Madoff, a New York hedge fund manager, was charged with fraud when he confessed to the FBI that he had been running a Ponzi scheme for years with losses that could top $50 billion (U.S.). Madoff was a major contributor to liberal causes, including Planned Parenthood, whose work includes committing hundreds of thousands of abortions yearly in the U.S. alone.
The Madoff scandal further injured the abortion business in Texas when news broke recently that the pro-abortion, billion-dollar Picower Foundation had closed because of the Madoff debacle. Picover had also supported Planned Parenthood, the Centre for Reproductive Rights and the ACLU’s Reproductive Freedom Project. Even in this scandalous situation, a few lucky unborn children may have found a silver lining.
Planned Parenthood lost nearly half a million dollars, the CRR lost $600,000 and the ACLU’s abortion project $200,000 due to their “investments” in Madoff’s alleged pyramid scheme.
A Ponzi scheme is when investors are paid off in interest on their investments with new investors’ money drawn by the possibility of obtaining unbelievable high rates of returns. Madoff knew the game was up when he received $7 billion in redemption requests that he couldn’t meet. There wasn’t enough cash from new investors to repay earlier investors. It was time for Bernard Madoff to call his well-heeled lawyers and head for his $7 million, three-floor penthouse in Manhattan.
Good news for Canadians. The Canadian Pension Plan avoided exposure to the Madoff madness, since its investment board had standards for disclosure that Madoff’s fund did not meet. However, the Wall Street Journal and Associated Press said Canada lost $40 million in the Madoff scam, with Japan the highest among the 15 nations reporting, losing $474 million. The U.S losses are in the billions.
Mutual fund managers don’t hold the assets they’re entrusted with by investors. Madoff Securities, the brokerage unit, initiated trades for Madoff’s investment business, executed the trades and was the sole custodian and administrator of the assets. Madoff cleared his own trades with no external custodian. Unbelievable. What should have made investors suspicious was that Madoff released his own financial statements instead of through a big firm like Fidelity. If there’s big money being made – 12 to 13 per cent on an annual basis, year after year – who’s going to ask any questions?
Why didn’t someone blow the whistle on Madoff? Two people did, but they were totally ignored. New York accountant Harry Markopolos spent the better part of a decade combing through Madoff’s books in an unsuccessful attempt to get the Securities and Exchange Commission to examine the Madoff’s fund’s finances. He even wrote a memo in 2005 to the SEC entitled: “The world’s largest hedge fund is a fraud.” The SEC was sound asleep with the Madoff train going over a cliff. Help!
The other hero was Barron‘s Erin Avedlund, who wrote a book skeptical about Madoff’s operation, calling on financial advisers who questioned how Madoff could routinely produce double-digit returns year after year with no down months. The response? Zip.
Leslie Gornstein, a Hollywood insider, said Madoff was accused of bilking millions from Kevin Bacon, his wife, Kyra Sedgwick, Steven Spielberg and many other Hollywood celebrities. However, no one has announced having to hold an auction to make up for their losses.
Madoff’s office desk held signed cheques totalling $173 million, ready to be sent out to relatives and friends before his arrest. Does Madoff feel bad about what’s happening to him? His friends? Clients? Business associates? Not from what we’ve heard. There was no jail for him. He had to put up $10 million for bail out of his estimated annual income of $75 million. He was said to be too busy packing up $1 million worth of watches, jewellery, cufflinks and a pair of $200 mittens which he mailed in violation of his bail. Oops, sorry about that, judge.
Don’t start to feel bad for Bernard Madoff – there may be a way out of his financial quandary. If Madoff admits the fund has gone broke, the investors get nothing. However, if Madoff admits to fraud, they get their money back as compensation from the U.S. taxpayers’ financial fraud protection scheme. That was the original Charles Ponzi plea tactic. If all fails, I feel there’s a best-selling book to be written by Madoff and an epic TV series and a big budget movie, too. Yes, they say that being convicted of being wicked has its financial bright side, too.