Bernard Madoff arrested over alleged $50 billion fraud

[castle007]

 

http://news.yahoo.com/s/nm/20081212/bs_nm/us_madoff_arrest

Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion Ponzi scheme in what may rank among the biggest fraud cases ever.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

On Thursday, two agents for the U.S. Federal Bureau of Investigation entered Madoff's New York apartment.

"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.

The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.

U.S. prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.

The Securities and Exchange Commission filed separate civil charges against Madoff.

"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."

Dan Horwitz, Madoff's lawyer, told reporters outside a downtown Manhattan courtroom where he was charged, "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."

A shaken Madoff stared at the ground as reporters peppered him with questions. He was released after posting a $10 million bond secured by his Manhattan apartment.

Authorities, citing a document filed by Madoff with the U.S. Securities and Exchange Commission on January 7, 2008, said Madoff's investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management. Those clients may have included other funds that in turn had many investors.

The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.

fuck Wall Street, all of it!!! Nothing but corruption

[Van Cruncheon]

hang him.

[Phoenix Dark]

that's gangsta

[ToxicAdam]

Kind of an allegory for our economy as a whole.

[Mandark]

Jeeeeeeeesus.

[ToxicAdam]

Stock market should have a great day tomorrow.

Oh yea, my local GM plant closed its doors and laid off 300+ people today ...

[Mandark]

In further 2G2D news, Krugman says that the Germans are not helping.

[castle007]

why is yahoo the only website reporting this??

[Howard Alan Treesong]

2 Great 2 Depressing is now over

We have entered the era of:

The Great and the Depressing: Rolling in Grift

[HyperZoneWasAwesome]

Bernard Madoff, a quiet force on Wall Street for decades, was arrested and charged on Thursday with allegedly running a $50 billion Ponzi scheme in what may rank among the biggest fraud cases ever.

The former chairman of the Nasdaq Stock Market is best known as the founder of Bernard L. Madoff Investment Securities LLC, the closely-held market-making firm he launched in 1960. But he also ran a hedge fund that U.S. prosecutors said racked up $50 billion of fraudulent losses.

Madoff told senior employees of his firm on Wednesday that "it's all just one big lie" and that it was "basically, a giant Ponzi scheme," with estimated investor losses of about $50 billion, according to the U.S. Attorney's criminal complaint against him.

A Ponzi scheme is a swindle offering unusually high returns, with early investors paid off with money from later investors.

On Thursday, two agents for the U.S. Federal Bureau of Investigation entered Madoff's New York apartment.

"There is no innocent explanation," Madoff said, according to the criminal complaint. He told the agents that it was all his fault, and that he "paid investors with money that wasn't there," according to the complaint.

The $50 billion allegedly lost would make the hedge fund one of the biggest frauds in history. When former energy trading giant Enron filed for bankruptcy in 2001, one of the largest at the time, it had $63.4 billion in assets.

U.S. prosecutors charged Madoff, 70, with a single count of securities fraud. They said he faces up to 20 years in prison and a fine of up to $5 million.

The Securities and Exchange Commission filed separate civil charges against Madoff.

"Our complaint alleges a stunning fraud -- both in terms of scope and duration," said Scott Friestad, the SEC's deputy enforcer. "We are moving quickly and decisively to stop the scheme and protect the remaining assets for investors."

Dan Horwitz, Madoff's lawyer, told reporters outside a downtown Manhattan courtroom where he was charged, "Bernard Madoff is a longstanding leader in the financial services industry. We will fight to get through this unfortunate set of events."

A shaken Madoff stared at the ground as reporters peppered him with questions. He was released after posting a $10 million bond secured by his Manhattan apartment.

Authorities, citing a document filed by Madoff with the U.S. Securities and Exchange Commission on January 7, 2008, said Madoff's investment advisory business served between 11 and 25 clients and had a total of about $17.1 billion in assets under management. Those clients may have included other funds that in turn had many investors.

The SEC said it appeared that virtually all of the assets of his hedge fund business were missing.

that's seriously messed up.  Chances are this guy won't pay even that and will end up with a sharply reduced sentence after pleading guilty.
Its fucking bullshit.

[Fragamemnon]

I think it's pretty clear that the Security and Exchange Comission and Treasury Department need NKVD-style Commissars. Seriously, these people are so completely out of touch and corrupt that they aren't going to start behaving until their friends get trotted out and shot in the middle of the street.

