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Madoff's Firm: All In The Family
We told you earlier that the niece of Bernard Madoff -- who's accused of running a "$50 billion ponzi scheme" through his investment firm -- is married to a former top SEC compliance official who had been involved in two reviews of Madoff's firm. And that Madoff bragged about the family connection last year.
But it's worth piecing together the extent of what we know about the cozy web of family ties that may have allowed Madoff to escape scrutiny for so long.
CNBC reports that the compliance department of Bernard Madoff's firm is run by Bernard Madoff's brother Peter, and by Bernard Madoff's niece, Shana Madoff Swanson, who's married to the former SEC official, Eric Swanson. That team appears to also include Bernard Madoff's son, Mark Madoff, who the Wall Street Journal last week identified as the firm's senior managing director and chief compliance officer.
The Journal added that Bernard Madoff's other son, Andrew Madoff is the firm's director of trading.
And it looks like Mark Madoff and the former SEC official, Eric Swanson, were at least acquainted with each other before Swanson married Mark Madoff's cousin Shana, and, just as important, before Swanson had left the SEC. Here's a picture of Mark Madoff and Eric Swanson appearing together on a 2006 panel organized by the Securities Traders Association. Swanson is identified as being with the SEC at the time.
It's also worth noting that Eric Swanson and Shana Madoff met through their work in that industry trade association, according to Eric Swanson's current employer. (That spokesman also said that when Swanson participated in an SEC review of Madoff's firm in 2004, he and Shana Madoff were not in a relationship. They married in 2007.)
And to cap things off, the Journal today reports that investigators are looking into the role that Bernard Madoff's wife, Ruth, may have played in the alleged scam.
It looks like the all-in-the-family nature of Madoff's business could have helped him pull off the alleged fraud -- at least before his sons fully wised up and decided to tell their lawyer.
Madoff, a former Nasdaq chair, is scheduled for a bond hearing at 2pm today.
Josh
Zachary
Sure makes you wonder what went on at NASDAQ when Bernie was chairman.
How can his children claim ignorance of the scheme if the investment arm of Madoff was supposed to be running all of its trades through Madoff's brokerage firm?
Didn't the kids notice the volume of trading was a little on the low side for a multi-billion dollar fund? Low as in non-existent, btw.
I have no sympathy for any of the investors who made money year in and year out with Madoff despite any change in market conditions. I know they all assumed Madoff was discreetly trading on inside information.
(For an interesting sidetrip, visit madden.com at the wayback machine.)
December 16, 2008 2:19 PM | Reply | Permalink
Mrs. Panstreppon, I don't share the schadenfreude. The victims of Madoff's scam were not just rich fat-cat 'fuck you I got mine' Republicans.
For one, the Innocence Project had funds invested with Madoff (indirectly, I believe).
heard a story on NPR this AM about a couple who had lost the 'modest', million-dollar nest egg representing their entire life's savings. A million bucks sounds like a lot but for retired folks, it's not unreasonable to expect to have that much in the bank when one retires after a lifetime of saving, investing and pensions.
Madoff scammed some individuals unworthy of compassion, sure; but not all of them were unsympathetic. Indirect victims will be those who benefitted from charitable donations by those who were wealthy until this week.
If I fault these people for anything, it's for not diversifying. I don't care how good the returns are, you don't put all your eggs in one basket and you certainly don't put your eggs in a hedge fund in retirement!
December 16, 2008 5:23 PM | Reply | Permalink
The Jewish community has also been devastated by this. Non-profits are closing or losing millions, which will result in jobs cut across the board. This is horrible on all levels.
December 16, 2008 7:01 PM | Reply | Permalink
I have no sympathy for the non-profits and individuals who invested money they couldn't afford to lose in an unregulated hedge fund.
They knowingly and willingly accepted a higher rate of risk in exchange for the prospect of a higher return.
December 16, 2008 11:53 PM | Reply | Permalink
I wonder how Bernie's investments fared in the fall of 2001.
Madoff website post-9/11:
Sophisticated Disaster Recovery Facilities, Reflects the Attention to Every Detail
Madoff Securities has one of the most sophisticated disaster recovery facilities found anywhere in the securities industry. In addition to its offices in Manhattan, Madoff Securities maintains a fully equipped and staffed facility located near LaGuardia Airport. This office duplicates all of the features of the primary Madoff Securities offices. Madoff Securities' disaster recovery facility is not just an alternative trading room, but rather a full-fledged office which is equipped to receive and transact orders and to handle the clearing and settlement process as well.
Under the supervision of a facilities manager, this unique on-line facility is tested continuously to ensure that it is prepared to take over the firm's operations if any kind of disaster were to affect the Manhattan office. Members of the firm's staff are rotated through the facility and regularly perform their work from it. Thus, there is always staff on hand in case disaster strikes at the firm's main office.
The disaster recovery facility is on a different electric power grid than the main office, and it is served by a different telephone central office. The facility also has its own electrical generator.
Since this facility was created in 1992, it has been used as an adjunct to Madoff Securities' main office, and it has not been confronted with a major emergency. But the existence of this facility testifies to the high priority the firm places on being available to meet the needs of its clients under all conditions."
December 16, 2008 2:24 PM | Reply | Permalink
All that money just "fell off a truck" (while the GOP has the dumbed-down American people believing that the Unions and the union bosses are crooks..I didn't care if Hoffa was a crook..as long as he signed my paycheck and I made livable wage) Hope they all go to prison....the family that cheats together....should all get to wear one-piece orange jumpsuits for at least twenty years..together
December 16, 2008 2:58 PM | Reply | Permalink