As I posted over the weekend, it takes a village to pull off a $50 billion investment fraud. In the case of the Madoff securities fraud, that village may have included his investors, family, accountants, regulators, politicians and hedge fund bundlers. And it could be that part of that village included two New York senators and the SEC. How so? Campaign contributions from Madoff to two New York senators and a family relationship between Madoff and an SEC investigator may have deflected any efforts to shut down the fraud.
Were Madoff's Washington money connections enough to keep investigators away? It's possible. Senate Banking Committee member Charles Schumer, D-NY, was the top congressional recipient of Madoff's $267,000 in campaign donations between 2001 and the present. Schumer's campaign -- which received $32,000 during that period -- claims it has turned over the money to charity. Others in Congress have received smaller amounts from Madoff including Barney Frank, D-MA ($2,250) and Hillary Rodham Clinton, D-NY ($2,800).
Did the romantic relationship between an SEC attorney and a Madoff Securities compliance lawyer deflect the SEC from doing its job? It's not out of the question. In 2007, Eric Swanson, who served for 10 years as a lawyer at the SEC and left in 2006 while he was an assistant director of the office of compliance inspections and examinations in Washington, married Shana Madoff, Bernie Madoff's niece and daughter of Bernie's brother, Peter Madoff, chief compliance officer for Madoff Securities. Shana is Madoff Securities' compliance attorney.
And this doesn't even detail how the $400,000 he spent on Washington lobbying got doled out. One question that remains unanswered: Where did all the $50 billion go? If the regulators had been doing their job, we might know.
Peter Cohan is president of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.
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Reader Comments (Page 1 of 1)
12-17-2008 @ 1:24PM
Len said...
Guess it was a good move on Madoff having a family member in the SEC. Who's next to join in on the Bail Out, this will be one of the best Scams on the American Public yet this Bail Out Junk.
12-17-2008 @ 1:06PM
racerx said...
You better believe he paid them off. It's called campaign contributions. Pay to play. Ever see a poor congressman or senator?
12-17-2008 @ 3:14PM
ANONOMOUS said...
WHY DID COF BUY CHEVY CHASE AND WHAT IS MI HOMES INVOLVEMENT?
THERE ARE BANK LOANS WITH 20 INTERNATIONAL BANKS, AND NO REGULATION OF THE UNAUDITED AND UNSECURED FUNDS........
Click here: http://www.gao.gov/new.items/d0954.pdf "GAO CRIME VICTIMS RIGHTS ACT"
"Increasing Awareness, Modifying the Complaint Process, and Enhancing Compliance Monitoring Will Improve Implementation of the Act".....
'For the Quarterly Period Ended September 30, 2008"
"M/I Homes, Inc. and Subsidiaries Unaudited Condensed Consolidated"
Financial Statements
Condensed Consolidated Balance Sheets at September 30, 2008
(Unaudited) and December 31, 2007
3
Unaudited Condensed Consolidated Statements of Operations for the
Three and Nine Months Ended September 30, 2008 and 2007
4
Unaudited Condensed Consolidated Statement of Shareholders Equity
for the Nine Months Ended September 30, 2008
5
"
Unaudited Condensed Consolidated Statements of Cash Flows for the
Nine Months Ended September 30, 2008 and 2007"
6
Notes to Unaudited Condensed Consolidated Financial Statements
""Published - Dec 16 2008 07:03PM EST | AP"
"Investors poring over Bernard Madoff's books have discovered the money manager falsified documents to hide massive losses to investors in a fraud case that could take months to unravel, an official helping to oversee the firm's liquidation said."
September 27, 2006
Mr. James Quigley
CEO and President
Deloitte & Touche
1633 Broadway
New York, NY 10019
212-492-4000
Dear Mr. James Quigley,
I am writing this letter to fully disclose all the material statements that may apply to your consulting and auditing firms. I believe you have been completely responsible for all the consulting and auditing for the public company MI HOMES, since 1976. This company also was known as MI Schottenstein Homes before the name change. There are material allegations that you should be informed about that apply to all the board of directors, law firms, and auditors associated with MI HOMES. There are allegations of securities fraud, tax fraud, and other possible criminal activity that you may wish to disclose. Enclosed you will find several documents that you may wish to review:
1) The HO -108XXXX number established on July 12, 2005 from the SEC in connection to alleged securities fraud and tax fraud associated with MI HOMES.......
"JULY 12, 2005
"WE HAVE REFERRED YOUR COMPLAINT TO THE APPROPRIATE SEC OFFICE OR DIVISION. BUT AT THIS POINT OUR OFFICE CAN DO NOTHING FURTHER TO HELP YOU."
SINCERELY,
STAFF ATTORNEY
HO 108XXXXX
12-21-2008 @ 4:08PM
Andy said...
Guess what?
It is one big happy family and you're not in it!