Bernard Lawrence Madoff is. How the biggest swindler in the history of Wall Street lives and earns behind bars Bernard Madoff where is he now
Scam of the century. The biggest scam in history. Bernard Lawrence Madoff is the master of the pyramid scheme. Such headlines in American newspapers, magazines and television news accompanied the investigation and trial of the largest financial fraud case in the history of the United States, and possibly the world.
The name of the American financier Bernard Madoff seems to have become a household name. He managed to deceive millions of citizens of the United States, including the very wealthy and influential. And the amount of damage from his scam is estimated by some experts at 50 billion dollars.
By the time of his arrest in December 2008, Madoff had earned a reputation as one of Wall Street's most powerful and successful financiers. Bernie, as his acquaintances and journalists called him, was considered one of the founding fathers of the modern financial market, says Alexandra Lozova, asset manager at TNO Capital:
"The key success of the scheme that Bernard Madoff built was his reputation. The man had an excellent education. More than 50 years ago he organized his own investment company, which was registered on Wall Street, had connections with the business elite and the richest people in the United States "The whole style of his life demonstrated this approach: I managed to earn for myself, I can earn for you. This was the principle of his success. It was with this that he "took" investors and attracted money to his fund. "
MMM: mountains of samovar goldIn the early nineties of the twentieth century, financial organizations began to appear in abundance, which attracted deposits from citizens at high interest rates. In fact, many of them turned out to be financial pyramid schemes. Among them was MMM.The future symbol of greed, deceit and stupidity by 2008 managed to work as a trader, investment advisor, and also held positions on the board of directors of one of the largest US exchanges Nasdaq and International Securities Clearing Corporation. The latter was responsible for non-cash payments between private companies and even states.
But Bernie Madoff's life's work was his own corporation, Madoff Investment Securities, an investment hedge fund. He founded it back in the 1960s of the last century with an honestly earned 5 thousand dollars. But then - with the growth of the stock market and the introduction of computer technology, the fund has become one of the leading players in the investment industry. In 2008, the company ranked 6th on Wall Street in terms of operations.
But it turned out that it was all just an appearance. A spectacularly created image that covered up a banal financial pyramid. According to Igor Nikolaev, Director of the Strategic Analysis Department at FBK, Madoff's activities were not much different from those of Sergey Mavrodi:
"The reason for the success of Madoff's company, like that of Mavrodi's, was a simple thing - people are gullible, they are not taught to make mistakes. They want to make money quickly and a lot. And what's the difference - well, after all, Mavrodi acted on a larger scale, millions of people were involved "And Madoff has a narrower circle of people, more acquaintances and more wealthy. But from the point of view of human motivation - both wealthy and poor - everyone has the same thing: they want to make quick money, get cheap. As a result, both there and there pyramid, and as a result, a completely logical end: it collapses, and their organizers end up in prison."
Madoff's company promised its clients 10-12% annual guaranteed income. It was believed that Madoff and his subordinates successfully play the stock market. But everything turned out to be simpler: according to the principle of a financial pyramid, payments to old customers were made at the expense of newly attracted investors. And the case was put on stream. And the fraud itself was like a family contract: Madoff hired his sons, brother and niece.
It is noteworthy that the exact amount of damage is unknown to this day. According to the most negative estimates, the total size of Bernie's financial pyramid could reach 65 billion dollars. However, most experts and government officials agree on a more modest estimate of $20 billion. Overall, between 1992 and 2008, Madoff's empire was checked at least six times, but nothing suspicious was found. However, many researchers are sure that Madoff had powerful patrons.
It is interesting that the whole fraudulent scheme was revealed almost by accident. According to the official version, in December 2008, Madoff himself confessed to his sons that all his work and the fund were “one big lie,” and that the company was working on a pyramid scheme. Peter and Mark immediately went to the FBI and "turned in" their daddy. Madoff was arrested the next day. The trial of the former financier took two years. Bernie received the maximum possible sentence - 150 years in prison. And he has no right to parole.
Prosecutors and lawyers for the victims of the fraudster did everything possible to hold his relatives accountable. Madoff's wife had to give up all luxuries, apartments, cars and bank accounts. All the money went into the compensation fund. Bernie himself is now spending his days in a cell in an ordinary prison. He even tried to organize investment courses there. But the authorities did not appreciate the idea and banned it. One of his sons - Peter - was sentenced to 10 years in prison, and the second - Mark - committed suicide in 2010.
Every morning, the petite blonde walks from her nondescript apartment to Upper Crust Bagel Company on Sound Beach Avenue, the main street in this picturesque village of Old Greenwich, New England, with a population of 6,600.
Almost everyone who lives here knows that Ruth Madoff is in exile, and they basically don't touch her.
They know the rough outline of her downfall—how her privileged world crashed in December 2008 after her husband, Bernie, confessed to the biggest Ponzi scheme in history. The fraud was estimated at $18 billion, for which he is serving a 150-year sentence in prison.
