Banks hit worldwide by US 'fraud'


Mr Madoff is the former chairman of the Nasdaq stock exchange

BBC NEWS | Business | Banks hit worldwide by US 'fraud' (external - login to view)


Some of the world's biggest banks have revealed they are victims of an alleged fraud which has lost $50bn (£33bn).

Bernard Madoff has been charged with fraud in what is being described as one of the biggest-ever such cases.

Among the banks which have been hit are Britain's HSBC and RBS, Spain's Santander and France's BNP Paribas.
One of the City's best-known fund managers has criticised US financial regulators for failing to detect the alleged fraud.

Nicola Horlick, boss of Bramdean investments, told the BBC: "I think now it is very difficult for people to invest in things that are meant to be regulated in America, because they have fallen down on the job."

"This is the biggest financial scandal, probably in the history of the markets - $50bn is a huge amount of money," she said.

Counting the cost

Banks and financial institutions across the world had investments with Bernard Madoff, but not all have yet confirmed what their potential losses might be.

Among the largest potential losers so far is Spain's largest bank, Santander, which also owns the UK High Street banks Abbey, Alliance & Leicester and Bradford & Bingley.

One of its funds had $3.1bn invested in the firm run by Bernard Madoff Britain's HSBC said it had investments of about $1bn which could be affected.

Royal Bank of Scotland said it could potentially lose about £400m ($601m) if all its investments had to be written off.

The French bank, Natixis, a subsidiary of Caisse d'Epargne and Banque Populaire, said it could potentially lose up to 450m euros (£402m; $605m).

One of the world's biggest investment groups, Man, said it had invested about $360m through its RMF institutional fund of funds business, representing 0.5% of its total funds

'Systemic failure'

Meanwhile, some of the biggest private losers seem to have been members of the Palm Beach country club, where many of Mr Madoff's wealthy clients were recruited.
According to some reports, the list of prominent victims include a New Jersey Senator, the owners of the New York Mets and the charities run by film director Stephen Spielberg and Nobel Prize winning writer Elie Wiesel.

Mrs Horlick said 9% of Bramdean's own funds were invested with Mr Madoff, but that even if the money was written off, the fund involved would be down just 4%.

"I just want to make it clear to investors that even after this, they would have done extremely well, relative to anything else they could have invested in," she said.

In a statement, Bramdean said: "The allegations made appear to point to a systemic failure of the regulatory and securities markets regime in the US."

However, some argued that the fund managers should themselves have done more.

"City figures cannot call for light touch regulation yet at the same time complain that regulators missed risks that the industry failed to spot," said Simon Morris, a partner with City law firm CMS Cameron McKenna.
"It's the unequivocal job of the fund manager to check out the bona fides of whoever they chose to pass their customers' money onto," he said.

Antonio Borges, chairman of the Hedge Fund Standards Board, said the scandal highlighted the need for "robust governance practices and oversight via independent boards, which will challenge management procedures and behaviour".

Meanwhile one of the City's watchdogs, the Serious Fraud Office (SFO) called on whistleblowers to come forward with evidence of corporate wrongdoing in the wake of the credit crunch.

The Serious Fraud Office said it wanted workers, former staff and shareholders to step up with information over suspected fraud in the current financial turmoil.

Director Richard Alderman said: "Our objective is to ensure that we can bring offenders to justice as quickly as possible."

High returns promised

US prosecutors say Mr Madoff, a former head of the Nasdaq stock market, masterminded a fraud of massive proportions through his hedge fund and investment advisory business.

Mr Madoff is alleged to have used money from new investors to pay off existing investors in the fund.

A federal judge has appointed a receiver to oversee Mr Madoff firm's assets and customer accounts, while the 70-year-old banker has been released on $10m bail.

Mr Madoff founded Bernard L Madoff Investment Securities in 1960, but also ran a separate hedge fund business.

According to the US Attorney's criminal complaint filed in court, Mr Madoff told at least three employees on Wednesday that the hedge fund business - which served up to 25 clients and had $17.1bn under management - was a fraud and had been insolvent for years.

He said he was "finished", that he had "absolutely nothing" and "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.
If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m.

For all those who are interested in the economic news..... yet another reason why the government should step in, in order to control this greedy capitalistic bleedout.
ah yes... Only in America can someone smile at you and leave you penniless.
Scott Free
Quote: Originally Posted by TyrView Post

"Meanwhile, some of the biggest private losers seem to have been members of the Palm Beach country club, where many of Mr Madoff's wealthy clients were recruited.
According to some reports, the list of prominent victims include a New Jersey Senator, the owners of the New York Mets ..."

lmao,... my heart bleeds for them.. it really does...

Greedy f**ks.

Too bad about the charities though.
Quote: Originally Posted by TyrView Post

ah yes... Only in America can someone smile at you and leave you penniless.

Yep, leave it to the yankees to screw everyone else...
There may be a problem with our bankers. Why they don't reach out for help before they ruin the reputations of the fine institutions that our forfathers defeated the Nazis to preserve is beyond me.
Quote: Originally Posted by darkbeaverView Post

There may be a problem with our bankers. Why they don't reach out for help before they ruin the reputations of the fine institutions that our forfathers defeated the Nazis to preserve is beyond me.

