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J. Ezra Merkin to give up control over hedge funds
Financier and philanthropist J. Ezra Merkin assented Tuesday to step down as manager of his hedge funds and to place them into receivership.
The step was demanded by New York Attorney General Andrew Cuomo, who brought civil charges against Merkin last month, accusing him of fraudulent concealment and misrepresentation for steering his clients’ money to Bernard Madoff without their knowledge or permission.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)Merkin, the former chairman of GMAC and the scion of a prominent Jewish family, funneled $2.4 billion into Bernard Madoff Investment Securities, including millions from prominent institutions like Yeshiva University.
Some of his investors, including New York University, New York Law School and Mort Zuckerman’s charitable trust, have brought suit against him, as has the trustee liquidating Madoff’s firm.
The agreement, announced Tuesday in New York State Supreme Court, means that Merkin will no longer control his three hedge funds, Ascot, Gabriel and Ariel, from which he reportedly collected more than $470 million in fees over the last decade.
“Mr. Merkin is working closely with the New York Attorney General,” his attorney, Andrew Levander, said in a statement, adding that Merkin had agreed in principle to appoint Guidepost Partners as receivers for the funds while he remains available to consult regarding the wind-down.
Justice Richard Lowe gave Cuomo and Merkin until May 28 to finalize the agreement.
Despite his legal and financial woes, the Jewish Week reported that Merkin is the frontrunner expected to be elected chairman Wednesday of the tony Fifth Avenue Synagogue, which his father helped found.
Nobel Laureate Elie Wiesel, who lost most of the funds of his humanitarian foundation, as well as his personal savings, after investing with Madoff, will become one of two honorary chairmen.
Despite consternation in some quarters, the Jewish Week said that Merkin has not been publicly opposed, perhaps because he has been one of the synagogue’s primary benefactors.
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This post is tagged with: , Andrew Cuomo, Ariel, Ascot, Bernard Madoff Investment Securities, Elie Wiesel, Fifth Avenue Synagogue, Gabriel, GMAC, J. Ezra Merkin, Madoff, Mort Zuckerman, New York University, Recent StoriesRead related stories: Madoff · Recent Stories
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Spitzer’s mood darkens during state testimonyMay 21, 2009 at 9:48am
Two sides of former New York Gov. Eliot Spitzer’s personality are revealed in recently released transcripts of two interviews he gave on the same subject under oath last year.
NY Fed’s Stephen Friedman resigns over ties to Goldman
His nickname at Goldman Sachs was “Mr. Inside,” and for decades, Stephen Friedman’s extensive contacts and expertise made him a go-to player on Wall Street.
But it was precisely that web of connections that raised conflict-of-interest issues in his latest job as non-executive chairman of the powerful Federal Reserve Bank of New York.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)Friedman, 71, resigned from the post Thursday amid questions about his continuing ties to Goldman Sachs, which were first raised in a Wall Street Journal story Monday.
“Although I have been in compliance with the rules, my public service motivated continuation on the Reserve Bank Board is being mischaracterized as improper,” he wrote in a letter to New York Fed President William Dudley. “The Federal Reserve System has important work to do and does not need this distraction.”
In its story, the Journal had disclosed that Friedman was allowed to lead the New York Fed and remain a Goldman director and shareholder, in violation of Fed policy because of Goldman’s new status as a bank holding company. The New York Fed sought a one-year waiver of that rule, which was granted by the Federal Reserve board in Washington in January.
While the waiver was under consideration, in December, Friedman bought 37,300 more Goldman shares, the paper reported. He also bought more shares the day after the waiver came through. The purchases, which gave him a $3 million paper gain, were disclosed in Securities and Exchange Commission filings.
Friedman originally told the Journal that his role at the New York Fed wasn’t a policy-making one and that he saw “no conflict whatsoever in owning shares” of Goldman.
He noted that when he became an economic adviser to former President George W. Bush, he had had to sell nearly all his investments, in a process he described as “very costly and a difficult thing to manage.”
A longtime star of the financial world, Friedman had worked as an investment banker, a private-equity executive and an economic adviser to the president.
The bulk of his career, however, was spent at Goldman Sachs, where he held numerous executive roles. He was the company’s co-chief operating officer from 1987 to 1990, co-chairman, along with his longtime friend Robert E. Rubin, from 1990 to 1992, and the sole chairman from 1992 to 1994; he still serves as a director.
Admired for his intelligence and low-key style, Friedman has a welter of relationships in the philanthropic world as well. He is chairman emeritus of the board of Columbia University, where he attended law school, chairman emeritus of the executive committee of the Brookings Institution, and a member of the Council on Foreign Relations.
Out of work, he is said to be an avid chess player and wrestler. A wrestling center at his alma mater, Cornell University, bears his name. His son David Benioff, wrote the screenplay for The Kite Runner and X-Men Origins: Wolverine and is married to actress Amanda Peet. His brother, Richard, is a constitutional law scholar at the University of Michigan.