Ruth, in turn, lost everything: money, social status, husband and two sons. Eldest son Mark committed suicide in 2010 and Andrew died of cancer in 2014.
Ruth turns 76 this week, two days before the release of The Master of Lies on HBO, a dramatic retelling of the fall of the Madoff family. Starring Robert De Niro and Michelle Pfeiffer.
Although Ruth lives an hour's train ride from Manhattan, this world is far from the one Ruth once belonged to, living in an apartment on the Upper East Side and vacationing in a mansion in Palm Beach and Montauk.
After her husband's trial, Ruth was forced to give up her luxurious residence. In addition, her friends from high society were no longer happy to see her. Donald Trump, who denounced Bernie as a "disgusting scoundrel with no principles," refused to rent Ruth an apartment in any of his Manhattan buildings as the woman desperately tried to find a place to live later.
Before the trial in 2009, her husband Bernie made a deal with prosecutors in exchange for giving up most of their benefits: valuable mansions, jewelry, cars and art worth $80 million. Ruth was allowed to take $2.5 million.
After that, she lived briefly in an exclusive condo in Boca Raton, Florida, and moved to Old Greenwich in 2012 to be closer to her three grandchildren who live nearby. For two years she lived at 57 Thomas Avenue, in an old house built in 1905 and owned by her son Andrew and his ex-wife Deborah West, according to public records.
“She was a very good neighbor is all I can say,” said Mike Worden, who lived across the street from Madoff's home.
Two months after son Andrew died of a rare form of lymphoma, Ruth moved out of his home. The house was sold two years later and was recently demolished to make way for a new one.
Ruth moved into a townhouse in a condominium complex The Gables where he still lives. It is listed that a one-bed room is rented for $3,100 per month.
It was here that Pfeiffer, who played Ruth in The Master of Lies, sat in the kitchen chatting with Ruth. “She was sitting in the kitchen and studying it,” the source said.
“I don't think it's appropriate to say that Ruth is collaborating with the film. Michelle just spent some time talking to Ruth. I don't think they spent much time on the script. They just met," Levinson told the publication. Page Six.
The neighbors say that Ruth walks all the time.
She walks every morning to buy a bun from a certain bakery, but avoids other bakeries in the city. She is uncommunicative due to the fact that many people have lost their money because of Bernie.
Now her new friends are a group of women who go to church and don't get their hair and nails done, said a neighbor who saw Ruth.
"If they didn't live in Old Greenwich, you'd think these ladies were homeless," she said. post. Ruth spends a lot of time with them. She always wears the same jeans."
Last Christmas, a friend helped Ruth sell church handicrafts at the local bazaar, another neighbor said. “It was spectacular to watch Ruth Madoff get crafts from under the table and get paid for it,” he added.
Other neighbors saw her taking a morning walk on a nearby Long Island beach. She walked up and down the main street of the city, stopped at the Anna Banana store - a store that sells children's clothes, and also visited a beauty salon.
“Why can’t she just live in peace?” asked the woman, who left the salon to prevent the photographer from taking pictures. “She has the right to privacy.”
The friendly attitude of this beauty salon is in sharp contrast to the Pierre Michel salon in Manhattan, where Ruth went for more than 10 years for procedures.
The owners of Pierre Michel banned Ruth from the salon after Bernie's arrest in 2008, and she remains an unwelcome guest to this day.
"Unfortunately, many of Pierre Michel's clients have been victims of Bernie Madoff," a spokesman for the salon told the publication. The Post.
Instead of the $400 she paid to have her hair dyed at Pierre Michel, she now pays upwards of $175 at Old Greenwich.
Although Ruth was not charged with any crimes, the family was shunned, mainly because many of the elite had invested in the Bernie project and lost their savings. Holocaust survivor Elie Wiesel, a Nobel laureate who died last year, called Bernie a "scoundrel" and said his charity lost $15.2 million because of Madoff and he lost all his life savings.
The sons of the spouses refused to speak with their mother after the arrest of their father. They claimed they were never in the scheme, but wondered why she continued to support her husband, living with him in their Manhattan penthouse for 3 months while he was under house arrest between 2008 and 2009.
Ruth Alpern met Bernie Madoff when she was 16 and they were attending high school in Queens. Both she and Bernie grew up in the Jewish Quarter in Laurelton. They married in November 1959 when she was 18.
Ruth, who has been married to Bernie for almost 60 years, worked as an accountant for him when he set up his investment business in 1960. But she claimed she didn't know her husband was creating a pyramid scheme.
After the husband was accused of mass fraud, the couple tried to commit suicide on the night of January 1, 2009.
“I don’t know whose idea it was, but we decided to kill ourselves because everything that happened was so terrible,” said Ruth Madoff in an interview with the program 60 minutes channel CBS.
