Archive for the ‘Madoff’ Category

The NY Mets and owners announced a deal with a trustee for Bernard Madoff’s fraud victims that requires them to pay millions less than they might have.  Mets CEO Fred Wilpon and team president Saul Katz, co-majority owners, emerged smiling from a Manhattan federal courthouse after a judge announced the agreement, which makes it likely they’ll pay much less than the agreed-upon $162 million, if any at all; guarantees they will owe nothing until the end of four years; and averts a high-profile civil trial.

On December 19, 2011, the Securities and Exchange Commission charged a longtime Bernie Madoff employee with falsifying books and records in order to hide Madoff’s fraudulent investment advisory operations from regulators.

The SEC alleges that Enrica Cotellessa-Pitz, who worked at Bernard L. Madoff Investment Securities LLC (BMIS) for more than 30 years, assisted in falsifying BMIS’s internal accounting records in order to misclassify hundreds of millions of dollars of income purportedly generated by BMIS’s investment advisory operations. Cotellessa-Pitz also falsified financial statements filed with the SEC and other regulators as well as materials that were prepared to deceive SEC staff examiners, federal and state tax auditors, and other external reviewers.

The SEC previously charged BMIS’s Director of Operations David Bonventre with falsifying books and records to hide and obfuscate Madoff’s advisory operations. According to the SEC’s complaint against Cotellessa-Pitz filed in U.S. District Court for the Southern District of New York, she played a central role in falsifying these records as directed by Madoff and Bonventre. Madoff used the false records to artificially improve the firm’s reported revenue and income as well as to deceive regulators who sought to review the firm’s operations and financial results.

Lawyers who are trying to recover money for the far-flung victims of the Bernard Madoff Ponzi scheme have moved to recover $375 million from banking giant Credit Suisse.

The trustee who is amassing the pool of money to pay back Madoff investors, filed a lawsuit late Monday in U.S. Bankruptcy Court in Manhattan against Credit Suisse and several affiliates, accusing it of harboring money that belongs to the estate of Mr. Madoff’s collapsed investment firm.  Most of that money flowed to the bank through Fairfield Sentry Ltd., the biggest feeder of investor funds into Mr. Madoff’s Ponzi scheme, according to the lawsuit. Other money went through Kingate Global, the lawsuit said.

Both of those funds are liquidating in the wake of the Madoff scam, which came undone in December 2008.

A former trader at Bernard Madoff Investment and long-time colleague is expected to plead guilty to fraud Monday and testify that Madoff’s $65 billion Ponzi scheme may have started 20 years earlier than what his ex-boss claimed, the Guardian reported.

David Kugel, who began working for Madoff in 1970, is cooperating with investigators and is expected to plead guilty in the hopes of lighter sentence, federal prosecutors said in a letter Wednesday. He is charged with conspiring to commit fraud, falsifying records and faking trades.

The Securities and Exchange Commission charged a longtime Bernie Madoff employee with fraud for his role in creating fake trades to facilitate the massive Ponzi scheme.

The SEC alleges that David Kugel, who worked at Bernard L. Madoff Investment Securities LLC (BMIS) for nearly four decades, was asked by Madoff to provide the firm’s investment advisory operations with backdated arbitrage trade information to be formulated into fictitious trading on investors’ account statements. Kugel’s own account at BMIS was among those in which backdated trades were entered, and he withdrew nearly $10 million in “profits” from the fictitious trading over several years.

The SEC previously charged two other longtime Madoff employees Annette Bongiorno and JoAnn Crupi for their roles in producing phony account statements that were sent to Madoff investors. According to the SEC’s complaint against Kugel filed in U.S. District Court for the Southern District of New York, Bongiorno and Crupi and other staff in Madoff’s investment advisory (IA) operations used the information provided by Kugel to formulate fictitious trades to appear on investor account statements.

The SEC alleges that sometime in the early 1970s after Kugel began his career with Madoff as an arbitrage trader in the firm’s proprietary trading business, Madoff informed Kugel that BMIS managed money for outside clients. He asked Kugel to provide the firm’s IA operations with backdated convertible arbitrage trades for inclusion on investor account statements. Some of these trades replicated successful trades that Kugel had actually made for BMIS proprietary trading operations. Other trades were based on historical information that Kugel obtained from old newspapers.

According to the SEC’s complaint, Bongiorno and Crupi regularly asked Kugel for backdated information about trades amounting to millions of dollars. After Kugel provided the information, Crupi and Bongiorno would then design trades that totaled that amount. These fictitious trades were highly profitable on an annualized basis, and appeared on account statements and trade confirmations sent to investors. Kugel, who opened his own BMIS account, received these account statements and trade confirmations as well.

The SEC alleges that Kugel provided backdated trade information for IA accounts, including his own. He withdrew the purported “profits” of these trades even though he knew they weren’t proceeds of actual trading activity. One trade in S&P index options in 2007 earned Kugel a profit of more than $375,000 in just a few weeks. Kugel withdrew almost $10 million from his BMIS IA accounts from 2001 to 2008.

The U.S. Attorney’s Office for the Southern District of New York has filed parallel criminal charges against Kugel, who has pled guilty and also agreed to settle the SEC’s civil charges. Subject to court approval, the civil case will result in a permanent injunction against Kugel, who must forfeit his ill-gotten monetary gains upon entry of a criminal forfeiture order in the criminal case.

The SEC’s complaint against Kugel alleges that by engaging in this conduct, Kugel violated and aided and abetted violations of Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 thereunder; aided and abetted violations of Sections 204, 206(1) and 206(2) of the Investment Advisers Act of 1940 and Rule 204-2 thereunder, and Sections 15(c) and 17(a) of the Exchange Act and Rules 10b-3 and 17a-3 thereunder.

