Add Steven Speilberg, John Malkovich and Mets owner, Fred Wilpon to the list of thousands of people or groups who were victimized by Bernard Madoff’s Ponzi scheme. (s.wsj.net/public/resources/documents/st_madoff_victims) The list is international in scope and public knowledge of the victims is added to daily as people join in on lawsuits trying to recover lost funds. The prurient details of actual amounts of money lost isn’t always available, but probably no one’s losses will exceed the seven billion dollars of the Fairfield Greenwich Advisors group who lost half of their fourteen billion dollars in assets.
More names will undoubtedly be added to the list as individuals and corporations seek to recover lost funds. Many of the more public names will find there way to Entertainment Tonight, but I think I think Phyllis Molchatsky’s reaction to her losses was the most interesting of any I’ve read about. She is suing the SEC alleging negligence in their failure to detect Madoff’s scam.
As I mentioned recently, even if Madoff bought estates or artwork every day for the past ten years, those real assets are around somewhere. Finding those assets may be the new century’s version of searching for sunken pirate treasure depending on how shrewd Madoff was in hiding his ill-gotten gains. I haven’t read anywhere whether or not he plans to cooperate with authorities in locating the lost empire’s wealth. But this story is just beginning.
During the last century, film director Alfred Hitchcock was a guest on the Johnny Carson version of The Tonight Show. Johnny asked the reigning king of crime and horror movies whether he thought that anyone ever committed the perfect crime. Hitchcock’s response, in his unique breathless delivery, was that he was certain that perfect crimes were committed every day. They were never uncovered, never even recognized as crimes. That’s what made them perfect.
Which of course makes me wonder, has there ever been a perfect Ponzi scheme? Has anyone ever bilked billions or even millions from investors, and then slowly and systematically lost money so that those investors never even knew they were never actually invested in anything? Probably not, at least not with that amount of money. But I wonder on a small scale if little Ponzi schemes aren’t taking place every day, never to be discovered. It’s only a perfect crime if you don’t get caught.
By Myron Gushlak
Showing posts with label Bernard madoff. Show all posts
Showing posts with label Bernard madoff. Show all posts
Monday, March 2, 2009
Friday, January 30, 2009
Scams
The down time at BlueWater Partners (http://bluewater.ky/) is always interesting. I don’t think that would be too surprising to many people. When men work in high pressure jobs, handling large sums of money, things tend to get a little unpredictable during the breaks. Bond traders are notorious for this sort of behavior. A bond trader will work at warp speeds for hours at a time manning several telephone lines and computer screens simultaneously, and then bam, everything stops, and traders find themselves staring at one another in a minor daze. I knew of one bond trader in New York who caught mice and threw them out the window after making little parachutes for them during the down time. Things get weird. Conversations are often unrepeatable.
The talk the other day centered around the Bernard Madoff scam. It’s hard not to talk about Madoff, or “made-off” as I’ve heard him called recently, as in “he ‘made-off’ with all the money.” We started by talking about other scams, the original pyramid scheme of Charles Ponzi in the 1920’s to the Nigerian money laundering scheme that still surfaces every now and again. Madoff seems to have the biggest scam to date, at least in terms of dollars. The Albanian pyramid scheme of 1997 was the hands down biggest in terms of the numbers of people involved. It was estimated that two-thirds of that country’s entire population and government were caught up in it. Riots ensued when the whole thing collapsed, and the country still hasn’t fully recovered. But in terms of dollars, Madoff seems to have won a rather dubious prize.
Which led to the main topic of discussion – “Where is the money?”
If the totals that are being thrown around in the newspapers are remotely accurate, Madoff took hundreds of millions, and possibly billions of dollars. Think about that. In these days of billion dollar buyouts numbers get thrown around and lose their meaning. But he may have taken billions of dollars. A million dollars is a lot of money. If you spent a dollar a day for a million days you would have had to begin in the fifth century BC to be broke today. (without interest, of course.)
It was the esteemed consensus of BWP that a single man cannot spend that much money in his lifetime, never mind the forty or fifty years Madoff may have been at it. There just isn’t enough time in the day. It would take a foundation with many employees to spend at a fast enough rate. It’s a funny idea, not being able to spend a fixed amount of money, a Brewster’s Millions sort of fantasy, but think about it. If you stole one billion dollars, you would have to spend ten million dollars a day to make it disappear in a couple of decades. Now think about how much work it would be to spend ten million dollars a day every day for a couple of decades. If you gave it away in huge allotments. far too much attention would be drawn to you. Did he buy an estate a day for a year? A roomful of Picassos? Where are they? What a dilemma! So the question remains, where is the money?
I was reminded of a story I read many years ago. A man in France stole what is the equivalent to one million dollars in quarters. Do you know how much space you need to store a million dollars in quarters? What are you going to do with them? Sell them each for a nickel to neighborhood children? Go to quarter casino machines every day for eight hours? You would draw so much attention to yourself that you would be caught in weeks, which leads me to the what the police chief in charge of the case was quoted as saying, “Stealing this much money is its own punishment.”
By Myron Gushlak
The talk the other day centered around the Bernard Madoff scam. It’s hard not to talk about Madoff, or “made-off” as I’ve heard him called recently, as in “he ‘made-off’ with all the money.” We started by talking about other scams, the original pyramid scheme of Charles Ponzi in the 1920’s to the Nigerian money laundering scheme that still surfaces every now and again. Madoff seems to have the biggest scam to date, at least in terms of dollars. The Albanian pyramid scheme of 1997 was the hands down biggest in terms of the numbers of people involved. It was estimated that two-thirds of that country’s entire population and government were caught up in it. Riots ensued when the whole thing collapsed, and the country still hasn’t fully recovered. But in terms of dollars, Madoff seems to have won a rather dubious prize.
