc? They provide bridge loans and offer investors 13-14% returns? When my brother was telling me about it, it sounded kinda fishy and risky….” Seriously, people, what is it with the fish?
While the fisticuffs were entertaining, Reuters dashes any hope of flight from Mr. Cosmo.
“Nicholas Cosmo took the advice of an attorney and complied with an arrest warrant,” said Al Weissmann, spokesman for the U.S. Postal Inspection Service, which is investigating Agape World and Cosmo along with the FBI.
I would have loved to have been in the room for that discussion.
NY financier arrested in purported $400 million scam [Reuters]
