Not everyone was fooled by Madoff

[eridani]

http://www.truthout.org/122708D

Barron's: You once took a pass on investing in Bernie Madoff's fund. What troubled you?

Jim Hedges: I went in 1997 to meet Madoff, and spent two hours with him in his offices. His manner with me was wildly outside the traditional rapport I have had with managers and the kinds of access I have had to managers. I was told it was unusual for him to meet with anyone for that length of time, and that he was perturbed with the process. His whole tone during the meeting was curt, truncated, and he volunteered nothing. It was an extraction process to get him to answer anything. He was distracted the whole time, looking at people out on the trading floor through the glass wall of his office. Mind you, I was coming in to potentially invest billions of dollars for prominent families and institutions, representing extraordinarily well-known clientele. I couldn't be more the type of person for whom you would open up the kimono. And what it told me was that it was a fraud, full-stop. It was wildly impressionable on me. I have said over the years to many people: Do not touch Madoff with a barge pole.

Q: What didn't you like in that initial interview?

A: We have a due-diligence questionnaire that we use as a template for any investment. It's substantial, about 40 pages of factors we have to get comfortable with. It covers management's trading strategy, the back office, the pricing mechanism for the portfolio, how the manager is compensated, the checks and balances, and governance issues, and a whole host of other factors. We could barely get past page one with Madoff before alarm bells were going off. On the strategy itself, when I asked him to explain his investing strategy, it didn't line up. His strategy was like Long Term Capital Management, where you're saying you're going to sweep up pennies and nickels around the globe via arbitrage opportunities. His representation that he was going to get free money gains from the marketplace, without a principal risk, didn't make sense. One of the most important things in any fund investment is having realistic expectations. The client and manager buy into the same expectations. I looked at the return pattern that was offered, and my immediate reaction was it was too good to be true because of its predictable consistency. I saw no correlation between the strategy and how he delivered returns. I felt that the returns looked like what I and others have coined as "manufactured." In good times and bad times to have this consistent, narrow band of returns is not reality.

[formercia]

1. Madoff probe focuses on tax havens

http://www.guardian.co.uk/business/2008/dec/28/bernard-madoff-fraud-investigation-offshore

Madoff probe focuses on tax havens

* James Doran in New York
* The Observer, Sunday 28 December 2008
* Article history

The hunt for funds allegedly cheated out of investors by Bernard Madoff, who faces fraud charges in New York, has turned to offshore tax havens where investigators believe he may have salted away hundreds of millions of dollars.

Stephen Harbeck, chief executive of America's Securities Investor Protection Corporation (Sipc) and official receiver of Madoff's now defunct brokerage business, said the hunt for funds was likely to spread all over the world. "We will trace funds wherever the trail goes," he said on the steps of the US Bankruptcy Court for the Southern District of New York.

Sources close to the investigation said forensic accountants examining Madoff's books believed he had regularly sent large sums of money to offshore accounts in the Caribbean and Europe. "There are accounts at New York Mellon Bank that we have been looking at that appear to have sent and received money from offshore locations," a senior source said. Tracking down the money investors entrusted to Madoff is likely to be one of the longest and most complicated financial investigations on record.





* James Doran in New York
* The Observer, Sunday 28 December 2008
* Article history

The hunt for funds allegedly cheated out of investors by Bernard Madoff, who faces fraud charges in New York, has turned to offshore tax havens where investigators believe he may have salted away hundreds of millions of dollars.

Stephen Harbeck, chief executive of America's Securities Investor Protection Corporation (Sipc) and official receiver of Madoff's now defunct brokerage business, said the hunt for funds was likely to spread all over the world. "We will trace funds wherever the trail goes," he said on the steps of the US Bankruptcy Court for the Southern District of New York.

Sources close to the investigation said forensic accountants examining Madoff's books believed he had regularly sent large sums of money to offshore accounts in the Caribbean and Europe. "There are accounts at New York Mellon Bank that we have been looking at that appear to have sent and received money from offshore locations," a senior source said. Tracking down the money investors entrusted to Madoff is likely to be one of the longest and most complicated financial investigations on record.

--snip--

[JohnyCanuck]

5. A bit more on the Caribbean connection

From the Barbados Nation News:

Regional link to Madoff
Published on: 12/28/08.

by TONY BEST

"THERE IS BOUND TO BE a Caribbean link to the Madoff affair."

That prediction by a Wall Street analyst a few days after the US$50 billion fraudulent Ponzi scheme masterminded by Bernard Madoff made headlines around the world has become a fact of life.

So far, two Caribbean countries, the Caymans and US Virgin Islands, are known to have suffered losses as a result of Madoff's scheme which has hurt banks, families, educational institutions, investment funds and individuals around the world.

The largest known loser in the Caribbean is M-Invest Limited, an offshore company in the Cayman Islands that has been hit for hundreds of millions of dollars, maybe as much as US$700 million belonging to private investors who had originally placed their money in an elite private Swiss Bank, Union Bancaire Privée.

SNIP

M-Invest, regulated by the Cayman Islands Monetary Authority, was used by UBP to do two things. First, it enabled the private Swiss bank to put at least US$500 million and as much as US$700 million into Madoff's company in New York. Secondly, the Caribbean entity gave UBP a cozy financial arrangement with Madoff, so much so that M-Invest and UBP were able to get access to financial assessments and other insights into Madoff's business that others were routinely denied.

http://www.nationnews.com/story/293426899540621.php

[ChairmanAgnostic]

2. LOL. An educated, careful investment experts runs into Madoff,

and, Voila! this is the result.

For those earn free money fast folks, even the charities, who were foolish enough to put ALL their eggs, yolks, shells, and even birds in one basket, sorry, they were warned REPEATEDLY not to do that.

[Lasher]

3. Fund managers get paid boatloads of money so as to recruit & retain highly competent people.

Oftentimes the strategy doesn't work.

K & R

[elleng]

4. This is AMAZING

in its simplicity, folks!

[formercia]

6. Guarantee a steady 17% return

and the suckers trip over each other to dump their money at your door.