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This post is tagged with: Business, Columbia University, David Benioff, Federal Reserve Bank of New York, Goldman Sachs Group, Recent Stories, Robert E. Rubin, Stephen FriedmanRead related stories: Business · Recent Stories0 Comments
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Dave Bing, political neophyte, will be Detroit’s oldest mayorMay 10, 2009 at 12:42pm
When pro basketball hall-of-famer Dave Bing was elected May 5 as Detroit’s third mayor in less than a year, a voter turnout of just 14 percent showed they’d prefer a duke to an emperor, and age to outrage.
Court-appointed trustee goes after Madoff family’s wealth
It looks like court-appointed Madoff trustee Irving Picard is going after the whole shebang: Not just Bernard Madoff’s Manhattan penthouse and home in the Hamptons, but also a good chunk of the wealth accumulated by his wife, brother and sons.
In his latest filing in U.S. Bankruptcy Court in New York, Picard argues that the convicted swindler used his firm, Bernard L. Madoff Investment Securities (BLMIS), “as his personal piggy bank” to support “a lavish lifestyle” for himself and his wife, as well as for his brother and other members of his family.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)“Madoff used BLMIS to siphon funds which were, in reality, other people’s money, for his personal use and the benefit of his inner circle,” Picard says in the filing submitted Tuesday evening. “Plain and simple, he stole it.”
Picard, who is charged with returning as much money as possible to burned investors, contends that Madoff used money stolen from investors, for instance, to buy country club memberships for himself, his wife and one of his sons.
He also loaned $9 million to his brother, the firm’s chief compliance officer, in 2007, from one of the firm’s accounts, according to the papers. Picard said there is no evidence the loan was ever repaid. Peter Madoff’s wife, Marion, was also listed on the firm’s payroll with a salary of $163,500 in 2008, although there is no indication she did any work.
The firm also gave money to ventures begun by Madoff family members, including $1.7 million to Madoff Energy Holdings LLC, owned by Madoff’s sons Andrew and Mark, and his niece, Shana Madoff, the filing said.
The firm paid out $4.5 million to support Ruth Madoff’s real-estate-related investments through various entities under the name “Sterling,” with no benefit to Madoff’s firm or his customers, according to the papers.
Madoff placed his boat captain, his maid and his house-sitter in Florida on the firm’s payroll, and used the firm to provided corporate credit cards to his son’s wife and brother’s wife, even though they didn’t work for him, according to the filing.
More than $11.5 million was used to buy two yachts for the Madoff family, the filing said. Another $4.4 million appears to have been used by Andrew Madoff last October to purchase an Upper East Side apartment, while $6.5 million was loaned to Mark Madoff and his wife, Stephanie, last spring to purchase property on Nantucket, again with no evidence that any money was repaid.
Bernard Madoff, 71, was arrested Dec. 11 and pleaded guilty March 12 to running a $65-billion Ponzi scheme in which early investors were paid with the money of new clients. He is in jail, awaiting sentencing, and faces as much as 150 years in prison for various counts of securities fraud and other crimes.
Picard made the allegations in connection with his attempt to consolidate the bankruptcy proceedings of Madoff’s companies with those filed against Madoff by a group of investors.
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This post is tagged with: Andrew Madoff, Bernard L. Madoff Investment Securities, Bernard Madoff, Irving Picard, Madoff, Madoff Energy Holdings LLC, Mark Madoff, Peter Madoff, Recent Stories, Ruth Madoff, Shana MadoffRead related stories: Madoff · Recent Stories0 Comments
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Judge rejects hardship plea from ex-Detroit mayorMay 8, 2009 at 6:36pm
Convicted felon and former Detroit mayor Kwame M. Kilpatrick today lost a hardship bid to reduce $6,000 in monthly restitution payments to the city for his crimes.
Citigroup, Goldman Sachs recruit lawmakers’ ex-aides
Lavishing lawmakers with six-figure campaign donations is not the only way banks and investment houses influence the legislative process.
They also hire the top aides of those lawmakers, who can trade on relationships with their old bosses to pick up the phone and, say, arrange an impromptu session with Harry Reid, the Senate majority leader, or Chris Dodd, chairman of the Senate Banking Committee.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)In the past year, top bailout recipients, including Goldman Sachs Group and Citigroup, have dispatched dozens of former congressional staffers and ex-government officials to lobby their former bosses on the financial rescue package, Mother Jones reports.
Besides one-time aides to Democratic and Republican leaders, the magazine found that many of the lobbyists hired by financial institutions are ex-employees of congressional committees on banking, finance, and commerce, former Treasury officials and in one case, a top aide to Rahm Emanuel, now the White House chief of staff.
Goldman Sachs, which has more than 30 ex-government officials working as registered lobbyists on staff, also tapped one-time House Majority Leader Richard Gephardt (D-Mo.) to represent its interests on issues related to the Treasury Department’s Troubled Assets Relief Program.
