by Allan Dodds Frank Info
Allan Dodds Frank is a business investigative correspondent who specializes in white collar crime stories. He also is the former president of the Overseas Press Club of America, one of the many journalism organizations that protests the arrests of journalists abroad and repression of freedom of speech.
Days after the suicide of Mark Madoff, on the second anniversary of his father's arrest, the screws are tightening on Bernie's surviving son Andrew—and Mark's estate. Allan Dodds Frank on the Ponzi case's latest twists.
In the criminal and civil investigations of the biggest Ponzi scheme ever, the searchlights never blink. And now, more than ever, Andrew Madoff, the 44-year-old younger brother of Mark Madoff, who killed himself on Saturday, will be a key focus.
One look at the bankruptcy trustee's complaint against the Madoff brothers makes it clear that from a legal point of view, they might as well be twins. No doubt prosecutors from the U.S. Attorney's Office in Manhattan have been seeing the duo as one, and possible joint co-defendants, since the brothers turned in their father, Bernie, to the FBI on Dec. 10, 2008, and asserted their lack of knowledge about the Ponzi scheme that funded the family businesses.
The Madoff brothers shared titles and alleged responsibilities at Bernard L. Madoff Investment Securities in New York and were directors of the separately incorporated Madoff operation in London. Mark Madoff was the trustee of Andrew's children's trust funds and vice versa. Mark was a University of Michigan graduate; Andrew a Wharton School-University of Pennsylvania man.
But as a family friend told The New York Times, "Andy was always tougher than Mark."
And, on advice of counsel, neither one has apparently talked to their father or their mother Ruth in two years. Andrew still will not see or talk to his father any time soon, as the Bureau of Prisons already has decided that Bernard Madoff will not be allowed to take a furlough from the 150-year sentence he is serving at federal prison in Butner, North Carolina, for his son Mark's funeral.
While bankruptcy trustee Irving Picard said in a statement: "This is a tragic development and my sympathy goes out to Mark Madoff's family," it was hardly an apology. His counsel, David Sheehan, from Baker & Hostetler, also confirmed to The Daily Beast: "The trustee will move forward with all the litigation that has been filed, including the litigation in which Mark Madoff is named."
In other words, Mark Madoff's estate will now be a party to all the legal action.
The job of the bankruptcy trustee, in his pursuit of Madoff money, is to be implacable, unblinking, undeterred, and totally determined. In the case of the Madoff brothers, the trustee's legal papers say each brother got about $60 million from the family enterprises and their parents that was stolen from investors.
Gallery: Madoff Family Photos
Andrew Madoff (Photo: Newscom)
• Allan Dodds Frank: Mark Madoff’s Agony • Frank: Madoff’s Devilish Female Partner in Crime • Complete coverage of Mark Madoff For the Madoff brothers, seeing Bernie's trusted assistants Annette Bongiorno and JoAnn Crupi indicted recently and stuck in jail, unable to raise $5 million in bail money, must have been unsettling. The federal prosecutors have long been after the two women to cut plea deals and testify about what the brothers may have known about all sorts of fraud, not just the $60 billion Ponzi, and to detail what they did in the way of falsifying documents to fund the seven accounts each brother had.
Frank DiPascali Jr., whom Bernie put in charge of making all the fake trading activity look real, also has been cooperating fully with prosecutors for months and may already have sunk the Madoff brothers, as well as Bernie's brother Peter and his daughter Shana, who was a "compliance officer" at the firm.
Prosecutors also will be scrutinizing allegations made by the trustee that the brothers engaged in all sorts of other crimes that include security fraud and tax fraud and making up fake backdated stock trades worth millions of dollars in Big Board securities including Dell Computer, Lucent Technologies, and Microsoft.
The trustee says in his complaint: "Between 2001 and 2008, Andrew was paid $31,105,505 in salary and bonus. His compensation included bonuses of over $4.8 million in 2006, and over $9 million in 2007, alone. Beyond this amount, in a proof of claim filed with this Court, Andrew seeks an additional $40,624,525 in deferred compensation. Although the Trustee has discovered self-serving documents, created by Andrew, stating that he is owed over $9.5 million in deferred compensation as of March 2008, there is no evidence that anywhere near this level of compensation was, in fact, deferred. At any rate, in documents filed in connection with Andrew's divorce proceeding, he disclosed that his unpaid deferred compensation was only $52,173."