Ruth visited her husband in a federal prison in North Carolina, but she had to stop after her son Andrew issued an ultimatum: if she wants to communicate with Andrew and see her two granddaughters, she will have to forget about visiting Bernie in prison.
On December 11, 2008, in the midst of the global financial crisis, Bernard Lawrence Madoff, beloved and revered on Wall Street by the friendly demeanor "Bernie", was arrested. He was arrested on charges of creating a financial pyramid, which turned into the largest embezzlement of funds in history - $ 50 billion.
At the same time, in hot pursuit, I investigated this case in detail (using, of course, only those materials that were available at the beginning of the trial) and wrote an article for Business Journal, to which I refer readers for an introduction to the course of events.
Since then, 7 years have passed. Bernie Madoff received 150 years in prison, and both of his sons, who worked in the family financial business, passed away: Mark hanged himself two years after his father's arrest, Andrew died of lymphoma in 2014. As for the amount of alleged embezzlement, it swelled up to $65 billion in the admiringly envious eyes of the public.
And here's what's amazing: for 7 years, no one has ever dared to publicly start a conversation about the version of events, which, in my humble opinion, is the only one worthy of discussion by people who consider themselves to be of sound mind and able to resist unscrupulous zombies. The version, which, as it seemed to me in 2008, lies on the surface, was not heard in the Public Broadcasting Service film investigation “Frontline: The Madoff Affair” (2009), it is not in the documentary of the French Third Channel “Madoff, l'homme qui valait 65 milliards" (2014). The authors of monographs do not doubt the officially sanctioned script: neither Gerald Strowber ("Catastrophe: The Story of Bernard L. Madoff, the Man Who Swindled the World", 2009), nor Jerry Oppenheimer ("Madoff with the Money", 2009), nor Diana Enriquez ("The Wizard of Lies: Bernie Madoff and the Death of Trust", 2012).
Maybe, of course, I missed something, but in all the mainstream listed above, I did not find anything other than the repetition of a dreary monotonous mantra: Ponzi pyramid, 65 billion, stole, deceived those who trusted, scoundrel, how could you, Bernie etc. Even somehow it became uncomfortable for colleagues. For their stubborn, downright deliberate superficiality and militant lack of curiosity. Didn't it really occur to anyone, at least for a moment, to throw off the blinders imposed on their eyes and try to evaluate Madoff's story - no, not from the position of conspiracy theories, God forbid! - but just common sense?! Everything is also on the surface, sewn with white threads.
Apparently not destiny. And if so, I have no choice but to again and again draw the attention of readers to what seems obvious. I do this on Insider.pro for at least two more reasons. Firstly, the very name of the portal obliges to go beyond the square-nested system of thinking allowed by someone from above. Secondly, the details of Madoff's story shed light on the organization of a considerable number of structures, vaguely denoted by the term "hedge fund", so popular today and so far from being an adequate public interpretation.
In order not to repeat myself, I refer readers for the details of the arrest and biography of Madoff to my essay, from which I borrow the key points of my hypothesis. Here they are:
- the reason for all the charges, as well as for the arrest, was a voluntary denunciation of the father, made to the FBI agent by Madoff's sons Mark and Andrew, employees of the family financial business. That is, the sons with their own hands not only sent their father to jail, but also deprived themselves of the future (by also going to the bunk);
- The information contained in Mark and Andrew's denunciation was based from beginning to end on what their father had told them. Yes, that's right: Bernie Madoff accused himself of creating a "Ponzi scheme", called his half-century financial business "one big lie", and - sic! - announced the figure of $ 50 billion, the absurdity of which is already characterized by the fact that in all the financial statements of Bernard L. Madoff Investment Securities LLC there was not even a hint of such amounts - either at the entrance or at the exit from the hedge fund. This also explains the wild approximation of damage - from 7 billion to 65;
- version of the financial pyramid (Ponzi Scheme, - I described in the book "What is the name of your god"), invented by Madoff himself, for any person, even remotely representing its device, is an intellectual insult. On this basis, I left the explanation behind the scenes of "Barium Porridge", however, it seems that I did it in vain. Well, I'm making up for lost time.
Any financial pyramid has not only a primitive interpretation of its mechanism - the payment of income to old members is carried out at the expense of funds received from new members - but also objective circumstances that only allow it to stay afloat:
- a financial pyramid can attract investments only with promises of high returns. Otherwise, no one will bring money into it, especially in a situation where no one gives any guarantees;
- the financial pyramid always develops and only due to pure outward expansion: the more participants it involves in its networks, the longer it will last;
- no financial pyramid in history lasted more than three years, because this contradicts simple arithmetic: remember the tale of the creator of chess and wheat grains (“put one grain on the first cell, two on the second, four on the third, eight on the fourth " etc.)
