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["Lynn Wigglesworth" <lynnw1366 AT hotmail.com>]

Bob; It's like another world and another language to me. Completely alien. 
I'm still wondering how all this will affect me.

Lynn Wigglesworth

----- Original Message ----- 
From: "bob ford" <bobford79 AT yahoo.com>
To: <homestead AT lists.ibiblio.org>
Sent: Friday, December 12, 2008 2:18 PM
Subject: [Homestead] 50 Billion dollar ponzi scheme will affect everyone


> This was only uncovered because of the failing economy.  It has been all 
> the talk since before daylight on busioness television and on trader's 
> websites.  When very wealthy, politically connected people (mostly in NY 
> and Florida-retired) lose this much money , all at once, everything in the 
> finacial world is affected.  They could gamble with what they have left to 
> try to make it back.  The new fed funds could be distributed in such a way 
> to make these people whole.  The rich and powerful take care of themselves 
> and their friends, first.  These 'losers' (i mean that only in the sense 
> that they have lost money, not a character designation) are the 'very' 
> rich....
>
> ---------------------------------------------------------------------
>
> DECEMBER 12, 2008 Top Broker Accused of $50 Billion Fraud
>
> Sons Turned In Madoff After He Allegedly Told Them His Investment-Advisory 
> Business for the Wealthy Was 'Giant Ponzi Scheme'Article
>
> Bernard L. Madoff, a former chairman of the Nasdaq Stock Market and a 
> force in Wall Street trading for nearly 50 years, was arrested by federal 
> agents Thursday, a day after his sons turned him in for running what they 
> said their father called "a giant Ponzi scheme."
>
>
>
>
> The Securities and Exchange Commission, in a civil complaint, said it was 
> an ongoing $50 billion swindle, and asked a judge to seize the firm and 
> its assets. "Our complaint alleges a stunning fraud that appears to be of 
> epic proportions," said Andrew M. Calamari, associate director of 
> enforcement in the SEC's New York office.
>
> In a separate criminal complaint, Federal Bureau of Investigation agent 
> Theodore Cacioppi said Mr. Madoff's investment advisory business had 
> "deceived investors by operating a securities business in which he traded 
> and lost investor money, and then paid certain investors purported returns 
> on investment with the principal received from other, different investors, 
> which resulted in losses of approximately billions of dollars."
>
> Dan Horwitz, a lawyer for Mr. Madoff, declined to elaborate on the 
> allegations. "Bernard Madoff is a longstanding leader in the 
> financial-services industry with an unblemished record," Mr. Horwitz said 
> in an interview. "He is a person of integrity. He intends to fight to get 
> through this unfortunate event."
>
> The 70-year-old Mr. Madoff is the founder and primary owner of Bernard L. 
> Madoff Investment Securities LLC. The firm is primarily known for its 
> business in market-making, or serving as the middleman between buyers and 
> sellers of shares. But Mr. Madoff also oversaw an investment-advisory 
> business that managed money for high-net-worth individuals, hedge funds 
> and other institutions.
>
> According to the complaints, Mr. Madoff ran the investment advisory as a 
> secretive business, independent from the firm's proprietary trading and 
> market-making operations. The SEC complaint said that the alleged fraud 
> was run through this arm of Mr. Madoff's company.
>
> The FBI complaint quotes two senior Madoff employees as saying Mr. Madoff 
> ran the investment arm on a separate floor of the firm's offices. The two 
> employees said Mr. Madoff kept the financial statements from the firm 
> under lock and key and was "cryptic" about the firm's investment business.
>
> The complaint did not name the two senior employees. But according to 
> people familiar with the matter, they are Mr. Madoff's sons, Andrew and 
> Mark. Mark Madoff is the firm's senior managing director and chief 
> compliance officer. Andrew Madoff is its director of trading.
>
> A call to the sons' attorney was not returned.
>
> Both complaints say Mr. Madoff told his sons he believed losses from his 
> fraud exceeded $50 billion. That figure couldn't be confirmed. But such a 
> loss is plausible, had money been flowing in and out for years: At the 
> beginning of 2008, according to the SEC filing, his operation had more 
> than $17 billion under management.
>
> Such a scheme would dwarf past Ponzi schemes. It would also be nearly five 
> times larger than the accounting fraud that drove telecom company WorldCom 
> into bankruptcy proceedings in 2002.
>
> The criminal complaint said that when Mr. Cacioppi and another agent went 
> to Mr. Madoff's apartment Thursday, Mr. Madoff told them: "There is no 
> innocent explanation." Mr. Madoff told the agents that "he paid investors 
> with money that wasn't there," adding that he was "broke" and had decided 
> "it could not go on." He said he expected to go to jail.
>
> View Full Image
>
> Associated Press
> Investors inquiring about their money, and others, gather Friday in the 
> lobby of where Bernard L. Madoff Investment Securities has its offices.
> After his arrest, federal prosecutors in Manhattan charged Mr. Madoff with 
> criminal securities fraud.
>
> Mr. Madoff didn't enter a plea during a court hearing Thursday evening. He 
> was released after agreeing to post a $10 million bond secured by his 
> Manhattan apartment. A preliminary hearing was scheduled for Jan. 12. He 
> declined to comment after the hearing.
>
> Under 'Great Stress'
> Earlier this month, the criminal complaint says, Mr. Madoff told one of 
> his sons that "clients had requested approximately $7 billion in 
> redemptions, that he was struggling to obtain the liquidity necessary to 
> meet those obligations." On Tuesday, the complaint alleges, Mr. Madoff 
> added that he wanted to pay bonuses to employees this month, which was 
> earlier than usual.
>
> The next day, the sons met with Mr. Madoff at his office to ask about the 
> bonus situation because he had appeared to be under "great stress" in 
