Criminal Law

Fund Blames US Regulators for Losses

Posted on December 28, 2008
You gotta love the Madoff Middlemen. Now they are blaming the regulators for their own failures, even from overseas. A British investment fund, which apparently lost something like 30 million dollars, is screaming about the "systemic failures" in the US regulatory system...

Madoff Insane?

Posted on December 28, 2008
The Madoff Mess has moved to the gossip columns. The NY Daily News has a gossip column that "reports" that Madoff may try a sanity defense, some sort of mental break that caused him to do what he did.Keep the source in mind, but that defense is not very likely to work...

The Start of the Mortgage Meltdown

Posted on December 28, 2008
With landscapers claiming $150,000 a year incomes, WaMu built a home mortgage business that eventually collapsed in a sea of bad mortgages. The NYT has a story today that provides an intense insight into the home mortgage business, and the collapse of Washington Mutual...

No Damages in Suit vs. SEC

Posted on December 27, 2008
I didn't want to be the first to say it, but now that Professor Chemerinksy of UC Irvine School of Law has said it out loud, there is no stopping me - it seems that no one sees a viable suit for money damages against the SEC for the Madoff Mess. There just isn't a statute or rule of law that would support such a suit...

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Madoff Middlemen Under Investigation

Posted on December 26, 2008
WSJ: Investigators probing the Bernard Madoff investment scandal arebeginning to turn their attentions to the middlemen who attractedbillions of investment dollars to Mr. Madoff's funds, said a personfamiliar with the government effort.Yup, no shocker there...

Securities Fraud Prosecutions Lowest since 1991

Posted on December 26, 2008
More troubles for Cox? Since he is gone in a couple of weeks, it probably doesn't matter, but there is a lesson here. Criminal prosecutions for securities fraud are down significantly. 133 prosecutions this year, vs. 437 in 2000, and 513 in 2002.There are any number of factors that can cause this decline - I suppose it could be due to less actual securities fraud, but I doubt that is the case...

Securities Fraud Prosecutions Lowest since 1991

Posted on December 26, 2008
More troubles for Cox? Since he is gone in a couple of weeks, it probably doesn't matter, but there is a lesson here. Criminal prosecutions for securities fraud are down significantly. 133 prosecutions this year, ves. 437 in 2000, and 513 in 2002.There are any number of factors that can cause this decline - I suppose it could be due to less actual securities fraud, but I doubt that is the case...

Inside Madoff

Posted on December 26, 2008
I have been involved in the aftermath of a couple of Ponzi schemes over the years, and it seems to me that none of them actually start as a fraud. They start as an investment that goes bad, and the man at the center simply can't bring himself to admit to his investors that he is losing money...

John E. Sprizzo, US District Court Judge

Posted on December 23, 2008
John Sprizzo, a United States District Court Judge in the Southern District of New York, has passed away. I had the privilege of appearing before Judge Sprizzo on numerous occasions. As noted in this NYT article, he was certainly intelligent and had a sense of humor that you don't often see in judges...

Madoff Investor Sues SEC

Posted on December 23, 2008
Here we go, a first in what will undoubtedly be numerous attempts - a Madoff investor has sued the SEC for negligence, which she claims cause her to lose $2 million dollars with Madoff. Investor Who Lost Money in Alleged Scheme Seeks Relief From SEC - WSJ...

WSJ Does Madoff Background

Posted on December 21, 2008
The WSJ does some background on Madoff. Sorta interesting, if you are the type who reads biographies of serial killers.Madoff Created Air of Mystery

Report: SEC In a State of Panic over Madoff

Posted on December 21, 2008
Cox's statement that the SEC failed to follow credible, specific leads in the Madoff Mess has put the SEC staff in a panic. According to this article, they have started to review past investigations to see what else they might have missed, and have been instructed not to destroy documents or emails because of the ongoing investigation into what they did, or rather, didn't do...

Madoff Middlemen Are Circling the Wagons

Posted on December 20, 2008
Not that it took any legal genius to figure out, but I mentioned a few days ago that the Madoff Middlemen - the advisers and hedge funds who put their clients' money with Madoff - are going to be the viable defendants in the Madoff Mess. Apparently the Madoff Middlemen agree...

More on the Attorney Who Married the Niece

Posted on December 19, 2008
The NYT has information and interviews relating to the SEC attorney who married Madoff's niece. Straightshooter, hardworking, and no evidence that he did anything wrong.Another victim of Madoff.

Madoff Investor List

Posted on December 19, 2008
The WSJ has a list of Madoff Investors and the amounts that they lost. There is quite a bit of double counting in there, but the list is extensive.Madoff's Victim List - The Wall Street Journal

Madoff - 30 Years and 4,000 Investors?