Bernard L. Madoff Investment Securities LLC never had Bernard L. Madoff Investment Securities LLC work: on average, throughout its history, the hedge fund showed a return of 10% per annum, in the best periods - 13%. If you imagine the structure of the stock markets, then you simply have to admit that such numbers are the absolute mainstream. You don't have to be a pyramid scheme to give 10% a year, you just need to be... the most ordinary, most ordinary mutual fund investing in corporate and municipal bonds near investment grade. 10% per annum for Wall Street is a daily occurrence, almost devoid of risk. And only in the case of Bernie Madoff, the public does not get tired of chanting for seven years, “Pyramid! Ponzi! A crime!"
Further. Pyramids live by maximum expansion and attracting the money of any passerby. Bernard L. Madoff Investment Securities LLC is a completely closed and elite financial structure, which is also strictly racially tinged: Madoff generously accepted money only from his fellow believers, moreover, almost always only from Orthodox and deeply believing Jews. Every day, long queues of those wishing to give their savings to the one who received the nickname Jewish T-Bill, "Jewish treasury bill", which emphasized the reliability and reliability of investments, lined up to him. Every second Madoff refused. And this despite the fact that the minimum contribution to the hedge fund was $ 1 million. Such a good pyramid, isn't it?
Finally, the duration of existence. Pyramids live up to three years. Bernie Madoff's hedge fund has been in business for... 48 years! 48 flawless years with a consistent 10% annual return, with countless scheduled and unscheduled financial audits by all relevant government departments from the Securities and Exchange Commission to the Treasury Department. Nobody ever found anything. Not a single violation! The perfect model hedge fund owned by the most powerful man who, incidentally, founded the Nasdaq exchange and served for decades on its Board of Directors.
For 48 years, no “pyramids” were heard, and then Madoff himself came and said: “All this, guys, is one big lie. I created a pyramid scheme and stole $50 billion.” And society unanimously believed, condemned, cursed and gave 150 years in prison (the maximum possible term under the law).
Why did no one question the appropriateness of self-blame in creating a pyramid? After all, the absurdity lies on the surface. Instead, all monographs, all video-documentary “journalistic investigations” take the version of Madoff himself on faith and, as far as they can, they dig in the direction of “stole - deceived”, in the hope of raising the bar of theft as high as possible (seven years ago, Bernie’s figure of 50 billion was the maximum , and today the common figure is already 65).
I have no doubt that the hypothesis expressed by me in "Barium Porridge" occurred to thousands and thousands of financially sane people around the world. Maybe someone somewhere made it public, but it didn’t leak into the mainstream media.
Bernard Madoff was not a banker, not because he was a beach lifeguard by profession, but because he always had a different public role. Bernie was a “hizbar”, exactly the same as Edmond Safra was for European Sephardim (the story of his murder, attributed by the same vigilant mainstream media to either the “Russian mafia” or the “Medellin cartel”, and the essence of the “treasure keeper” phenomenon, I described in ).
Madoff's financial family contract was not a pyramid scheme or a hedge fund, but a safe parking lot of money belonging to the richest families of the American Orthodox Jewish community. This money was not invested at all in option “condors” (as Bernard Madoff himself tried to convince the court), but was kept on reliable bank deposits, or invested in no less reliable fixed income securities. Under conditions of complete openness and awareness of the beneficiaries themselves - as soon as it is possible to work as a treasure keeper.
I have no doubt that from time to time Bernard Madoff performed (with the knowledge and for the benefit of his clients!) Super-profitable insider deals, because he was known and was probably the most informed person on Wall Street. Most likely, these transactions provided the same 10% per annum that the hedge fund showed in its financial statements.
It is believed that Madoff's problems arose after one of the clients wanted to withdraw his money - $ 7 billion. Bernard L. Madoff Investment Securities LLC did not have free funds and ... away we go! The version, in my opinion, is ridiculous, assuming that the Madoff structure was a simple hedge fund. If anyone has forgotten, in the fall of 2008, at the peak of the financial crisis, almost all non-racial hedge funds organized for their clients the so-called. redemption halt, a withdrawal ban that lasted until spring 2009. Why didn't Bernard Madoff do this? All in the same way: he was a gizbar, not an indifferent and irresponsible financier.
As for the real reason for Madoff's self-accusation and, in fact, sacrificing himself and his family, for 7 years, in the absence of at least some more or less convincing alternative versions, I have not changed my mind: Madoff took it upon himself " theft" and announced a completely wild figure of $ 50 billion so that his clients had the opportunity to record and write off (non-existent) losses to Madoff, which can then be deducted from taxes for a long time and in detail.
In favor of this - I confess, conspiracy theory! - the version indirectly speaks of the enthusiasm with which the trustees of the gizbar, with the help of the mainstream media hired by them to protect the "common cause", began to inflate the "catastrophe". Let's pay tribute to diligence: in seven years they have inflated quite well: from 50 to 65 billion dollars!
