Feds Zero In on Bernie's (Madoff) Inner Circle

[babylonsister]

Feds Zero In on Bernie's Inner Circle

by Lucinda Franks

In a Daily Beast exclusive, Lucinda Franks reports that investigators are focused on suspiciously exorbitant salaries of Madoff family members and evidence about who minded the store when Bernie was away. Plus, the millions of dollars Madoff salted away around the world, mounting tension between officials investigating the scheme, and why investigators haven’t interviewed Ruth yet.


With Bernie Madoff locked away, the next big challenge for investigators is to continue piecing together how he pulled off the massive fraud—and who helped him. As they examine the inner workings of his firm and attempt to trace his assets, according to sources from various investigative agencies, their focus is now on the following:

• The exorbitant salaries Madoff paid to family members and employees of Bernard L. Madoff Investment Securities LLC, creating rich incentives not to question the firm’s procedures. Bernie’s brother Peter, as chief compliance officer, was paid "millions" for a job that usually commands a salary of $150,000- $250,000, according to a source who worked in payroll. A compliance lawyer often earns even less, but Peter’s daughter Shana received more than half a million dollars a year with that title. "Back office" staff in the fraudulent investment-advisory wing on the 17th floor had salaries in the hundreds of thousands of dollars, according to the employee, although the criminal complaint against Madoff notes they had little or no prior pertinent training or experience in the securities industry.

• Investigators say there is mounting circumstantial evidence that Peter, Shana, and Ruth, who was the bookkeeper, minded the store when Bernie was away and oversaw the generation of false trades. Just as the teller who is bilking the bank comes in early, leaves late, and doesn't take vacations because he can't afford to have a replacement scrutinize his activities, investigators say they believe Madoff must have had a small inner circle who could keep the scheme running in his absence.

• Ruth Madoff has not yet been questioned by investigators, according to sources on the defense team. A source close to the case says "they are going after family and associates with a vengeance, but in their own way, by indirection." The many assets put in her name over the years—including real estate, yachts, jewelry and cash—have been frozen, but now the government is moving to try to seize the $69 million worth of real estate and cash and bonds in Ruth’s name that she says are unrelated to the Ponzi scheme. For example, Ruth claims a house in Montauk was given to her by her father in the early '80s, according to a federal source: "This is one of her recent fabrications. She darn well knows her father had no money. He didn't give it to her, Bernie did." The US Attorney's office will find it quite a hurdle to seize these assets. They will have to go to trial; both sides will require depositions and discovery; and the whole thing could take months.

more...

http://www.thedailybeast.com/blogs-and-stories/2009-03-16/feds-zero-in-on-bernies-inner-circle/

[Fumesucker]

1. That would be a conspiracy..

And we all know that conspiracy theorists are all whack job, tin foil hat wearing loonies..

:eyes:

[elleng]

3. No conspiracy;

just a bunch of bad acts (by bad actors.)

[Fumesucker]

7. You mean they never communicated with each other in an attempt to break the law?

I find that hard to believe, that they pulled all this off without once ever communicating their intentions to each other.

[elleng]

8. I think it was not NECESSARY that they do so,

so they can be framed for the acts themselves, but not necessarily conspiracy; just a thought. They're in these positions, recognize whats going on, and act within their jobs to promote all the crap.

[merh]

10. conspiracy - racket - enterprise

by any name, it was illegal and Bernie couldn't have pulled it off all these years by himself.

[elleng]

15. Sure.

I was thinking of the legal 'criminal conspiracy.'

"A criminal conspiracy exists when two or more people agree to commit almost any unlawful act, then take some action toward its completion. The action taken need not itself be a crime, but it must indicate that those involved in the conspiracy knew of the plan and intended to break the law. One person may be charged with and convicted of both conspiracy and the underlying crime based on the same circumstances."

http://criminal.findlaw.com/crimes/a-z/conspiracy.html

[Fumesucker]

17. Eh, it would seem to me that it is highly unlikely they did not agree to do this..

Which would indeed make it a conspiracy under the law..