> prior weeks, they told the FBI. Mr. Madoff refused to answer their 
> questions and arranged to meet them at his Manhattan apartment, the 
> complaint says.
>
> Mr. Madoff "wasn't sure he would be able to hold it together" if they 
> continued to discuss the issue at the office, the complaint quotes one of 
> the sons as saying. At the apartment, Mr. Madoff confessed that his 
> business was a fraud and that he was "finished." He said he had 
> "absolutely nothing," that "it's all just one big lie," and that it was 
> "basically, a giant Ponzi scheme." He told them the firm was insolvent, 
> according to the complaint.
>
> Mr. Madoff told them he planned to surrender to authorities, but first, he 
> wanted to pay certain employees portions of the $200 million to $300 
> million dollars that was left.
>
> According to a person familiar with the firm, the sons brought the matter 
> to the attention of their attorney, who notified federal officials 
> Wednesday night.
>
> Since its inception almost a half-century ago, the Madoff firm has been a 
> family affair. Mr. Madoff started his company with $5,000 he saved from a 
> lifeguarding at Rockaway Beach in Queens and a job installing underground 
> sprinkler systems, according to a 2000 report in a trade magazine, "Wall 
> Street + Technology."
>
> Mr. Madoff's brother, Peter Madoff, joined the firm around 1970 and is the 
> senior managing director. Peter Madoff did not return calls for comment.
>
> The two sons, Andrew and Mark, have worked for the securities firm since 
> graduating from college 20 or so years ago. Neither is involved in the 
> asset-management business that their father runs, according to a person 
> familiar with the situation.
>
> "All of his family members grew up with this being our lives. When it is a 
> family operated business you don't go home at night and shut everything 
> off. So you take things home with you, which is how all of us grew up," 
> Mark Madoff told "Wall Street + Technology."
>
> According to a 1986 report in a monthly financial magazine, Financial 
> World, titled "The Highest Paid People on Wall Street," Mr. Madoff owned 
> three homes and kept a yacht moored in the Bahamas. The report said he 
> earned $6 million in 1985. Property records show at one point he owned a 
> home in Montauk, N.Y., and paid more than a $1 million in annual taxes. He 
> has made major donations to Democratic candidates and organizations.
>
> Mr. Madoff's asset-management business appealed to investors for its 
> remarkably steady returns for investing in the stock market. His investors 
> consistently enjoyed small monthly gains, usually between zero and 2%. Mr. 
> Madoff told investors his strategy was to trade in and out of large-cap 
> stocks and buy options on those shares to help smooth the ups and downs. 
> When he failed to see opportunities in the market, he would shift to U.S. 
> Treasurys, according to fund marketing documents and people familiar with 
> his strategy.
>
> Inside Wall Street's Madoff Scandal
> 3:55
> Another large-scale scandal rocks Wall Street as Bernard Madoff, a Wall 
> Street titan and investment advisor was arrested for an alleged $50 
> billion dollar fraud against investors, WSJ's Kelsey Hubbard and Amir 
> Efrati discuss.
> Widespread Skepticism
> Mr. Madoff's Fairfield Sentry Ltd., a hedge fund run by Madoff Investment 
> Services to invest in shares in the S&P 100, claimed to be up 5.6% through 
> the end of November, a period when the Standard & Poor's 500-stock index 
> was down 37.65%. In October, Fairfield Sentry was said to be down 0.06%, a 
> month when the S&P 500 lost 16.8%. Since its inception in December 1990, 
> the fund averaged a 10.5% annual return, according to fund documents.
>
> Such returns sparked widespread skepticism for years on Wall Street. News 
> stories raised questions about his approach. A number of traders suggested 
> his firm could be buying shares for its own account just before it filled 
> orders for customers, an illegal act called front-running.
>
> In 2001, Mr. Madoff told Barron's that charges of front-running were 
> "ridiculous."
>
> An executive in the securities industry, Harry Markopolos, contacted the 
> SEC's Boston office in May 1999, urging regulators to investigate Mr. 
> Madoff. Mr. Markopolos continued to pursue his accusations over the past 
> nine years, he said in an interview on Thursday, and according to 
> documents he sent to the SEC that were reviewed by The Wall Street 
> Journal.
>
> "Bernie Madoff's returns aren't real and if they are real, then they would 
> almost certainly have been generated by front-running customer order flow 
> from the broker-dealer arm of Madoff Investment Securities LLC," Mr. 
> Markopolos wrote to the SEC in November 2005.
>
> The SEC declined to comment on the matter.
>
> Mr. Madoff's investors described their shock and panic on Thursday. Susan 
> Leavitt of Tampa Bay, Fla., said she had several million dollars of 
> inherited money invested in the firm and added $500,000 earlier this year. 
> A stay-at-home mother with two children, the 46-year-old Ms. Leavitt says 
> she is considering going back to work. "That was my nest egg for the 
> children, and my future. I'll never see much back, I'm sure," she said.
>
> Ms. Leavitt said she recently discussed her investment with a friend who 
> told her he was suspicious about the firm's ability to generate such 
> profits amid the economic crisis. "I thought, 'He's probably just 
> jealous,' " said Ms. Leavitt. "We've been with [Mr. Madoff] for 15 years, 
> and it's grown every year at 10%."
>
> U.S. District Judge Louis Stanton, who is overseeing the SEC's case 
> against Mr. Madoff and his firm, on Thursday appointed Lee Richards, a 
> Manhattan lawyer, as the firm's receiver in order to preserve its assets 
> and accounts outside the U.S. The judge also ordered Mr. Madoff and his 
> firm not to move assets. At a hearing set for Friday, the judge will 
> consider the SEC's request to grant powers to the receiver over the entire 
> firm, and a complete asset freeze.
>
>
>
>
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