Posts Tagged ‘Madoff’

A Refreshing New Wall Street Scandal

Wednesday, April 27th, 2011

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(credit: REUTERS/ Shannon Stapleton)

Ah, spring! Baby birds stretch their wings, trees release deadly spores, and Wall Street awakens from its long post-Ponzi slumber. You know, Ponzi. Scheme. Ponzi scheme. Madoff?

This guy.

But we digress. Today’s news is about Raj Rajaratnam, the founder of a successful hedge fund called Galleon Group. He’s been accused of insider trading – this is, unfairly using information from outside sources in order to make a big profit for his company (and himself).

Here’s what you need to know about Bernie and Raj:

  • 1. Madoff has already been tried, convicted, and sent to prison for 150 years. Raj is just on trial – and he’s still innocent until proven guilty. If he is proven guilty, though, he’ll be in the clink with Bernard for up to 25 years.
  • 2. Madoff ran a Ponzi scheme – he collected money from new investors and handed much of it over to existing investors, calling it a return on their investment. In other words, he just moved the money around instead of investing it. It involved a huge network of people, funds, customers, billions of dollars, and many, many handshakes.
  • Galleon Group is accused of insider trading by using a small network of tipsters from different companies. These tipsters [allegedly] shared valuable corporate secrets with Galleon, and Galleon [allegedly] used that information to make a killing on the trading floor. All very fine line behavior.

What would you do if someone gave you valuable information about a potential investment win?

Madoff Clients Sue Owners of the Mets – “They Should Have Known”

Tuesday, February 1st, 2011

“The trustee representing the victims of Bernard L. Madoff’s multibillion dollar Ponzi scheme is seeking hundreds of millions of dollars from the owners of the Mets, alleging that they, as longtime and successful investors, knew or should have known Madoff was operating a fraud, according to two lawyers involved in the case.”

What do you think?

Should the Madoff clients that made money be forced to pay the clients that lost money?

Sale of the century! Own a little piece of Bernie Madoff…

Thursday, December 23rd, 2010

The AP reports that hundreds of Bernard Madoff’s personal items are going up for auction at the Sheraton New York Hotel, courtesy of the U.S. Marshals Service. Madoff is just beginning his 150-year prison sentence for ripping off investors in the biggest Ponzi scheme ever.

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Snatch up those limited-edition monogrammed velveteen slippers before they’re gone! Also available: a 10.5 carat diamond ring owned by Bernie’s wife, Ruth, and a “like-new” Steinway piano. (Thanks, msnbc.com)

Schemer Buys Yacht, Hangs With Celebs, Is Jailed For 50 Years

Wednesday, June 16th, 2010

A prominent Florida lawyer is the latest example of what not to do as an investor, a business person, or a generally moral person.

  • 47 year-old Scott Rothstein was convicted on charges of money laundering, conspiracy to commit bank transfer fraud, and criminal conspiracy related to the financial system.
  • Rothstein managed to buy several houses, cars, and a yacht before he was caught. He also befriended celebrities and politicians, including Arnold Schwarzenegger.
  • Rothstein used new investors’ money to pay off earlier investors, and just like Bernie Madoff’s famous  Ponzi scheme, he left countless investors with immense losses.

Facts & Figures

  • Rothstein’s fraudulent investment scheme was worth more then $1 billion.
  • He was sentenced to 50 years in prison.
  • Rothstein forged the signatures of at least three federal judges.

Best Quote

“This rags-to-riches-to-jail saga is a humbling reminder of what can happen when greed and ambition run amok.”  - Wifredo Ferrer, U.S. Attorney

Bernie Goes From The Penthouse To The Big House

Friday, September 25th, 2009

When something seems too good to be true, it’s probably because it is. Consider this a cautionary tale…

  • Bernard Madoff was sent to jail on March 12th after pleading guilty to one of the biggest fraud scandals in history. Many believe the international attention of Madoff’s fall has worsened our “national crisis of confidence and distrust of the financial system.”
  • His crime: a global, multi-billion dollar Ponzi scheme.
  • The jailing came 3 months after Madoff’s infamous confession of his crime to his sons. Madoff insisted two sons worked for a part of his business that was separate from the Ponzi scheme. Yet the court says they were “one.”

Facts & Figures

  • Madoff faces a maximum 150-year sentence, but will most likely get as little as 20.
  • Many of Madoff’s investors lost all of their money, and one even committed suicide.
  • If he’s sent to a general population prison, his new reality would look like this: a TV in a common area, a ping-pong table, library visits, a rooftop basketball court every other day, and a khaki prison uniform.

Best Quote

“I realized that my arrest and this day would inevitably come.” – Bernard Madoff

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A Ponzi Scheme is…

Friday, May 15th, 2009

A Ponzi scheme (named after Charles Ponzi) is an investment scam that promises investors high returns that aren’t actually real profits. Instead, each time a new investor signs on with the money manager, he uses their new funds to pay the high ‘returns’ to his older clients. Ponzi schemes fall apart because the manager eventually will fail to find new clients or regulators catch on – it’s generally just a matter of when.

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