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Archive for the ‘Madoff’ Category


Peter Madoff sentenced to 10 years for role in Ponzi scheme

Peter Madoff will serve 10 years in prison for his role in his older brother’s multibillion-dollar Ponzi scheme, a U.S. judge said on Thursday.

Peter Madoff, 67, pleaded guilty in June to criminal charges including conspiracy to commit securities fraud for falsifying the books and records of the investment advisory company founded by his brother, Bernard Madoff.

He agreed at the time not to oppose a request by prosecutors for a maximum 10-year prison sentence and agreed to an order requiring him to forfeit a symbolic $143.1 billion. U.S. District Court Judge Laura Taylor Swain approved the sentence on Thursday.

“I am deeply ashamed of my conduct,” Peter Madoff said at the sentencing. “I accept full responsibility for my actions.”

Of 13 individuals charged criminally in connection with the fraud, Peter Madoff is the only one, other than his brother, who was a member of the Madoff family. Bernard Madoff, 74, was sentenced in 2009 to a 150-year prison term and was ordered to forfeit $170.8 billion.

Madoff checks mailed by trustee

Victims of Bernard Madoff’s fraud will soon receive $2.48 billion to help cover their losses, more than tripling their total recovery to about $3.63 billion, the trustee liquidating the imprisoned swindler’s firm said.  Checks ranging from $1,784 to $526.9 million were mailed on Wednesday to 1,230 former customers of Bernard L. Madoff Investment Securities LLC, according to trustee Irving Picard. The average payout is $2.02 million.  Madoff’s victims earlier recovered $1.15 billion, including sums committed by the Securities Investor Protection Corp, which helps customers of failed brokerages.

U.S. Bankruptcy Judge Burton Lifland in Manhattan authorized the latest distribution last month following two legal victories for the trustee.  In June, the U.S. Supreme Court let stand a lower court decision that endorsed Picard’s methods for calculating losses. In July, a former Madoff customer dropped a court challenge to a $7.2 billion forfeiture by the estate of Madoff investor Jeffry Picower. Of that sum, $5 billion would go to the Madoff firm’s estate, and the rest to the U.S. government.  Picard has recovered $9.15 billion, or

53 percent of the $17.3 billion he believes was lost in Madoff’s Ponzi scheme.  The trustee is holding some funds in reserve as some Madoff victims pursue their own cases to recover more money.  Picard said this litigation is delaying further distributions. The trustee is also appealing court decisions that have limited his claims against banks such as JPMorgan Chase & Co that did business with Madoff.

Peter Madoff charged with fraud

On June 29, 2012, the Securities and Exchange Commission charged Peter Madoff, the brother of Bernie Madoff, with committing fraud, making false statements to regulators, and falsifying books and records in order to create the false appearance of a functioning compliance program over Madoff’s fraudulent investment advisory operations.

The SEC alleges that Peter Madoff, who served as Chief Compliance Officer and Senior Managing Director at Bernard L. Madoff Investment Securities LLC (BMIS) from 1969 to December 2008, created stacks of compliance documents setting out supposedly robust policies and procedures over BMIS’s investment advisory operations. However, Peter Madoff created these compliance manuals, written supervisory procedures, reports of annual compliance reviews, and compliance certifications to merely paper the file. No policies and procedures were ever implemented, and none of the reviews were actually performed even though Peter Madoff represented that he personally completed the reviews.

The U.S. Attorney’s Office for the Southern District of New York today announced parallel criminal charges against Peter Madoff.

NY Mets, owners settle with Madoff trustee

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.

SEC Charges Madoff Employee

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.

More Madoff Litigation – Trustee Sues Credit Suisse

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.

Madoff Ponzi scheme started in 1970s

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.

SEC Charges Madoff Employee

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.

Madoff Clients To Start Receiving Money

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.

MassMutual unit agrees to $1 billion Madoff settlement

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.

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