Which led to the main topic of discussion – “Where is the money?”
If the totals that are being thrown around in the newspapers are remotely accurate, Madoff took hundreds of millions, and possibly billions of dollars. Think about that. In these days of billion dollar buyouts numbers get thrown around and lose their meaning. But he may have taken billions of dollars. A million dollars is a lot of money. If you spent a dollar a day for a million days you would have had to begin in the fifth century BC to be broke today. (without interest, of course.)
It was the esteemed consensus of BWP that a single man cannot spend that much money in his lifetime, never mind the forty or fifty years Madoff may have been at it. There just isn’t enough time in the day. It would take a foundation with many employees to spend at a fast enough rate. It’s a funny idea, not being able to spend a fixed amount of money, a Brewster’s Millions sort of fantasy, but think about it. If you stole one billion dollars, you would have to spend ten million dollars a day to make it disappear in a couple of decades. Now think about how much work it would be to spend ten million dollars a day every day for a couple of decades. If you gave it away in huge allotments. far too much attention would be drawn to you. Did he buy an estate a day for a year? A roomful of Picassos? Where are they? What a dilemma! So the question remains, where is the money?
I was reminded of a story I read many years ago. A man in France stole what is the equivalent to one million dollars in quarters. Do you know how much space you need to store a million dollars in quarters? What are you going to do with them? Sell them each for a nickel to neighborhood children? Go to quarter casino machines every day for eight hours? You would draw so much attention to yourself that you would be caught in weeks, which leads me to the what the police chief in charge of the case was quoted as saying, “Stealing this much money is its own punishment.”
By Myron Gushlak
Wednesday, December 17, 2008
Martha
I wonder what Martha Stuart was thinking this week when the $50 billion Ponzi scheme of former Nasdaq chairman Bernard Madoff came undone. (www.time.com/time/business/article/0,8599,1866680,00.html)
The SEC was intent on making an example of Martha Stewart when they sentenced her in 2004 for alleged “insider trading.” This, in hindsight, would have been three years after the suspicious investments of Mr. Madoff were originally investigated by that same SEC. I picture a harried investigator at the SEC getting a call from his boss to drop everything and get on this Martha Stewart case! “But I’m in the middle of an investigation of Madoff,” the harried worker protests. “He’s posted a suspiciously consistent profit of one or two percent almost every month for the past three years. We’re talking billions here!”
This would be, of course, the same SEC who failed to detect anything amiss at Bear Sterns, Lehman Brothers, etc, etc. But they got Martha Stewart. What amount of money were we talking about back there in the idyllic financial days of 2004? Oh yeah, it was 4,000 shares at $60 a share. Wow. Almost a quarter of a million dollars. That’s right Two hundred and fifty thousand big ones! Today the market doesn’t even react if a company announces a twenty million dollar loss. Any loss that starts with an “M” instead of a “B” doesn’t even register.
I don’t really want to kick a man when he’s down. The SEC isn’t the only culprit here. Moody’s Investors Service, who were ostensibly paid to rate investors for the public good had Countrywide Securities highly rated six months before their irregularities started coming to light. They also missed the Enron debacle until it was too late. An article in The New York Times raises relevant questions about the people who are supposed to be watching the shop. (www.nytimes.com/2008/12/07/business/07rating.html?_r=1&scp=2&sq=Moody's&st=cse) They quote an anonymous Moody’s managing director in September, 2007: “These errors make us look either incompetent at credit analysis or like we sold our soul to the devil for revenue, or a little bit of both.” He left out the words “criminally negligent”. The Times article paints a picture that Moody’s is involved in, at best what could be called a “conflict of interest.” The SEC is right there along side of them. But at least the SEC nailed that threat to society – the heartless arch-criminal, Martha Stewart.
By Myron Gushlak
The SEC was intent on making an example of Martha Stewart when they sentenced her in 2004 for alleged “insider trading.” This, in hindsight, would have been three years after the suspicious investments of Mr. Madoff were originally investigated by that same SEC. I picture a harried investigator at the SEC getting a call from his boss to drop everything and get on this Martha Stewart case! “But I’m in the middle of an investigation of Madoff,” the harried worker protests. “He’s posted a suspiciously consistent profit of one or two percent almost every month for the past three years. We’re talking billions here!”
This would be, of course, the same SEC who failed to detect anything amiss at Bear Sterns, Lehman Brothers, etc, etc. But they got Martha Stewart. What amount of money were we talking about back there in the idyllic financial days of 2004? Oh yeah, it was 4,000 shares at $60 a share. Wow. Almost a quarter of a million dollars. That’s right Two hundred and fifty thousand big ones! Today the market doesn’t even react if a company announces a twenty million dollar loss. Any loss that starts with an “M” instead of a “B” doesn’t even register.
I don’t really want to kick a man when he’s down. The SEC isn’t the only culprit here. Moody’s Investors Service, who were ostensibly paid to rate investors for the public good had Countrywide Securities highly rated six months before their irregularities started coming to light. They also missed the Enron debacle until it was too late. An article in The New York Times raises relevant questions about the people who are supposed to be watching the shop. (www.nytimes.com/2008/12/07/business/07rating.html?_r=1&scp=2&sq=Moody's&st=cse) They quote an anonymous Moody’s managing director in September, 2007: “These errors make us look either incompetent at credit analysis or like we sold our soul to the devil for revenue, or a little bit of both.” He left out the words “criminally negligent”. The Times article paints a picture that Moody’s is involved in, at best what could be called a “conflict of interest.” The SEC is right there along side of them. But at least the SEC nailed that threat to society – the heartless arch-criminal, Martha Stewart.
By Myron Gushlak
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