But of course, conspiracies never happen and anyone who thinks they do is a tin foil hat wearing nutjob.

[elleng]

18. Conspiracies DO happen;

we legal beagles, however, tend to be very conscious of the need to prove all the elements thereof.

[mod mom]

12. Sounds like conspiracy to me. They worked in concert to hide assets.

[KharmaTrain]

2. I Can Wait...Go Get "Em...

The dirty side of this collapse are all the criminals who are trying to slip through the cracks. From Jim Cramer to Alan Sanford to Madoff...they all throught the could play their games and no one would ever call them on it. Now that their schemes have been exposed, the denial game goes on while the money is buried and the paperwork is shreaded.

Methinks the prosecutors are quietly squeezing up...talking to the underlings in this scam and building the case that will nab the bigger fish in this mess. Discovery is sure to turn up a lot of the real dirt that still hasn't been exposed and bring out more names who enabled this scheme.

It's not just the Madoffs that should be punished but the SEC "regulators" who had anything to do with this case. They knew there were problems and avoided investigating...had they done their jobs, billions would have been save. They are just as complicit as anyone in letting this scheme develop and then let it roll on and then over those who trusted not just Madoff, but the entire system.

[depakid]

4. It's not just the Madoffs that should be punished but the SEC "regulators" who had anything to do

with the case.

That's absolutely correct. There are people in the agency- and potentially members of Cobgress tht are every bit as culpable as those running the schemes.

If this sort of deal is not to be repeated- those folks need to be held to account.

Same with those involved in the peanut poisonings.

[elleng]

5. As to the SEC, you are correct to charge them with being complicit.

I suspect that someones in the enforcement office decided to ignore the tips they were receiving. I don't know for how long it went on, but 'they' surely are guilty of major acts of malfeasance, imo.

[KharmaTrain]

6. His Son-In-Law Was A "Regulator"

and Bernie served on an SEC advisory panel. The mafia couldn't have infilitrated any better. For all intents and purposes, the SEC went out of business back in the 80's.

Cheers...

[elleng]

9. His son-in-law was what? where?

'Whistleblowers' were providing SEC with hot info for years, and someones within the SEC were ignoring all the stuff. Would take more than someone on an advisory panel, imo.

[KharmaTrain]

11. Eric Swanson...

Here's the story...

http://www.nysscpa.org/ezine/ETPArticles/ML121808.htm

Harry Markoplous blew the lid on Madoff's schemes over a decade ago. His testimony to Congress was riveting and made me angry to see how not only were the regulators incompetant, but so blatantly corrupt.

Eventally a lot of dirt will come out...Madoff is just the tip of a massive iceburg where regulators were in bed with the regulated and participated in many of the schemes.

Cheers...

[elleng]

13. Thanks.

"Shana Madoff is married to Eric Swanson, who worked for the SEC for a decade and who had been involved in the agency's examinations of Madoff's operations, according to the Post.

Swanson participated in the 2004 examination of Madoff's company, and helped to conduct an internal review of a previous examination of the company in 1999, according to the SEC. The agency issued a statement underscoring that Swanson was not involved in regulating Madoff after the relationship began, the Post said."

Certainly enough to get the bad ball rolling.

[KharmaTrain]

14. Under The Corporate Media Radar

That's the marvel of DU and the internet. Thank goodness we have these resources where the real stories are being told.

:hi:

[wackywaggin]

16. Shana Madoff and Husband still at ponzi scheme!!

This is where Eric Swanson is now. Look for Madoff money here. www.batstrading.com
How is a known Madoff associate allowed to continue running operations at a stock exchange firm, this is unbelievable ?

[KT2000]

19. My guess is that Ruth

was the brains behind this thing. It will be very interesting to see what they find out.

Reading between the lines of this article in the latest Vanity Fair, one could place Ruth in the know and likely more.
http://www.vanityfair.com/politics/features/2009/04/madoff200904