...and I thought we beat the Nazi's to avoid tyranny.
..He said he was "finished", that he had "absolutely nothing" and "it's all just one big lie", and that it was "basically, a giant Ponzi scheme", the complaint said.
If found guilty, US prosecutors say he could face up to 20 years in prison and a fine of up to $5m""

Oh, dear. Not another Ponzi scheme..........It does seem the whole world is a freakin Ponzi scheme, does it not?

Twenty years, well, hard to do.(*if he does it) 5m......chump change, probably.

But, hey; he's had a lot of fun.

Godam it boys'll be boys. Where's yer cents of humour.??

Trot the little ****er out and shoot him, no?

One giant Ponzi scheme and the Obama Illusion (external - login to view)
(external - login to view)
Donald Hunt & Simon Davies
Mon, 15 Dec 2008 19:53 UTC

The big news this week was the sudden exposure of a massive $50 billion Ponzi Scheme run it seems singlehandedly by Bernard Madoff a prominent New York Zionist, financier and philanthropist. The exposure is somewhat surreal while the resulting financial waves seem likely to hit, so we are told, many of the leading names in banking together with many of the most wealthy individuals in the US. There is certainly ample reason to believe that there is much more to the story than meets the eye.

In the same week the surreal dominated the news with US Treasuries briefly touching negative interest rates, the US automaker bailout descending into political farce, Marc Dreier the highly successful New York lawyer is caught trying to con hedge funds out of $380 million and Obama's team talk of which nations the US will leave to collapse in 2009. Of course silence echoes through the corridors of power in relation to the Israeli perpetrated holocaust in Palestine.

Bernard Madoff and his Ponzi Scheme

The story of the week, and no doubt for months to come, is the exposure of Bernard Lawrence Madoff and his $50 billion 'Ponzi' scheme. Just how one goes about losing $50 billion is intriguing, we've been looking for ways to make that sort of money for a long time, it looks as if Bernie Madoff had found the answer - get people to give it to you then "lose" it.

The scheme was incredibly simple; Madoff owned and ran a legitimate New York securities brokerage, he made a name for himself pioneering electronic trading and became a pillar of the financial community, he was a political donor, advisor to the Securities and Exchange Commission and noted philanthropist. This gave him his front from which he established and ran what amounted to an unincorporated hedge fund. He attracted investors because he presented an aura of success, of wealth, of confidence and of being an insider; all the classic attributes that draw people like moths to a flame.

These are in fact that same attributes that make the entire investment market work. In admitting that his investment advisory business was a Ponzi Scheme (external - login to view) Bernie Madoff was at least more honest that anybody else on Wall Street today. The entire market is a Ponzi Scheme.

Bernie Madoff founded Bernard L. Madoff Investment Securities LLC in 1960. He pioneered electronic trading growing his firm to be one of the principle developers of the NASDAQ (National Association of Securities Dealers Automated Quotations) exchange where he served as chairman of the Board of Directors and on its Board of Governors

Bernard L. Madoff Investment Securities LLC (external - login to view) website presents the company as "a leading international market maker" with an "uninterrupted record of growth" and capital of $700 million ranking it in the" top 1% of US Securities firms". The key is said to be the firm's "sophisticated proprietary automation and unparalleled client service delivers an enhanced execution that is virtually unmatched in our industry" enabling deal execution in seconds at fine pricing. The firms big selling point is its "highly automated clearing and settlement systems" which interface with all the major custodian, clearing and settlement systems. The firm stresses that, "Madoff Securities' computerized transaction processing means that the firm can customize client reports and deliver them electronically in whatever format best meets the needs of clients."

This is where things get interesting as all these computational resources seem to have been dedicated solely to the brokerage and remained entirely separate from the investment advisory operation. The investment advisory operation was essentially a hedge fund but reporst vary as to whether there were in fact properly constituted hedge funds or a series of individual client accounts purportedly inside Bernard L. Madoff Investment Securities LLC. However, while on adjacent floors, the offices of the brokerage and the offices of investment advisory were not physically connected. The impression given in news reports is that investment advisory had a very small staff which did not know or mix with the brokerage staff.

Madoff was clearly a very shrewd operator. He generated consistent returns of around 12 percent per annum, highly attractive but not so crazy as to attract attention, and he had a reputation for paying out whenever investors sought to redeem. It is reported that a number of major investors as well as regulators audited his firm and found nothing amiss. In a classic move of the con-man, Madoff was notoriously hard to see in recent years, only accepting business via other funds with a close existing relationship. He is also reputed to have turned many people down who wished to invest through him. These are all techniques of charlatans since time immemorial.

There were warnings for those with eyes to see. Despite being a pioneer of electronic trading, Madoff refused to provide clients online access to their accounts.

"This was extremely secretive (external - login to view), even for the non-transparent world of hedge funds," said Jake Walthour Jr., head of advisory services for Aksia, a New York consulting firm that advised clients not to invest in Madoff's funds. "It was all done almost in fortress fashion to prevent anyone from knowing what was going on."