Of the two brothers, Andrew seemed to be emotionally stronger. Last year, Andrew allegedly punched a disgruntled former Madoff employee named Reed Abend in the nose when Abend confronted him on the street. And the Associated Press reported after Mark's suicide: "A person who had recent contact with Mark Madoff, speaking on condition of anonymity because of the sensitivity of the case, said Sunday that Andrew Madoff, a cancer survivor, has occupied himself by helping his fiancee in a business venture. 'He's been doing much better than his brother,' over the past two years, the person said of Andrew Madoff."
The brothers particularly enjoyed deep sea fishing with their father off Montauk and in other exotic locales. Andrew took a tremendous interest in fly fishing, buying a venerated fishing reel company called Abel Reel Co. His wife, Deborah, filed for divorce the day after her father-in-law was arrested, and Andrew is reportedly living with Catherine Hooper, who was affiliated with the Urban Angler, an upscale Fifth Avenue fly fishing store in which Andrew Madoff also took an ownership stake.
Since Madoff senior's arrest, Andrew has disengaged his financial interests from those fishing ventures. Both he and Mark had agreements with the bankruptcy trustee not to dissipate or try to move assets.
"The trustee will move forward with all the litigation that has been filed, including the litigation in which Mark Madoff is named."
According to the trustee's accounting: "In 2003, the $12,000 down payment on Andrew's boat was paid with a check issued by one of the BLMIS operating accounts;
• In 2002, BLMIS paid $68,900 to the Beacon Point Marine in Connecticut where, on information and belief, Andrew kept the boat paid for, in part, by BLMIS;
• In 2001 and 2002, BLMIS funds were used to pay $75,000 to 'Lock and Hackle,' a fly fishing and hunting membership club in Miami, Florida on Andrew's behalf;
• Between 2002 and 2008, BLMIS funds were used to pay for $813,287 in personal expenses charged to Andrew's American Express card such as clothes, boat rentals, and vacation travel for his wife and daughters."
Still Andrew Madoff and Hooper apparently have been trying to make a go of a family disaster counseling business called Black Umbrella, according to a recent profile in The New York Times.
While that may sound a little odd, it may have been more realistic than Mark Madoff's efforts to find work. The Wall Street Journal and others have reported that Mark still held out hope that he could someday once again be employed in a Wall Street job. One person involved with the case was incredulous about how that might have pushed Mark Madoff to suicide, telling The Daily Beast: "He was apparently just beginning to realize that he was unemployable."
Allan Dodds Frank is a business investigative correspondent who specializes in white collar crime stories. He also is the former president of the Overseas Press Club of America, one of the many journalism organizations that protests the arrests of journalists abroad and repression of freedom of speech.
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These boys must have had the IQ of a bowling bowl not to realize what's happening with the family business working 20 years at the trading desk. Either that, or they're crooks. I'm guessing the latter.
If I were Mark, I'd change my name to something more popular like John Wilkes Booth, Pontius Pilate or Henirich Himmler. No one is ever going to name their kid "Madoff" again.
If you were Mark you'd be dead, so not much point in changing your name.
I like money but I don't "love" it. And...no amount of money can repair the trouble this family is enduring. They may live well but they are certainly not living a good life.
Ironic, given the other miscreants who brought the US economy down to its pathetic knees (not just a bunch of rich careless investors as in the case of Madoff) are living high on the hog and taking some "time off" in the Hamptons. Rich peoples ire at being ripped-off leads to more consequence than main street ire at being royally you know what for no fault of their own. Even the one's who are caught, like Dick Fuld, seem to be doing relatively OK. Proves yet again that justice in this country is not money blind.
That is the biggest Ponzi scheme ever.
dhampton - s Because so many individuauls and charities were destroyed financially, the Madoffs are pariahs in their own community. The men lost the close-know family life they enjoyed, all living and working together. I doubt they know, but who knows? They've lost their lives, the only lives they knew. Everything the believed has proven to be false. They betrayed their friends and their community, however inadvertantly they might have done so. Bernie destroyed their lives.
I like money, too -- but I don't steal it from other people. I'm so sad for these sons -- no matter what, they were following that very powerful father. Stupid or thoughtless? Yep. Naive? Maybe. Devoted? I'm putting my money on that.
