MYTHS ABOUT MADOFF'S "PONZI SCHEME"

[katty]

more:
http://www.dailykos.com/storyonly/2009/3/18/709990/-MYTHS-ABOUT-MADOFFS-PONZI-SCHEMEBernies-Game-Wasnt-What-They-Told-You-(UPDATED-3X)

MYTHS ABOUT MADOFF'S "PONZI SCHEME" - Bernie's Game Wasn't What They Told You (UPDATED 3X)
by leveymg
Wed Mar 18, 2009 at 06:04:56 AM PDT
Bernie Madoff’s colossal investment fraud is almost everywhere described as a "Ponzi scheme". That echoes the very words Madoff, himself, used to describe it to the FBI agents who arrested him on December 11.

I’ve been running "basically, a giant Ponzi scheme," he told investigators. But, that was quite misleading.

Madoff gives the impression that his scam was a classic, self-contained Ponzi, wherein the first investors see the payouts and later investors are the ones whose capital provides the payouts. In that scheme, Ponzi pockets the proceeds.

But, it didn’t really work that way. Madoff Securities was not designed to rip-off its own customers. Instead, it sustained itself over four decades by an infusion of money from "feeder fund" franchizes, the proceeds of which were methodically diverted into hidden accounts. It was part multi-level marketing, part money-laundering scheme, and part bleed-out fraud designed to provide a cover for conversion of funds that would be used by banks a continent or two away from Madoff’s Manhattan headquarters.

[screembloodymurder]

1. This smells of BCCI.

At the end of GHW Bush's presidency, there was a similar scandal involving BCCI, the mafia and the CIA.

BCCI became the focus in 1991 of one of the largest scandals in world financial history. Due to the massive fraud and corruption at the heart of the bank, it was described as a “$20-billion-plus heist”.<3> Regulators in the United States and the United Kingdom found it to be involved in money laundering, bribery, support of terrorism,<4> arms trafficking, the sale of nuclear technologies, the commission and facilitation of tax evasion, smuggling, illegal immigration, and the illicit purchases of banks and real estate. The bank was found to have at least $13 billion unaccounted for. The bank’s relationship with underworld elements led to the nickname “Bank of Crooks and Criminals International.”

When BCCI went down, Madoff started up.

[katty]

2. yes, i know all about BCCI-a laybrinth of criminal activity

[screembloodymurder]

3. Banks keep records.

Bernie didn't - how convenient.