Some of the investors swindled by Wall Street swindler Bernard Madoff will soon be receiving some money back.

The trustee charged with recovering funds for customers of the jailed financier announced that $312 million will be distributed this week on claims relating to 1,230 accounts.

Trustee Irving Picard has recovered about $8.7 billion from investors who were paid fictitious profits by Madoff above the amount they invested.

That’s about half the roughly $17.3 billion lost by Madoff customers who have filed claims.

The bulk of the recovered funds can’t be paid out yet because they are tied up in litigation and appeals.

Madoff pleaded guilty to fraud charges and is serving a 150-year prison sentence in federal custody in North Carolina.

A hedge fund group owned by Massachusetts Mutual Life Insurance Co. has agreed to pay more than $1 billion to customers of imprisoned fraudster Bernard Madoff, in one of the largest settlements with the trustee in Madoff bankruptcy case.

Under the agreement, announced today, Tremont Group Holdings of Rye, N.Y., and its Rye Select family of funds, will pay more than $1 billion to the fund for defrauded Madoff clients. The entities were the second-largest of the so-called feeder funds to Madoff, private portfolios that directed billions of dollars in client assets to Madoff.

The settlement agreement includes Tremont’s former chief executive; the group’s owner, Oppenheimer Acquisition Corp.; and Springfield-based MassMutual, Oppenheimer’s parent.

According to the complaint, the Tremont Group and related entities were aware, through warnings in both internal communications and publicly available information, that the Madoff operation could be a fraud.

The long-time director of operations for convicted Ponzi schemer Bernard Madoff’s defunct firm was arrested and charged criminally Thursday with allegedly directing that false accounting entries be made in the firm’s books to conceal Mr. Madoff’s fraud.

Prosecutors from the U.S. Attorney’s Office in Manhattan charged Daniel Bonventre, former operations director at Bernard L. Madoff Investment Securities LLC, with conspiracy, securities fraud, falsifying books and records of a broker-dealer, false filings with the U.S. Securities and Exchange Commission and four counts of filing false federal tax returns.

A lawyer for Mr. Bonventre declined to comment Thursday.

Bonventre, 63 years old, is expected to appear before a U.S. magistrate judge in Manhattan later Thursday. He faces as much as 20 years each on the fraud, falsifying-books-and-records and false-filings charges.

He is the sixth person to be charged criminally in the case, including Mr. Madoff himself.

The SEC also separately brought civil accounting fraud charges against Mr. Bonventre, alleging he helped disguise Mr. Madoff’s fraud and financial losses at the Madof firm by misusing and improperly recording investor money to create the false appearance of legitimate income.

The Securities and Exchange Commission today announced that Bernard Madoff’s auditors have agreed not to contest the SEC’s charges that they enabled Madoff’s fraud by falsely stating they audited the convicted fraudster’s financial statements in accordance with the relevant accounting and auditing standards.

On November 3, 2009, the SEC submitted to the Honorable Judge Louis L. Stanton, a federal judge in the Southern District of New York, the consents of David G. Friehling and Friehling & Horowitz, CPA’S, P.C. (“F&H”) to a proposed partial judgment imposing permanent injunctions against them. Friehling and F&H consented to the partial judgment without admitting or denying the allegations of the SEC’s complaint, filed on March 19, 2009. If the partial judgment is entered by the Court, the permanent injunction will restrain Friehling and F&H from violating certain antifraud provisions of the federal securities laws.

The proposed partial judgment would leave the issues of the amount of disgorgement, prejudgment interest and civil penalty to be imposed against Friehling and F&H to be decided at a later time. For purposes of determining Friehling’s and F&H’s obligations to pay disgorgement, prejudgment interest and/or a civil penalty, the proposed partial judgment precludes Friehling and F&H from arguing that they did not violate the federal securities laws as alleged in the Complaint.

In its complaint, the SEC alleges that Friehling and F&H enabled Madoff’s Ponzi scheme by falsely stating, in annual audit reports, that F&H audited Bernard L. Madoff Investment Securities LLC’s (“BMIS”) financial statements pursuant to Generally Accepted Auditing Standards (GAAS). F&H also made representations that BMIS’ financial statements were presented in conformity with Generally Accepted Accounting Principles (GAAP) and that Friehling reviewed internal controls at BMIS. The complaint alleges that all of these statements were materially false because Friehling and F&H did not perform a meaningful audit of BMIS and therefore had no basis to form an opinion about the firm’s financial condition or internal controls.

Just months before his now-infamous Ponzi scheme collapsed, Bernie Madoff snookered a Merrill Lynch adviser who was attempting to perform due diligence on him for a foundation that serves the elderly, according to a lawsuit filed in federal court in Florida last week.

In the complaint, MorseLife Foundation is seeking at least $33 million in damages from Merrill Lynch & Co. Inc., claiming that the New York financial advisory firm was taken in by Mr. Madoff during a face-to-face meeting just several months before his fraudulent investment empire collapsed.

Now in prison for running a $65 billion Ponzi scheme and wiping out the fortunes of a lengthy list investors, he met with the Merrill adviser, John S. Lacy, in July of 2008.

Mr. Lacy, a vice president with Merrill’s global wealth management group in West Palm Beach, along with foundation executives, was part of a group in a due diligence meeting on behalf of MorseLife, which filed the lawsuit last Friday in U.S. district court in Miami.

As of July 2008, the portfolio was worth $32.4 million.

After 2006, with the hope of building its relationship with the foundation, Merrill Lynch expanded its services, which included advising MorseLife on its investment policies, strategies, asset allocation risk tolerance and specific investments not managed by Merrill Lynch, the lawsuit claims. MorseLife in its suit is alleging that Merrill Lynch was negligent.