It really doesn't matter what their motivation, knowledge or competence was prior to two years ago when the scheme became public. We may never know. What we absolutely do know though is that since then the brothers and other relatives and former employees who received outsize comp, loans or proceeds from accounts have fought aggressively to keep all that illegally obtained money, spending a good portion of it on high priced lawyers to defend the lifestyle they never earned. That speaks to their character and lack of morals or ethics unequivocally, regardless of their participation in their father's scheme. They may have been shaped by their sociopathic father but eventually they have to take responsibility for their own actions. It is telling in the end that Mark allegedly believed he couldn't "support" his family despite holding on to tens-of-millions in assets, maintaining luxury residences, etc. He could have given back 90% of what he held onto, sold the luxury homes and still lived a life at least as good as the average American and never worked another day in his life. Yet his expectations were so twisted by the wealthy paid for by the scheme that the idea of a "normal" life was worse that death.
God's Wrath is being visited upon the Madoff's. What they did is really no different from what the "legitimate" banksters, Rubin, Summers, Geithner, the men and women of GS, ML, Morgan, JP Morgan, Fannie, Freddie, AIG, etc. have been doing for decades now. Of course the Fed doesn't bail out operations like the Madoff's; too small. And they didn't bail out Lehman. But well, can't make an omlette without some eggs being broken. George Patton
"What they did is really no different from what the 'legitimate' banksters, Rubin, Summers, Geithner, the men and women of GS, ML, Morgan, JP Morgan, Fannie, Freddie, AIG, etc. have been doing for decades now." I am certainly no fan of the "legitimate" bankers, but this is an utterly ridiculous statement.
How many lives will the Madoff's end up ruining? A few thousand. The "recession" which Wall Street caused has meant that about 8 million plus people lost their jobs. Since the "recovery" began, about a million jobs have been restored. That's quite a deficit. Many of the unemployed ( and U6 is running just shy of 20 percent) will never work again. I repeat: What the Madoff's did is really do different from what the "legitimate" banksters did, and continue to do. George Patton
We just gave this family of terrorists a huge tax break. Waterboard the lot of them.
What huge tax break? You couldn't possibly be talking about what the President and Congress are debating since there is no "break" involved as it still preserves a much higher tax rate for upper income and is exactly the same as the current rate. Besides that tax rate is more relevant to upper-middle class people in major high cost markets than to the rich like the Madoff relatives. They have most of their wealth protected in investment gains and LLC's, all of which get much lower tax rates than ordinary income and were not even on the table for change during or before the current bill floating around Washington. Which is why the Fortune 500 have an effective tax rate almost half as much as the upper-middle-class who are hit by the highest ordinary income tax rate and AMT. If your goal is the "tax the rich" some more, you need to focus on capital gains and corporate tax rates and loopholes (like the ability for rich investors to hide gains by "reinvesting" them back into their funds but then take no interest loans from those investments). And if your goal is "social justice" or some "fair" distribution of taxes, start by recognizing that 50% of taxpayers end up netting $0 federal payment and 40% get refunds in excess of payments, which means that tax dollars are flowing straight from those 1-in-2 who really pay taxes through to these people's personal wallets without contributing at all to federal expenses. So effectively a big part of our tax system is a straight up alternative form of welfare, operating on top of any other federal or state welfare programs. Why not make taxes really go toward expenses or debt?
citi - Excellent post: You're exactly on tartge in identifying "upper-middle class people in major high cost markets" as the true losers in our tax schemes. Even without increasing their rate of taxes, these people get the butt end of everything - no help with child care, no grants, confiscatory tax rates....it's a shame we do this to our most productive citizens. And, at the same time, I read day after day about how the "common man" gets screwed. I don't remember when all of this class hatred got started, but it's the exact opposite of the aspirational vision of setting goals and reaching them that I remember not so long ago. People are posting about the "aristocracy" in our country when none exists and while I know many many people who earn quite a bit, not a single one of them grew up with wealth. Good educations, hard work and incredible luck is what they all have in common. I hope this is a temporary situation, this loathing of success and desire to punish. People seem to have lost sight of the fact that most of us are still captains of our own fate
tax break..............as in Rangel?
Even if he didn't know what Pops was up to, which I doubt, everything he has was bought with stolen people's money. The fact he is fighting to hold onto it tells you something right there.
Or people's stolen money?
I think we have a bunch of criminals and gangsters running the show at the elite levels in this country, expecially with Wall Street and the big corporations whose only purose is to extract as much money as possible from the lower orders to enrich themselves.
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