[Marxism] Lobbyists, Congress and the Ponzi Scheme

Greg McDonald sabocat59 at mac.com
Mon Dec 22 19:53:19 MST 2008


Lobbyists, Congress and the Ponzi Scheme

Madoff's Money Trail Leads to Washington

By PAM MARTENS

The forces of the universe sent us a corruption triple play the week  
of December 8th.  Just in case there were any slumbering souls still  
doubting the multi headed monster we need to slay to avoid becoming  
Rome, those benevolent forces assaulted our senses with a politician,  
a lawyer, and a Wall Street icon in a three-day sweep of unimaginable  
crime.  Unimaginable, at least, to those of us bereft of adequate  
imaginations to keep up with the criminals.

The trifecta began on Monday, December 8, with Marc Dreier charged by  
Federal prosecutors in Manhattan with selling bogus promissory notes  
to steal what currently adds up to over $380 million.  Mr. Dreier, a  
graduate of Harvard Law and Yale College, is the owner and founder of  
Dreier LLP, a prominent law firm employing over 250 lawyers.

On Tuesday, December 9, the Feds arrested Democratic Governor Rod  
Blagojevich of Illinois, revealing transcripts of taped phone calls  
where the governor was strategizing on how to sell the U.S. Senate  
seat of President-elect Barack Obama to the highest bidder or career  
enhancer and, separately, getting revenge on the editorial board of  
the Chicago Tribune whose writers were saying bad things about him  
(for some strange reason).

We had a day off to allow our psyches to mend and then Thursday,  
December 11 arrives.

We are told that Wall Street icon, Bernie Madoff, a key player in  
self regulation of Wall Street, has stolen $50 billion from investors  
in a Ponzi scheme stretching over what is now emerging as a three- 
decade crime spree, or longer.  Despite our sprawling Homeland  
Security apparatus that regularly catches Democratic governors, law  
enforcement did not catch Madoff; his two sons turned him in after he  
confessed.

As of December 19, Blagojevich had been released and was in the  
Governor’s Mansion issuing pardons; Madoff was in his $7 million  
penthouse in Manhattan after being allowed to post, as collateral for  
his bond, the East Coast mansions he likely bought with Ponzi money  
stolen from an eclectic group of charities, Florida pensioners and a  
well-heeled country club set.  Dreier was still in jail even though  
he stole less than 1 percent of the Madoff take.  Apparently, Mr.  
Dreier lacks the right friends in high places.

The major beneficiary of the week was Citigroup.  The leaky piggy  
bank disappeared from the news along with the investor lawsuit  
charging it with running its own Ponzi scheme on a scale to dwarf  
Madoff to piker status.  Had it not been for the Madoff media frenzy,  
folks might have started connecting the dots to a $300 billion  
taxpayer bailout of a bank serially charged with global misdeeds,  
market maneuvers internally named “Dr. Evil” and “Black Hole,” and  
recent press reports that Citigroup had stashed over $1.2 trillion  
off its balance sheet.

I seldom have the urge to give a comforting pat on the back to people  
profiled in the Wall Street Journal.  But that was my reaction when I  
read the 21-page whistleblower document about Madoff that was written  
by Harry Markopolos to the Securities and Exchange Commission (SEC)  
on November 7, 2005. The Journal still has the document on its web  
site and Markopolos provides a step by step plan for the SEC to  
follow to nail Madoff as a Ponzi fraudster. The letter followed a  
five-year effort by Markopolos, who supplied documentation and made  
repeated requests to the SEC to investigate Madoff.

Here’s how the SEC characterized the letter from Markopolos  in a  
January 4, 2006 memo: “The staff received a complaint alleging that  
Bernard L. Madoff Investment Securities LLC, a registered broker- 
dealer in New York (“BLM”), operates an undisclosed multi-billion  
dollar investment advisory business, and that BLM operates this  
business as a Ponzi scheme.  The complaint did not contain specific  
facts about the alleged Ponzi scheme…”

Here’s a tiny sampling of what Markopolos told the SEC in his 21-page  
November 7, 2005 letter.  You decide if these are “specific facts.”

“I am a derivatives expert and have traded or assisted in the trading  
of several billion $US in options strategies for hedge funds and  
institutional clients…(Highly Likely) Madoff Securities is the  
world’s largest Ponzi Scheme…The [Madoff] family runs what is  
effectively the world’s largest hedge fund with estimated assets  
under management of at least $20 billion to perhaps $50 billion…The  
third parties organize the hedge funds and obtain investors but 100%  
of the money raised is actually managed by Madoff Investment  
Securities, LLC in a purported hedge fund strategy.  The investors  
that pony up the money don’t know that BM [Bernie Madoff] is managing  
their money…Some prominent US based hedge fund, fund of funds, that  
“invest” in BM in this manner include: A. Fairfield Sentry Limited  
(Arden Asset Management) which had $5.2 billion invested in BM as of  
May 2005…Access International Advisors…which had $450 million  
invested with BM as of mid-2002…Tremont Capital Management, Inc… 
Tremont oversees on an advisory and fully discretionary basis over  
$10.5 billion in assets.  Clients include institutional investors,  
public and private pension plans, ERISA plans, university endowments,  
foundations, and financial institutions, as well as high net worth  
individuals…Madoff does not allow outside performance audits.  One  
London based hedge fund, fund of funds, representing Arab money,  
asked to send in a team of Big 4 accountants to conduct a performance  
audit during their planned due diligence.  They were told ‘No, only  
Madoff’s brother-in-law who owns his own accounting firm is allowed  
to audit performance’…Only Madoff family members are privy to the  
investment strategy.  Name one other prominent multi-billion dollar  
hedge fund that doesn’t have outside, non-family professionals  
involved in the investment process.  You can’t because there aren’t  
any…There are too many red flags to ignore.  REFCO, Wood River, the  
Manhattan Fun, Princeton Economics, and other hedge fund blow ups all  
had a lot fewer red flags than Madoff and look what happened at those  
places…”

Here is what the SEC’s memo of November 21, 2007 said following its  
investigation:

“The staff found no evidence of fraud…All files have been prepared  
for closing…Termination letters have been sent to Bernard L. Madoff  
Investment Securities LLC, Bernard L. Madoff, and Fairfield Greenwich  
Group.  The staff has no objection to the eventual destruction of the  
files and has no knowledge of any impediment to such a disposition.”

Let me run that by you again.  Mr. Markopolos, a private citizen,  
uses his personal time and energy over a seven year period to  
document a fraud occurring under the nose of the SEC that could  
impact the international reputation of the United States along with  
the financial well being of pensioners, university endowments,  
foundations and private investors.  After losing track of the case  
for five years, the SEC finally gets around to investigating using  
taxpayers’ monies.  They come up with nothing despite being given a  
perfect path to follow to the fraud.  And their final suggestion for  
dealing with the investigation is to destroy the files!  With  
regulators like these, who needs Ponzi artists?



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