Stalin
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Fascinating article on how this rogue conned his own people.
"...The most relentless skeptic was Harry Markopolos, an accountant and private fraud investigator mostly unknown outside of Boston, who repeatedly sounded the alarm about Madoff to the S.E.C., starting in 2000. When the S.E.C. took no action, Markopolos began a crusade to prove his point. In 2005 he sent regulators a 19-page memo entitled “The World’s Largest Hedge Fund Is a Fraud.” He was referred to the New York branch chief, Meaghan Cheung, who, he wrote in an e-mail to one of her colleagues last year, didn’t “have the derivatives or mathematical background to understand the violations,” much less prosecute them. The S.E.C. eventually opened an investigation into Madoff but closed the matter in November 2007 without bringing any claims against him. Cheung, 37, who left the S.E.C. last September, had difficulty defending her findings in the Madoff case, telling the New York Post after his arrest, “If someone provides you with the wrong set of books, I don’t know how you find the real books.” Markopolos, who lambasted the S.E.C. in a congressional hearing in February, said, “I felt like I was an army of one.”
Laura Goldman, now of the Tel Aviv–based LSG Capital, told me she had met Madoff at the lunch counter of Green’s Pharmacy in Palm Beach in 1992, when she was a broker with Paine Webber in Philadelphia, visiting South Florida in search of clients. “When I fortuitously bumped into Madoff, I thought I’d found my lottery ticket,” she remembered. He was dressed Palm Beach casual—polo shirt and slacks—on his way to play golf. As soon as the name Bernie Madoff floated across the counter, she knew who he was—the Jewish T-bill. They talked about politics, the weather, golf—everything except business, because Madoff didn’t talk business with strangers. “Finally, in 1997, I said to him, ‘Isn’t it time we started talking turkey?’” By then she was at a smaller firm, so Madoff got serious. “At this meeting he changed. He was still charming, but he did not tolerate my style of many questions,” she said.
“He would try to change the subject by saying that I was lucky to invest with him.” Look at the returns, he told her, and talk to some of his clients. But Goldman felt that she needed specifics. She knew almost everyone in the options business, she said, but she couldn’t find anyone who was trading with Madoff. “I found that strange.”
She asked him about custody issues, types of accounts, and Madoff came up short on everything, especially his auditing firm—two people in a 13-by-18-foot office in the sticks outside of New York. “I’m saving a few pennies on the auditors so I can give my clients more return,” she said Madoff told her. Why, she asked, wasn’t he set up like a typical hedge fund, which takes a 2 percent management fee and 20 percent of the profits? “He told me, ‘I’m making up for the lower fees by attracting greater volume.’” He added, “Jews like a discount.”
Goldman decided not to invest. In 2001, two skeptical articles appeared about Madoff, one in Barron’s and another in a hedge-fund trade publication (articles, sources said, that upset Mark Madoff but that Bernie seemed to take in stride). “Wherever I went, I’d tell people, ‘Don’t invest with this guy!,’” Goldman said. She even sent the articles to members of the Palm Beach Country Club. “I was expecting a thank-you, and all I got back in return was a hostile response. Some of the Madoff investors said that I was behaving unprofessionally and was bad-mouthing a competitor. Oh, they were nasty! Nasty! They said all these publications were jealous of Bernie. They were being anti-Semitic. People called me an anti-Semite. I’m not only a Jew, I live in Israel!”...
much more at http://www.vanityfair.com/politics/features/2009/04/madoff200904
Comrade Stalin
"...The most relentless skeptic was Harry Markopolos, an accountant and private fraud investigator mostly unknown outside of Boston, who repeatedly sounded the alarm about Madoff to the S.E.C., starting in 2000. When the S.E.C. took no action, Markopolos began a crusade to prove his point. In 2005 he sent regulators a 19-page memo entitled “The World’s Largest Hedge Fund Is a Fraud.” He was referred to the New York branch chief, Meaghan Cheung, who, he wrote in an e-mail to one of her colleagues last year, didn’t “have the derivatives or mathematical background to understand the violations,” much less prosecute them. The S.E.C. eventually opened an investigation into Madoff but closed the matter in November 2007 without bringing any claims against him. Cheung, 37, who left the S.E.C. last September, had difficulty defending her findings in the Madoff case, telling the New York Post after his arrest, “If someone provides you with the wrong set of books, I don’t know how you find the real books.” Markopolos, who lambasted the S.E.C. in a congressional hearing in February, said, “I felt like I was an army of one.”
Laura Goldman, now of the Tel Aviv–based LSG Capital, told me she had met Madoff at the lunch counter of Green’s Pharmacy in Palm Beach in 1992, when she was a broker with Paine Webber in Philadelphia, visiting South Florida in search of clients. “When I fortuitously bumped into Madoff, I thought I’d found my lottery ticket,” she remembered. He was dressed Palm Beach casual—polo shirt and slacks—on his way to play golf. As soon as the name Bernie Madoff floated across the counter, she knew who he was—the Jewish T-bill. They talked about politics, the weather, golf—everything except business, because Madoff didn’t talk business with strangers. “Finally, in 1997, I said to him, ‘Isn’t it time we started talking turkey?’” By then she was at a smaller firm, so Madoff got serious. “At this meeting he changed. He was still charming, but he did not tolerate my style of many questions,” she said.
“He would try to change the subject by saying that I was lucky to invest with him.” Look at the returns, he told her, and talk to some of his clients. But Goldman felt that she needed specifics. She knew almost everyone in the options business, she said, but she couldn’t find anyone who was trading with Madoff. “I found that strange.”
She asked him about custody issues, types of accounts, and Madoff came up short on everything, especially his auditing firm—two people in a 13-by-18-foot office in the sticks outside of New York. “I’m saving a few pennies on the auditors so I can give my clients more return,” she said Madoff told her. Why, she asked, wasn’t he set up like a typical hedge fund, which takes a 2 percent management fee and 20 percent of the profits? “He told me, ‘I’m making up for the lower fees by attracting greater volume.’” He added, “Jews like a discount.”
Goldman decided not to invest. In 2001, two skeptical articles appeared about Madoff, one in Barron’s and another in a hedge-fund trade publication (articles, sources said, that upset Mark Madoff but that Bernie seemed to take in stride). “Wherever I went, I’d tell people, ‘Don’t invest with this guy!,’” Goldman said. She even sent the articles to members of the Palm Beach Country Club. “I was expecting a thank-you, and all I got back in return was a hostile response. Some of the Madoff investors said that I was behaving unprofessionally and was bad-mouthing a competitor. Oh, they were nasty! Nasty! They said all these publications were jealous of Bernie. They were being anti-Semitic. People called me an anti-Semite. I’m not only a Jew, I live in Israel!”...
much more at http://www.vanityfair.com/politics/features/2009/04/madoff200904
Comrade Stalin