The Bramdean hedge fun of Nicola Horlick, the UK 'superwoman' financier whose reputed lack of charm but shrewd money sense is often commented upon, invested through a third party fund having never even met Madoff.

Much of the talk in New York focuses on the losses of numerous Jewish charities. What is not yet clear is whether these charities actually invested with Madoff or whether the investments were in fact donations from Madoff to the charities concerned. The latter seems to be the case; this would have enabled Madoff to seem like a generous benefactor when in reality he was donating non-existent securities, the only requirement being that he have enough cash to pay out the annual income attributed to the imaginary securities, thereby maintaining the illusion.

A substantial list of investors (external - login to view) who are said to have "lost everything" is available. This seems remarkable because the nature of these investments and the client lists of managers like Bernie Madoff are extremely confidential. The presence of so many wealthy and particularly Jewish names makes us highly suspicious for it ties in just too conveniently with the Obama phenomena.

In his seminal work on psychopaths and the pathology that they create in political systems, Political Ponerology (external - login to view), Andrew Lobazewski explains a stage in the pathology of the psychopathic nation state, which the US most certainly is, the "dissimulative phase".
Anyone studying this phenomenon... is reminded rather of the dissimulative state of phase of a patient attempting to play the role of a normal person, hiding the pathological reality although he continues to be sick or abnormal. Let us therefore use the term "the dissimulative phase of pathocracy" for the state of affairs wherein a pathocratic system ever more skillfully plays the role of a normal sociopolitical system. In this state, people become resistant and adapt themselves to the situation within a country affected by this phenomenon; outside, however, this phase is marked by outstanding ponerogenic activity.

Meanwhile, in the pathocratic country, the active structure of government rests in the hands of psychopathic individuals, and essential psychopathy plays a starring role. Especially during the dissimulative phase. "
The US would certainly seem to fit the bill. After a period of demonstrably psychopathic behaviour during the Bush presidency we are being treated to the illusion that everything has returned to normal with the election of Obama. It seems that the sudden exposure of Bernard Madoff's Ponzi scheme is part of this illusion; a strategic ploy seeking to convince us that many of the obvious beneficiaries of the insanity of the last 30 years of capitalism are also victims of the financial crisis.

Bernard Madoff is supposed to have pulled off years of financial fraud almost singlehandedly when in reality it would have taken a substantial staff. In the absence of finding his support staff there will be ample reason for speculation as to just who Bernie Madoff worked for and where the money went. Already it is being suggested that he was a Mossad front and that the Obama team are taking real action against the Israel lobby.

We are inclined to speculate slightly differently. It is quite possible and indeed likely that as a wealthy and influential New York Zionist Bernard Madoff has connections with Mossad. It follows that Mossad may have benefited from his Ponzi scheme and may even have provided the resources for him to carry it out for so long. If these speculations are in fact correct then the exposure of Bernard Madoff is part of the same operation; it is, in intelligence parlance, a "limited hang out", designed to deceive.

Such a scenario fits with the "dissimulative phase" of a pathocratic country. There is little doubt that the team Obama is surrounding himself with is as psychopathic as the Bush team and has the same domestic and global agenda. They are seeking to present a normal face to the people of the US while the evidence that they are continuing with the same foreign policy is overwhelming. If Obama and his team had one single ounce of "change" about them, Israel would find itself isolated and pilloried for the holocaust it is perpetrating in Gaza. That it is not points towards the Madoff affair as being far more than it seems and that Israel remains firmly in control in the US.
Quote: Originally Posted by TyrView Post

...and I thought we beat the Nazi's to avoid tyranny.

Where did you get that simple idea? We fought the second world war to preserve our way of life, usury or "debt slavery" for the illinformed. Fascism was successfully transferred to the west where it was safe from the Bolshevik hordes. Tyranny lives long live tyranny. Do the patriotic thing, sign up for the great adventure, we must save the world from the Islamic hordes sweeping accross the globe burning and looting as they go. Soon they will land hundreds of thousands of blood thirsty killers on our shores disguised as shepherds and oil potentates. Buy War Bonds Amedinejad must be stopped before he reaches the gates of Rome.
One of the smartest guys I know in the whole world got suckered last year,

Corporate social responsibility storyteller Billie Mintz (external - login to view) of Artists Raising Consciousness made a movie called The Ponzi Scheme (external - login to view) last year after he got swindled by an American conman.

Billie is one of the smartest guys I know and to think he was suckered makes me believe it could happen to anyone.
Now we can see why the efforts to increase Globalization was being pushed by the monied few. It broadens their field of victims in money schemes. This guy even evaded detection by the regulators because he had his own printing and billing system set up in a back room. Probably not much of a paper trail either. What will happen to him? He has money and the US system of justice is multi-tiered. He'll probably be sent home with an ankle bracelet on to write "I will not commit frauds anymore" a thousand times. If it wasn't for family members discovering this scheme and turning him in, he'd still be out doing this.

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