A $50 Billion Con Job Rocks Wall Street

By Danny Schechter, AlterNet. Posted December 24, 2008.

Every era has its bad guy, its high-profile criminal who flames into public view through media circuses and tabloid headlines. In the 1930s, there was Al Capone brought down by the taxman. In the '40s, Willie Sutton was a big bad guy who once said he robs banks because "that's where the money is."  In the 1950s, the Mafia seized our attention, while here in New York, we had George Metetsky, the mad bomber. In the '60s -- well, you know the saying: If you can remember that era, you weren't there ...

Many of these larger-than-life gangsters were anti-social outlaws robbing banks and the like. Now the banks are robbing us. Until he is outdone, we now have a new poster boy for Wall Street excess and larceny: the bland personage of Bernard Madoff, the consummate Wall Street insider, philanthropist and pillar of the financial community. He has now been credited in this credit crisis for the biggest theft in history.

Madoff seems to have won the gold medal for absconding with the most gold -- to a tune of $50 billion and counting. It was all, he admitted, a Ponzi scheme. He was a perverted Robin Hood: he took from the rich and enriched himself in a lifestyle festooned with many houses, boats and stays at $5,000-a-night hotels.

The Notice

Go to the Madoff.com Web site today and there is this notice that thousands of investors are reading while holding back tears and outrage:

On Dec. 15, 2008, the Honorable Louis L. Stanton, a federal judge in the United States District Court for the Southern District of New York, appointed Irving Picard as trustee for the liquidation of Bernard L. Madoff Investments Securities LLC (BMIS) pursuant to the Securities Investor Protection Act as set forth in the attached order.

Mr. Picard supersedes Lee S. Richards, the previously appointed receiver for BMIS, and all claims by customers of BMIS will be processed by Mr. Picard as SIPA trustee. Customers and claimants should refer to the Web site of the Securities Investor Protection Corporation for information about the processing of claims: sipc.org.

Mr. Richards continues to serve as receiver for Madoff Securities International Ltd. pursuant to the attached order. The trustee Irving Picard has engaged Lazard Frères & Co. LLC to assist in the sale of the trading operations of Bernard L. Madoff Investment Securities LLC.

Should you have further questions, please contact the trustee at the following number: (888) 727-8695.

In short: Good Luck at Getting Any of Your Money Back.

Whistle-Blower Rebuffed

Of course, this dry legalistic language doesn't tell the whole story -- the story of the failure of the regulators to act, or about the submission to the SEC on Nov. 7, 2005, of a 19-page, detailed document charging that "The World's Largest Hedge Fund Is a Fraud."

It was written by financial expert Harry Markopolos and sent to the Securities and Exchange Commission with a request for deep confidentiality. He exposed the man now being called "Made-off." The title of his report: "The World's Biggest Hedge Fund Is a Fraud." It projected scenarios including this one:

(Very Likely) in bold, "Madoff Securities is the World's Largest Ponzi Scheme." He believed that "this would be another black eye for the brokerage industry."

Bingo!

Victims We Can Relate To

That black-eye punch was never thrown. Instead, it was three years before Madoff went down. He continued to operate his con game, defrauding customers worldwide. At the same time, the investors he ripped off later became "sympathetic victims" in our media -- like Steven Spielberg -- as opposed to subprime home borrowers, who were often demonized as schemers and told they were naïve and should have known better. A CNBC "documentary" showcased a parade of wealthy Madoff victims.

Madoff was a high-flyer, a part of a clubby and incestuous elite world of golf clubs, resorts and philanthropy with tax benefits. He was a leader of the Wall Street world, at one point the chairman of NASDAQ. Universities invited him to lecture on how markets work. He was admired, considered a role model, a genius. His firm handled l0 percent of all stock exchange trades.

His niece married an SEC regulator. Mary Schapiro, Barack Obama's pick to lead the Securities and Exchange Commission, previously appointed one of his sons to a regulatory body that oversees American securities firms. Madoff himself said he had often visited the SEC, where he complained of over-regulation.

See more stories tagged with: wall street, madoff, scam, ponzi scheme

News Dissector Danny Schechter is making a film based on his book Plunder: Investigating Our Economic Calamity and the Subprime Scandal. Send comments to dissector@mediachannel.org. Watch the trailer.

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