Source http://www.warandpeace.ru/ru/analysis/view/31375/
About whether to save the American auto industry, the White House and Congress argued on December 12, 2008 to the point of hoarseness. The price of the issue is $25 billion, which the Bush administration was eager to put into the humbly outstretched hands of Ford, General Motors and Chrysler. Congress resisted with all its might. Suddenly, the sad logic of events was violated by an emergency message that tore apart the world information space: the seventy-year-old Bernard Madoff (admire his photo on the right), the “father” and member of the board of directors of the Nasdaq electronic exchange, a cult trader, a connoisseur of the financial market and a benefactor of the richest people on the planet, was arrested!
The joke is that the great “macher”, the existence of which 99.9% of market participants had no idea the day before, was taken on charges of embezzlement of $ 50 billion - an amount twice as high as the demands of the entire American auto industry!
In order for the public to thoroughly get hooked on Madoff's needle, they began to feed it daily and in increasing numbers with absurd tales: it turns out that individual investors, banks, hedge funds and charitable organizations not only in America, but throughout the world. The line of “martyrs” is growing by the hour and, at the time of this writing, includes the Spanish bank BBVA (a loss of $400 million), the British management company Man Group (300 million), the British banks Royal Bank of Scotland (599.3 million) and HSBC (1 billion), French BNP Paribas (460 million), Japanese Nomura Holdings ($302 million), Spanish banking group Banco Santander (2.3 billion euros), Italian bank UniCredit (75 million) and French Societe Generale (10 million euros).
All this blatant heresy is relayed around the world and is accompanied by epigraphs of irresponsible journalists from the Golden Key: “There is a magic field in the Land of Fools - it is called the Field of Miracles ... Dig a hole in this field, say three times: “Krex, fex, pex” , put gold in a hole, cover it with earth, sprinkle salt on top, fields well and go to sleep. In the morning, a small tree will grow out of the hole, instead of leaves, gold coins will hang on it.
Yes, the crisis brings the public consciousness to psychosis, forcing them to believe the most hypertrophied rumors. However, the bacchanalia that is circulating today around the "Bernard Madoff case" is sewn with such white threads that you wonder - where is the limit of gullibility and manipulation ?!
This solid building houses the apartments of Bernard Madoff, which seemed to the investigators enough collateral to release the suspect. Let's start with the main thing: all, absolutely all the information - about the "Ponzi scheme", and about the "50 billion", and about the "bankruptcy of Bernard L. Madoff Investment Securities LLC", and about the "fraud of investors" - comes from Madoff himself. From the first to the last word. The statement filed with the Judicial Magistrate of the Southern District of New York, on the basis of which Madoff was arrested (and released on bail on the same day), was compiled by FBI Special Agent Theodore Cacioppi. It contains a single indictment: a hypothetical $50 billion defraud of investors, which Cacioppi learned about from a conversation with two "high-ranking employees" of Bernard L. Madoff Investment Securities LLC.
Almost simultaneously with the arrest of Madoff, the public learned that the “high-ranking employees” who allegedly “laid” him to the FBI agent were Bernard’s sons, Mark and Andrew, and they received all information about the “crimes” directly from the lips of their father. Guessing family ties was not difficult, since all companies of Bernard Madoff are a classic family contract: sons, grandchildren, nieces, husbands of nieces and other relatives occupy key positions in all areas of business.
So what do we have? On the one hand, the self-accusation of a 70-year-old trader in a monstrous financial crime. On the other hand, Bernard L. Madoff Investment Securities LLC, which for 48 years (!) enjoyed an impeccable reputation, showed a stable, albeit modest (10-13% per year) income and successfully passed all third-party inspections.
Bernard Madoff was referred to by his friends as the Jewish T-Bill, the Jewish treasury bill: is it possible to come up with a higher rating for the reliability of investments? Today SEC Chairman Christopher Cox is hypocritically lamenting an alleged "oversight." It appears that "the commission received reliable and specific signals pointing to Mr. Madoff's wrongdoing, but did not respond to them in the proper spirit." You might think that today there is more than enough evidence of wrongdoing!
The problem, however, is that there is no evidence of any kind besides the voluntary "filial libel"! None! Alexander Vasilescu, a lawyer with the New York office of the SEC, who oversees the operation to examine and seize all the documents from the offices of Bernard Madoff, commented on the day of non-stop work: “Our task is to find records and track the movement of capital. At the moment (on the night of Sunday to Monday, December 14-15 - S.G.), the investigators have not been able to find anything either in relation to the crime itself or its scope. We don't question his figure ($50 billion - S.G.), we just can't figure out how he got there."
I bet you never will! Not because Madoff is so smart and so cunning, but because there was no 50 billion wasted client money and there was no Ponzi scheme!
