Madoff Was Huge Dem Donor
Posted in: Financial Crisis
Call it the Bonfire of the Sanities. In any other year, the meltdown of Bernard Madoff would be huge news, this week he broke down and confessed to his family and business partners that his investment advising had been a straight up Ponzi scheme.
He was using new money coming in to pay back old money that he owed, and lying about the firm’s holdings. Billions were in his control, as much as 30 billion was invested with him by other funds and advisors. Madoff’s own number? 50 Billion. He was a Master of the Universe.
That’s more than the amount of losses that it took to bring down Bear Stearns. GM lost 39 billion in 2007. These are the kinds of numbers that sink financial institutions. Big names, such as Nicola Horlick were caught. She thought he was good at calling the US equity market, because he got 1% return, every month, year in and year out.
That’s suspicious. Even people who get 30% returns per year, consistently, have really bad months as trades go the wrong way, or profits don’t materialize. Or they just screw up. But she had a lot of company.
The court order from the SEC, which failed to audit his firm several times, alleges that Madoff violated The Investment Adviser’s Act of 1940, by defrauding clients, and the Securites Act of 1933, by using interstate commerce and lying, and the Securities Act of 1934, as amended and not even being original about it. Basically, he lied in his advice, he lied about trades, and his whole business was designed to conceal those lies.
Lee Richards, best known for being the examiner in the Computer Associates examination, has been appointed receiver. Madoff’s assets have been frozen.
According to FBI agent Theodore Cacioppi Madoff said that there is no innocent explanation, all but confessing. Ira Sorkin, who is representing Madoff, is a well respected lawyer with experience in enforcement as well as defense, but the law, the facts, and his clients aren’t doing him any favors here.
Experts in Ponzi scheme representation are representing the victims, saying "the fox was guarding the henhouse." Perhaps having a son-in-law who worked in enforcement at the SEC had something to do with it. It is ironic, in that Madoff’s personal charity was founded to "reverse intermarriage and assimilation" among American Jews.
The judgment was entered at 4:51 Eastern Standard Time on a Friday. Welcome to the weekend.
Madoff’s clients included charities, town pension funds, well known business people. As one of the creators of NASDAQ, he was a name.
Madoff’s claim is that he did this himself, but the court isn’t buying it, and I find it impossible to believe that his director of trading, and youngest son, didn’t know what was up. Who ever heard of a master of the universe who filled out all of his own paper work?
However, the financial scandal is also a political scandal. Starting in this decade Madoff’s giving became radically one directional. In the 1990′s he gave to whoever was local, and to people who regulated the securities industry. Locally, Alphonse D’Amato and Jerrold Nadler were both on his contributions list. But in this decade, he and his youngest son Andrew began lavishing money on the Democratic Party. In all Bernard gave $128,000 to Democrats as a donor, but $100,000 of that came in the last three years to the Democratic Senatorial Campaign Committee. His wife Ruth gave heavily to Hillary Clinton and HILLPAC, their sons gave as well. The recipients? Back in 1999 they were backers of Bill Bradley, but over the long term, the tight cluster of giving was to Ed Markey, Chuck Schumer, and Ron Wyden. Frank Lautenberg got political contributions, and put his and his charity’s money with them. That’s a clear conflict of interest.
The Blagojevich scandal has rocked the Democratic Party, the Madoff giving scandal is next. Already the far corners of the right wing are fuming about liberal zionist conspiracies. Money helped Obama win the nomination and the election. Money drives politics. It is easy when in power to take an benign view of the checks that are rolling in, details like Eric Holder being an Obama bundler are waved off. However, money brings down politicians – even those who are trying to make positive change. Rangel’s effectiveness is going to be dogged by his financial dealings. It elevates men who are more comfortable with the status quo, it taints actions taken. It raises questions about the good faith of any politician to do the right thing, or enough of the right thing, at the right time.
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