Posted on December 19, 2008
Is it possible that Madoff has been running a scam since the 70's with over 4,000 investors? It is truly amazing how much of a life these stories take on as they unfold. I may wind up eating these words, but does anyone really believe that Madoff has been defrauding people for 30 plus years?However, Bloomberg says:U...

US Attorney General Removes Himself From Madoff Investigation

Posted on December 18, 2008
This case is a mess. With everything else that is going on around the Madoff Mess, there is now an AP report that the US Attorney General Michael Mukasey has removed himself from any investigation of Madoff. Fortunately, the reason is that his son is representing a financial officer at Madoff's firm...

The Best Defense..........Madoff Strategies

Posted on December 18, 2008
Fairfield Greenwich, a 17 billion dollar hedge fund which invested its money with Madoff is considering suing its accounting firm...for failing to detect the fraud, according to Financial TimesThat's interesting. Aren't investors lining up to sue Fairfield Greenwich for failing to detect the fraud?

The Madoff-Fairfield Connection

Posted on December 18, 2008
The Wall Street Journal has a lengthy story about an SEC examination of Madoff in 2006, as well as a detailed version of the Harry Markopolos story - Markopolos is the analyst at a rival firm who figured out that Madoff's returns were not real, and tried to get the SEC to believe him for years...

The SEC Attorney and The Niece

Posted on December 18, 2008
More details are coming out about the potential conflict between the SEC staff attorney who oversaw at least one "inquiry" at Madoff's firm, and Madoff. By now everyone knows that the attorney married Madoff's niece, who was the compliance officer at the firm...

The Madoff Middlemen - Liability for Fees on Phantom Profits?

Posted on December 17, 2008
In earlier posts I referenced the a

A Telling Look At Who Didn't Invest in Madoff

Posted on December 17, 2008
This fraud is going to be as much about the lack of due diligence as it is about Madoff's fraud, his compliance officer marrying an SEC attorney who investigated the firm, and his $65 haircuts.It is going to be about the apparent lack of due diligence by the individuals who invested in Madoff/ and those who recommended the investment...

SEC Probes Its Conflicts with Madoff

Posted on December 17, 2008
I cannot believe this is going on. I really thought I have seen everything in my 27 years of securities regulatory, compliance and litigation. I have seen frauds; outrageous frauds. I have seen extreme churning, outright unsuitability, flagrant market manipulation, and even a conflict of interest or two...

SEC Cox's Startling Admission

Posted on December 17, 2008
In a statement SEC Chairman Cox has admitted that credible and specific allegations regarding Mr. Madoff's financial wrongdoing, going back to at least 1999, were repeatedly brought to the attention of SEC staff, but were never recommended to the Commission for action...

Madoff's Funky Account Statements

Posted on December 17, 2008
Doctored account statements have to ultimately be at the center of the Madoff fraud, there is simply no other way that one could have run this scam for so long. You have to report holdings and trades to customers at some point in time, and if you are a broker-dealer, you have to do it monthly...

Problems at Madoff Obvious?

Posted on December 17, 2008
Another interesting side story to the Madoff Madness - putting aside the reports to the SEC, it appears that other investment experts realized that something was wrong, and refused to put their client's money with Madoff.I spoke to a very successful hedge fund manager last week, who told me that he was asked to look into Madoff as a potential investment for a client of a client...

SIPC to Liquidate Madoff Broker-Dealer. Why?

Posted on December 16, 2008
We are not getting the whole story. If the Ponzi scheme involved 25 investment adviser clients, why is SIPC liquidating the broker-dealer? Why is the broker-dealer out of business if the scheme involved on the investment adviser clients?One answer is that this scam involved the brokerage firm, which means to me that Madoff could not possibly have pulled this off by himself...

Failure to Support Lehman a Major Blunder?

Posted on December 16, 2008
We all know that the government refused to support Lehman, and let it go into bankruptcy. While many folks believe that the bailouts are entirely wrong, given the scope of the bailout, and the impact of the Lehman bankruptcy, there is no dispute that given the course of action chosen by the Government, the Fed and Treasury, the failure to assist Lehman was a huge blunder...

Madoff Investors Facing Possible Lawsuits - Reuters

Posted on December 16, 2008
Reuters is reporting what we wrote about earlier - Madoff investors will soon become defendants. "Disgraced money manager Bernard Madoff's suspected $50 billion fraudscheme looks set to burn even those who pulled their investments outlong before the scandal rippled into the global financial system...

Here they come...Madoff Third Party Lawsuits

Posted on December 16, 2008
The lawsuits against third parties involved with Madoff have started. Even my law school has filed suit:New York Law School sued Ascot Partners LP, an investment firm, general partner J. Ezra Merkin and auditor BDO Seidman LLP on Tuesday over investments with Madoff...

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