According to early 2008 financial statements, Bernard L. Madoff Investment Securities LLC held $17.1 billion in trust from 11 clients. Today, a multi-kilometer line of “debtors” voluntarily lined up to Bernard Madoff from all five continents trumpets heart-rendingly about losses exceeding “tens of billions”. Of course, one can object that not all clients are reflected in the statements, many trusted money to Madoff without proper documentation. In this case, of course, one can only guess about the true scope of the “Ponzi scheme” and thank Madoff for the barium porridge that he cooked for the townsfolk with his own confession: hidden channels and secret flows of “old European money” are now visible, as in an x-ray! But here's the problem: the voluntary "flare" of financial institutions on the "Maidoff case" borders not even on "crex, fex, pex", but on idiocy: in the case of unregistered financial relations, there is no need to talk about any legal proceedings and claims for damages. Why then shine?
And then, that the whole story of Bernard Madoff, deliberately or stupidly turned upside down by the world media, with the right accents, appears to be a completely logical financial operation, which is the main thing! - does not violate the logic of events either in the past (the impeccable reputation and reliability of Bernard L. Madoff Investment Securities LLC), or in the present (Bernard Madoff's motivation for self-incrimination).
I will not annoy the reader with a sugary lubok about how 22-year-old Long Island beach lifeguard Benya Madoff saved up five thousand dollars and established an investment fund named after himself in 1960 on the basis that in honest business "the name of the owner is always hanging on the door." This lubok also featured the Hofstra College of Law at New York University, where Madoff never finished his studies. There is no way to verify these legends now, and there is no need to: the sources of initial capital had no effect on the maintenance of Madoff's business.
Why? Because Bernard Madoff was a textbook hysbar, just like the Edmond Safra that our readers already know. The only difference is that Safra specialized in bank deposits, and Madoff specialized in stock investments. In other words, the entire business of Bernard Madoff from the moment of its inception to the present has been an absolutely closed and absolutely racial channel for investment. For obvious reasons, the media today is trying to portray the Madoff affair as an international scam involving the Japanese and Spaniards, the British, the Swiss and the Austrians. This is utter nonsense: if anyone suffered from the machinations of the great "macher", it was the unlucky fellow tribesmen.
All the talk about imaginary coasters of banks like HSBC and Royal Bank of Scotland is noodles for the uninitiated public: no banks were directly affected by the activities of Bernard L. Madoff Investment Securities LLC (which, in fact, they mention - in small italics in the back footnote of the press releases) - suffered (if, of course, they suffered at all - more on that later!) only Jewish hedge funds, charities and private clients, whom the mentioned banks lent for subsequent investments - already in Madoff's trust fund. And this is natural - no Japanese Nomura Holdings and Italian UniCredit were allowed directly into Madoff's financial bins for a cannon shot, since investment capital was attracted exclusively through closed channels - through Jewish religious organizations, educational institutions and elite golf clubs.
The prestige of investing in Madoff's fund was beyond imagination: people bought annual club memberships (Palm Beach Country Club in Florida, The Hamptons Golf in Long Island, Old Oaks Country Club in Purches, New York) for several hundred thousand dollars - just to be honored the honor to be presented to the great "macher", who, by the way, refused almost every second competitor! This, as you understand, was not just about the rich, but about the very rich citizens ($1 million is the minimum requirement for a trust account that a client could open with the Madoff hedge fund).
Carefully studying the list of persons and organizations allegedly framed by Bernard Madoff, I became more and more convinced of the absurdity of the accusations. Okay, there are multimillionaires Walter Noel, Jeffrey Katzenberg, owner of the Mets basketball team Fred Wilpon, Abraham and Carol Goldberg (Stop & Shop supermarket chain), real estate tycoon Mort Zuckerman. Money bags, after all, are designed to be deceived. But director Steven Spielberg, Nobel laureate and Holocaust victim Elie Wiesel, the almost sacred Yeshiva University, the Robert Lappin charitable foundation that sponsors trips of young American Jews to Israel to preserve national identity and fight interracial marriages - these, sorry, are not being deceived. In any case, people like Bernard Madoff, who has always been distinguished by piety and a reverent attitude towards orthodox religious and family traditions, do not deceive.
So, the first paradoxical conclusion that has to be made: if Bernard Madoff threw someone, it was like-minded people and fellow believers, that is, the closest people. I have big doubts that such scoundrels are chosen for the role of gizbar.
We move on. For 48 years, Bernard L. Madoff Investment Securities LLC has demonstrated exceptional stability and consistent returns. Madoff's business is presented in four guises: independent exchange trading and investment activities (1), brokerage and dealer services (1), regulatory activities on the Nasdaq electronic exchange, that is, market-making (3), and trust management of capital (4). All the horror stories about the "Ponzi scheme" and 50 billion dollars refer exclusively to the last, fourth, direction.
