The SEC is well aware that everyone thinks its failure to stop Bernie Madoff’s ponzi scheme was pretty weak. After all, Harry Markopolos told them about it for years and they did nothing. But it turns out there’s a pretty innocent explanation: when Markopolos would call the SEC, they didn’t have a pen handy so they couldn’t write down what he told them. This happened all the time and was generally viewed within the agency as not a big deal.
Tips used to come via phone calls, e-mails, faxes and even handwritten letters into the SEC’s 11 regional offices and Washington headquarters. Before the Madoff case, the SEC’s Los Angeles office might receive a written complaint about a bad broker, for instance, and stuff the letter into a filing cabinet if it was deemed without merit. So, if later on a complaint about the same broker was sent to the SEC’s Chicago office, staff there would have no easy way of knowing about the earlier tip and connecting the dots.
Now? They’ve got a shiny new database. And their treatment of people who do their job for them has never been better: Read more »
When one is serving a 150 year sentence for running a massive Ponzi scheme, he tends to find himself with time on his hands to think about things. Take Bernie Madoff, for example. He has a job in the joint (working in the commissary) and he gets in daily walks on the track but other than that, the hours are usually spent reflecting. His reflection time over the last couple years has lead to a few big conclusions and chief among them? That he’s been on the receiving end of a bum rap, in more ways than one, which he’s mentioned during several stops on his Legitimate Years Tour. In February, he griped to New York:
“Does anybody want to hear that I had a successful business and did all these wonderful things for the industry?” Bernie continued. “And got all these awards? And so did my family? I did all of this during the legitimate years. No. You don’t read any of that.”
Last month, he remindedNew Yorker reporter Jeffrey Toobin that he “was worth a billion dollars before any of this nonsense started” but does anyone ever mention that? No they only care about the net worth accrued from his ill-gotten gains. On the same tour stop, he also suggested that he should be getting credit for his later work (the legitimacy of which is still an open-ended question in his mind), if only for the fact that its complexities could only be understood by the most sophisticated of investors (him).
Still, he speaks about his financial acumen with unmistakable pride. “The strategy that I was using for them, whether it was real or not, was not something that anyone would understand if you were not an expert,” he said. As he put it in an e-mail, “Fred was not [at] all stock market savvy and Saul was not really either. They were strictly Real Estate people. Although I explained the Strategy to them they were not sophisticated enough to evaluate it properly, nor were most of my other individual clients. They were not in a position to perform the necessary due diligence and did not have access to necessary financial info or records.”
Which leads us to Berns’ latest. In an interview with the Times he reasons that he got such a raw deal because the judge, like all of his feeble-brained haters, doesn’t understand how “the industry” works. Read more »
MW’s Carson Block: It’s a Ponzi scheme in that the company perpetually issues securities in order to fund itself. Even by its own fraudulent numbers, the company does not generate any free cash and has not done so in sixteen years. Were the company be unable to issue additional securities to fund itself, it would collapse. That to me is the definition or epitomizes the definition of a Ponzi. “In this situation, the company appears to be investing for the 23rd century. It’s sixteen straight years burning cash, no guidance as to what the rationale is to acquire so many trees so far ahead of customer orders. This is taking a capex fraud–we have found several of these in China–it’s taking it to the next level where you’re not constrained by the walls of a factory and no one is able to really see the movement of physical goods. It could grow to be infinite provided that the capital markets continue to fund it.”Read more »
For the latest issue of the New Yorker, Jeffrey Toobin explores the relationship between Bernie Madoff and Fred Wilpon, chairman and chief executive of the Mets and a victim of Madoff’s Ponzi scheme, which resulted in Wilpon (and the baseball team) getting, how to put this? Fucked. As his new project while in the joint is getting people to remember his legacy and talk about all the great stuff he did prior to one blip on an otherwise tremendous career, Berns picked up where he left off with New York reporter Steve Fishman, to whom he griped in February:
“Does anybody want to hear that I had a successful business and did all these wonderful things for the industry? And got all these awards? And so did my family? I did all of this during the legitimate years. No. You don’t read any of that.”
Here’s what he had to say this time around: Read more »
This afternoon, the US Marshals Service will hold yet another auction of Bernie Madoff’s stuff, with proceeds going to the victims of the Ponzi scheme. Today’s lots are comprised of the liquor left behind by the Ponz Master. As previously mentioned, one lucky bidder will take home Bernie’s prized collection of low-grade mini-bar booze (including a selection of 2-ounce bottles of Smirnoff vodka, Bombay gin and Grand Marnier liqueur). Also up for grabs? A decanter containing a mystery liquid, which starts at $500. Read more »