Normal tech support phone call: "Press 1 for help with e-mail. Press 2 to have your password reset."

Madoff tech support phone call: "Hello, how can I help you dummy up some trading records today?"

The investigation of Bernie Madoff's fraudulent financial empire is leading to more arrests. Jerome O'Hara and George Perez, both computer programmers employed by the Ponzi schemer, were arrested by the FBI on Friday morning. The charges include conspiracy for falsifying books and records. They are accused of doing the deed for the boss and accepting hush money -- in the form of 25% raises and net bonuses of $60,000 -- to keep the scam afloat.

Continue reading Two more arrests in Madoff saga

Two more arrests in Madoff saga originally appeared on BloggingStocks on Fri, 13 Nov 2009 18:20:00 EST. Please see our terms for use of feeds.

Allen Stanford gets kicked around, but Bernie Madoff can clearly throw down some serious smack. While the former's being moved from one facility to another because he's lost some ground on the cell block, Madoff just earned himself some props.

The engineer of the largest (known) Ponzi scheme in history apparently got into an argument with another geriatric inmate at the Butner, North Carolina federal prison. Of course, it was over the stock market. Does it really make sense to outmaneuver a guy who never needed to know what the market was doing to deliver double-digit returns?

Well, push came to shove, as they say, with the "attacker" stumbling and looking up at a mean, mean Madoff. He got up and ran off.

Continue reading Madoff fights to win, gets some cred

Madoff fights to win, gets some cred originally appeared on BloggingStocks on Tue, 13 Oct 2009 16:15:00 EST. Please see our terms for use of feeds.

David Friehling is only the second person to face criminal charges in the Bernard Madoff debacle. He served as Madoff's auditor from 1991 to 2008, though it's hard to say if they'll resume their relationship as cellies. For now, Friehling has only been charged (innocent until proven guilty, and such) with securities fraud, abetting investment adviser fraud and filing false reports with the SEC. On five of the six charges filed, he faces a 20-year maximum.

It's alleged that Friehling didn't conduct "meaningful" audits while in Madoff's employ, despite issuing reports saying that he'd done his job -- which paid close to $15,000 a month (no work for big pay . . . where do I sign up?). In particular, he's said to have not bothered to verify Madoff's business assets, revenue sources or bank accounts. This is no-brainer stuff for an auditor.

Continue reading Madoff bean-counter pleads not guilty

Madoff bean-counter pleads not guilty originally appeared on BloggingStocks on Sun, 19 Jul 2009 16:00:00 EST. Please see our terms for use of feeds.

How much money does Madoff really have? originally appeared on BloggingStocks on Wed, 31 Dec 2008 14:45:00 EST. Please see our terms for use of feeds.

Continue reading Wall Street continues to reel from the Madoff scandal

Wall Street continues to reel from the Madoff scandal originally appeared on BloggingStocks on Mon, 22 Dec 2008 14:36:00 EST. Please see our terms for use of feeds.

To paraphrase our next Secretary of State, it takes a village to keep an investment scam going. It takes an entrepreneur who's hungry, amoral, and clever; investors eager to believe that what's too good to be true is real; auditors who get paid not to audit; politicians who take money to keep regulation away; and regulators who do what the politicians tell them to do.

All these factors were in play with the $50 billion Madoff Securities scandal. As I posted, Bernie Madoff was able to scam investors by creating false financial statements and using a tiny, unknown auditor to persuade investors hungry for membership in his club that they could get regular 10% annual returns in any market.

But Madoff's scam also benefited from a hands-off policy towards Wall Street thanks to help from politicians such as Chuck Schumer (D-NY) who raised millions from Wall Street to do its bidding. As head of the Democratic Senatorial Campaign Committee between 2004 and 2008, he raised $240 million while increasing donations from Wall Street by 50%. In return Wall Street got free-market, deregulatory policies that helped them cook up the scandals that have helped wipe out $30 trillion in global stock market value in the last year.

Continue reading It takes a village to pull off a $50 billion investment scam

It takes a village to pull off a $50 billion investment scam originally appeared on BloggingStocks on Sun, 14 Dec 2008 09:15:00 EST. Please see our terms for use of feeds.

This week a little story about a $50 billion investment fraud has metastasized. Madoff Securities, a brokerage firm that ran a secretive investment fund on the side, has closed down -- revealing that its steady 10% annual returns was a result of a Ponzi scheme. For some who trusted Madoff a week ago, they are today coming to grips with life without money. Is Madoff the only one out there? I doubt it. So you need to protect yourself.

How did Madoff accomplish this? That story has yet to be revealed. But founder Bernie Madoff revealed that he was using money from his most recent investors to pay off the earlier ones who requested their money. And a letter from hedge fund research and advisory firm, Aksia -- which steered its clients away from Madoff -- reveals five useful clues:

• Unknown accounting firm. Madoff used an accounting firm Friehling & Horowitz that employed three people -- one was a 78 year old living in Florida.
• Incomprehensible investment strategy too good to be true. Madoff employed a "split conversion strategy" which was never clearly defined and whose returns other traders could not duplicate.
• Deception about technology. Madoff claimed it was technologically sophisticated but a visitor to its offices found paper tickets sent through the mail.

Continue reading $50 billion investment fraud: Could you be next?

$50 billion investment fraud: Could you be next? originally appeared on BloggingStocks on Sat, 13 Dec 2008 08:41:00 EST. Please see our terms for use of feeds.