Candidate clients would buy several hundred thousand dollars memberships to elite golf clubs just to be honored with being introduced to the great Madoff. The structure of Bernard L. Madoff Investment Securities LLC is completely self-sufficient, therefore, it allows to carry out the entire investment cycle without resorting to the services of third parties: the client transfers money to management, the analytical department of the company selects the necessary instruments for investment, and the brokerage department places orders on the stock exchange, which are also executed on their own market-maker terminals. Add to this the social activity of Bernard Madoff on Nasdaq - he not only stood at the origins of the electronic exchange, but also served as a permanent member of its board, which he headed from 1990 to 1993 - and you have an ideal investment machine that has everything you need to be successful. activities.
Any "Ponzi scheme" attracts customers with significantly higher returns than competitors. Madoff's hedge fund has never reported returns above 13% per annum, a figure more than modest by any stock market. Today's talk that Madoff allegedly constantly aroused the suspicions of the rest of the market participants with amazing income stability (his fund showed profit even in the most unfavorable years) is a fairy tale for the uninitiated. The average return of Bernard L. Madoff Investment Securities LLC over the past decade is 10.5%, a similar result shows half of all corporate and municipal bonds with a reliability rating that does not fall under the category of junk (junk bonds). In this scenario, Madoff did not need any "Ponzi schemes" at all: it was enough to place client money in diversified baskets of fixed income securities and not bathe.
Meanwhile, there is an officially declared trading strategy that Bernard Madoff allegedly used for his clients. This strategy called collar (another name is Split-strike Conversion) is well known on the exchange and is used everywhere. Its meaning is as follows: a long position on an ordinary stock is opened, and then hedged (=insured) from above and below. From above - by selling a call option, from below - by buying a put option. If the share price drops sharply, then every dollar lost on its value will be won back with a dollar earned on the put option. Significantly, the insurance in the form of a put option costs almost nothing, since the cost of this contract is covered by the money received from the sale of the call option.
Madoff's hedge fund purportedly invested a trust in stocks as close as possible in volatility to the behavior of the stock indices they were part of, and then hedged the positions with call and put options written on the index itself. Positions were held open for one fiscal quarter such that the hedge fund's assets were reduced to liquid cash before each reporting period. Such unusual behavior was explained by the short-term nature of option contracts and the reduction in costs due to the abandonment of rolling forward - the transfer of options to longer expiration periods.
Independent agency Aksia LLC, which specializes in the analysis of the investment activity of hedge funds, circulated a letter pointing out the unreality of Madoff's strategy in two respects: firstly, a check conducted on archived quotes over the past ten years did not even confirm the declared return; secondly, Madoff's average trading capital ($13 billion) did not fit into the historically recorded volumes of options trading. This means that the collar has never been used by Bernard L. Madoff Investment Securities LLC in the declared volumes, and if it was used, it was only for cover. In any case, nothing can be checked, since all positions were closed before each financial statement, which featured exclusively cash.
What does it mean? Only one thing: Madoff's hedge fund didn't make money from options trading, but elsewhere. In which? Since we did not hold a candle, we can only guess, based on indirect sayings. For example, such: large investors close to Wall Street have always been convinced that Madoff makes money on insider information, and therefore dreamed by hook or by crook to get into the clients of Bernard L. Madoff Investment Securities LLC! Investors cannot be blamed, since only insider trading provides really stable and high incomes on the modern exchange.
Ultimately, it does not matter at all whether Bernard Madoff earned 10.5% for his clients on the exchange: on the collar strategy, on insider trading, or on corporate and municipal bonds. Another thing is important: Madoff did not need any “Ponzi scheme”. I'm not talking about the fact that not a single pyramid scheme known to history could last more than two or three years (Charles Ponzi himself promoted his stamps for five months). The business of Bernard Madoff demonstrated stable and profitable activity for 48 years.
What then happened to Bernard L. Madoff Investment Securities LLC? Exactly the same as with hundreds of other hedge funds - a banal run, that is, a panic withdrawal by clients of trusted capital! Bernard Madoff's self-disclosure and subsequent surrender by his (supposed) sons to FBI agents came amid a frantic effort to find $7 billion in emergency cash back for an unknown client (or clients).
There is, however, a huge difference between Madoff's office and ordinary hedge funds. How did conventional hedge funds do? That's right: they announced a temporary ban on clients withdrawing money from their accounts (the so-called redemption halt), on average in America - until March-April 2009. In other words, they threw their faceless nameless clientele without a twinge of conscience, so far - until better times. For a gizbar, such behavior is unthinkable. I'm sorry, they don't throw their own.
Bernard Madoff, due to the universal financial crisis, suddenly found himself in a situation where he was physically unable to return the money to his clients. What happened next? My hypothesis is this: Bernard Madoff - on his own or at a wise prompt - sacrificed himself by taking on debt obligations many times greater than the actual debt of the hedge fund!