[Kestastrophe]

When the shitstorm eventually passes over and reforms are made to executive compensation and the credit derivatives market, they should introduce tougher regulations for hedge funds (which are loosely regulated atm).

And holy shit, I didn't realize that the guy owned a market maker (the entities that quote bid/ask prices). Wow.

[archie4208]

a $5 million fine for swindling people out of 50 BILLION?  what a fucking joke.

[Beezy]

that's fucking insane

[Brehvolution]

How much more needs to happen before the public goes all torches and pitchforks on wall st.?

[Kestastrophe]

I saw on CNN this morning that instead of offering it's executives traditional bonuses, AIG (the insurer that was bailed out by the government for $150B and now has an 80% stake in the company) is offering hundreds of executives with salaries ranging from $100,000 to $3M annually a "retention bonus" ranging from $160,000 to $1M. They are claiming that it is needed in order to retain these executives (i.e. the same ones that took unprecedented risks for an insurance company and nearly bankrupted them).

[Tauntaun]

I saw on CNN this morning that instead of offering it's executives traditional bonuses, AIG (the insurer that was bailed out by the government for $150B and now has an 80% stake in the company) is offering hundreds of executives with salaries ranging from $100,000 to $3M annually a "retention bonus" ranging from $160,000 to $1M. They are claiming that it is needed in order to retain these executives (i.e. the same ones that took unprecedented risks for an insurance company and nearly bankrupted them).

 

[Eric P]

How much more needs to happen before the public goes all torches and pitchforks on wall st.?

there are cops with guns and rifles that patrol the exchange

i don't think mobs will be forming any time soon

there are a LOT of them too.

I see them every day on my way to work.

[Tauntaun]

How much more needs to happen before the public goes all torches and pitchforks on wall st.?

there are cops with guns and rifles that patrol the exchange

i don't think mobs will be forming any time soon

there are a LOT of them too.

I see them every day on my way to work.

This is why we buy AR-15's.      

[Eric P]

i have no idea what they have, but it's body armor, kevlar helmets and guns which look very similar to the ar-15.

i'm not really a gun nut so i can't tell you what it is, unfortunately.

[Howard Alan Treesong]

A fine of $5 million on $50 billion in fraud is the equivalent of a $1 fine fine on $1000 in fraud, or 0.1%.

And who says crime doesn't pay?

[Tauntaun]

i have no idea what they have, but it's body armor, kevlar helmets and guns which look very similar to the ar-15.

i'm not really a gun nut so i can't tell you what it is, unfortunately.

Won't matter when I be pullin of the HEADSHOTS!!  YEAAAHH BABY!

[AdmiralViscen]

20 years in prison?

[duckman2000]

How much more needs to happen before the public goes all torches and pitchforks on wall st.?

Americans generally and genuinely believe that civil unrest in other countries, even "western ones," is an indication of bad citizens as opposed to bad sociopolitical systems, and take great pride in being orderly. It's really quite remarkable.

[Tauntaun]

How much more needs to happen before the public goes all torches and pitchforks on wall st.?

Americans generally and genuinely believe that civil unrest in other countries, even "western ones," is an indication of bad citizens as opposed to bad sociopolitical systems, and take great pride in being orderly. It's really quite remarkable.

total

[Eric P]

which is odd because of our strong beliefs in individuality.

[Mandark]

A fine of $5 million on $50 billion in fraud is the equivalent of a $1 fine fine on $1000 in fraud, or 0.1%.

And who says crime doesn't pay?

Actually it's the equivalent of a 10˘ fine on $1000 in fraud, or 0.01%.

I mean, 0.1%?  That would just be exorbitant.

[Howard Alan Treesong]

er ... yeah. I was doing the math in Japanese so I lost a zero

[Fresh Prince]

How much more needs to happen before the public goes all torches and pitchforks on wall st.?

Americans generally and genuinely believe that civil unrest in other countries, even "western ones," is an indication of bad citizens as opposed to bad sociopolitical systems, and take great pride in being orderly. It's really quite remarkable.

Here 3 policeman shot a 15 year old kid armed with knives, 7 times. Luckily this isn't Greece.  

[Cormacaroni]

A fine of $5 million on $50 billion in fraud is the equivalent of a $1 fine fine on $1000 in fraud, or 0.1%.

And who says crime doesn't pay?

Great, let's fine him $50 billion then. It's no more ludicrous than sentencing him to jail for 20 yrs at this point.