It is for this reason that there is such a colossal discrepancy between the real and recorded assets of Bernard L. Madoff Investment Securities LLC and the mythological figure of $ 50 billion, which outside banks and financial institutions are frantically trying to “catch up” today! What for? But this is already a rhetorical question: then, in order to officially record non-existent losses, writing them off to Bernard Madoff! I will not tell readers how and how much hidden profit can be diverted from the state (and not only the state!) in the future under the pretext of already recorded imaginary losses.
Can I be wrong with my hypothesis about money laundering through the announcement of fictitious losses? Certainly can! Only one circumstance is undoubted: the layman today is fed exactly the version that Bernard Madoff needs! $50 billion and a "Ponzi scheme" is not a naive-foolish "crex, fex, pex" but a well thought out, calculated and clever misinformation.
Big shot, important person (Yiddish).
Vasily Sychev, "The Great Combinator".
The story of Charles Ponzi, the "father" of world swindle, opens my book What's Your God's Name?, ed. "Bestseller", Moscow, 2004.
"The owner's name is on the door" is the informal slogan of Bernard L. Madoff Investment Securities LLC, which until recently graced the company's website.
Treasurer (Hebrew).
See "The Secret of Gisbar", "Business Journal" No. 16, 2008
Bernard Lawrence Madoff is an American broker, financier and investment professional. He is best known as the organizer of the largest financial fraud in the history of the United States.
Madoff was born in Queens, New York (Queens, New York City, New York), in a Jewish family. Bernard received his education first at the University of Alabama, then at Hofstra University; Madoff graduated in 1960 with a bachelor's degree in political science. He briefly studied law in Brooklyn, but later switched to entrepreneurial activity, creating Bernard L. Madoff Investment Securities LLC. Initially, this company was engaged in small-scale stock trading - its entire capital was earned by Madoff as a rescuer and assembler of irrigation systems 5,000 dollars. Bernard later borrowed another $50,000 from his father-in-law. Father-in-law greatly helped the Madoff cause - primarily with connections and recommendations. The company was doing well; Bernard experimented with new approaches and solutions - for example, he became the first well-known broker to accept payments from dealers for the right to execute certain customer orders.
Madoff paid great attention to connections; so, since 1991, he and his wife have donated to various politicians, parties and committees a total of about $ 240,000. Madoff's family held leadership positions in the largest securities market organization, the Securities Industry and Financial Markets Association.
Madoff's name first surfaced in the context of a fraud story in 1992, when the SEC received a complaint from two clients of the Avellino & Bienes investment company. Eventually Madoff returned the clients their money and the case was closed.
In 2004, Genevievette Walker-Lightfoot, one of the SEC Complaints and Investigations lawyers, told her superiors that there were a number of frankly questionable points in Madoff's cases; the authorities, however, demanded that the investigation be stopped, and that the materials already discovered be handed over to them. One of the leaders, Eric Swanson, met Shana Madoff, Bernard's niece, back in 2003; They got engaged in 2006 and married in 2007. However, this did not help Madoff himself much. Suspicions against him began to be voiced back in 1999 - then financial analyst Harry Markopolos (Harry Markopolos) said that neither legally nor mathematically the profits declared by Bernard were simply impossible. The "SEC" ignored these statements; however, the largest players in the derivatives market preferred not to contact Madoff - his reports really looked suspiciously good. Nor did the largest Wall Street players invest in Bernard's companies.
Bernard Madoff was charged with securities fraud only on December 11, 2008; apparently, his children handed him over to the federal authorities - to whom Bernard shortly before admitted to the deeply fraudulent nature of the entire fund and its complete failure.
Madoff posted $10 million bail and remained under 24/7 surveillance for some time. On March 12, 2009, Madoff pleaded guilty to violating 11 federal laws. Bernard did not make a deal with the government, although this could have reduced his term; there is reason to believe that Madoff simply did not want to hand over his accomplices and assistants. In his confession, Bernard explained that he started cheating in 1991; the company did not make any investments - in fact, Madoff created a financial pyramid according to the classic Ponzi scheme. Bernard deposited the funds received into a personal bank account; from there, if necessary, he withdrew money to pay dividends. Madoff stated that he planned to eventually switch to normal investment activity, but never managed; Bernard knew about the inevitable collapse of his enterprise, but he was no longer able to change something.
On June 29, 2009, Madoff was sentenced to 150 years in prison; lawyers initially asked for a much more modest term - 7-12 years - emphasizing the respectable age of the defendant.
On October 13, 2009, Madoff got into his first prison fight. It is known that in prison he generally has a rather hard time - from stress alone, the swindler began to have skin problems. Other prisoners apparently did not make it easy for Bernard to serve his term - for example, in December 2009, Madoff was taken to the hospital with a number of facial injuries (and, according to rumors, broken ribs and a punctured lung); the exact origin of these injuries is unknown, but one of the prisoners hinted at another fight. Madoff himself, however, claimed in letters home that he was being treated "like a mafia don" in prison.