Other insiders lobbying for Goldman Sachs include Faryar Shirzad, a former top economic aide to President George W. Bush and also Republican counsel to the Senate Finance Committee; as well as former SEC commissioner Richard Y. Roberts, now a principal at lobby firm RR&G LLC.
Citigroup, which spent nearly $8 million on lobbying in 2008, is particularly adept at recruiting government insiders.
Leading its huge in-house staff is Nicholas E. Calio, senior vice president of global government affairs, who worked for both George H.W. Bush and George W. Bush as assistant to the president for legislative affairs assistant.
James “Jimmy” Ryan, former senior counsel to Majority Leader Reid, is another heavy hitter on the Democratic side. Ryan accompanied CEO Vikram Pandit to a recent meeting with Reid – although the senator’s spokesman Jim Manley discounted the notion that Pandit received any special treatment.
Another star on the Democratic side is Robert Getzoff, a vice president for federal government affairs who until 2007 served as senior counsel to then-Rep. Rahm Emanuel.
“To the best of our knowledge there has not been direct contact between Getzoff and Rahm in several months,” an Emanuel aide told Mother Jones.
Other in-house lobbyists include Robert Schellhas, a chief of staff to former Rep. Rob Portman, a Republican from Ohio, and Michael P. Andrews, formerly of the U.S. Commodity Futures Trading Commission
Besides its own staff, the banking giant has also hired more than a half-dozen lobbying firms, who themselves depend on hiring veterans of the legislative and executive branches.
Robert Cogorno, a Citigroup lobbyist who works for Elmendorf Strategies, is a former Gephardt aide and one-time floor director for Steny Hoyer (D-Md.), the No. 2 House Democrat.
(Cogorno also lobbies for Goldman Sachs, as does his boss, Steven Elmendorf, Gephardt’s former chief of staff.) A Hoyer spokeswoman told Mother Jones that Cogorno has not lobbied the House majority leader on banking matters.
Also on Citigroup’s lobbying team is DC attorney Robert Barnett, a former chairman of the Federal Deposit Insurance Corporation (FDIC).
Another new addition to Citigroup’s forces is DC Navigators, which registered in January to lobby for the bank on TARP issues. Handling the account is Cesar Conda, former Vice President Dick Cheney’s domestic policy chief.
Under current lobbying rules, lobbyists are only required to disclose if they lobby the House, the Senate, or the executive branch, and, in general terms, which bills or issue areas they lobbied on. They don’t have to identify the legislators or aides they contacted, or what they discussed with lawmakers.
The Honest Leadership and Open Government Act of 2007 strengthens some limitations on aides-turned-lobbyists, but former congressional staffers still need only wait a year before returning to the Hill to lobby their former bosses and colleagues.
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This post is tagged with: Cesar Conda, Chris Dodd, Faryar Shirzad, Goldman Sachs Group, Harry Reid, Jimmy Ryan, Lobbying, Michael P. Andrews, Nicholas E. Calio, Rahm Emanuel, Recent Stories, Richard Gephardt, Richard Y. Roberts, Robert Barnett, Robert Cogorno, Robert Getzoff, Robert Schellhas, Vikram PanditRead related stories: Lobbying · Recent Stories1 Comments
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America must curb its obvious threat that allows politicians and now their staffs to rope off the areas that permit them to be first at the till of taxpayers taken hostages.
Like the preferred beneficiaries of the United States Taxpayer Trust fund rather than elected representatives, it is what caused the first American revolution, and there is no reason to suspect that humanity is not capable of creating the conditions that necessitate another.
Term limits and lobbying limits may be the only cure for this egotistical affliction.
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Bush’s homeland security team hangs out shinglesApril 17, 2009 at 7:44am
Nearly every top member of the Bush Administration’s homeland security team has gone through the revolving door and re-emerged as a private consultant, where they can be expected to make big bucks off their expertise and contacts.
Former NY Rep. Vito Fossella pleads guilty to DUI
Vito Fossella, the former GOP congressman from Staten Island, NY, pleaded guilty to a drunk driving charge in a Virginia court Monday, in a change of heart which his lawyer said was prompted in part by the drunk driving death of a Major League Baseball player last week.
Fossella was pulled over after running a red light on May 1, 2008, and subsequently charged with driving while drunk. The arrest led to revelations that the married father-of-three had had a fourth child with a longterm girlfriend in suburban Virginia.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)Although he had been convicted in October, Fossella, 43, had been appealing that decision on the basis that he said police had used a faulty breath-test machine.
But his attorney Barry Pollack told the Associated Press that attempts to obtain information about the breath-test machine were unsuccessful. And then Fossella had a change of heart, he said, after the death last Thursday of Nick Adenhart, a 22-year old pitcher with the Los Angeles Angels, whose car was hit by a suspected drunk driver.
“With that in the news, Mr. Fossella thought it particularly appropriate for him to acknowledge his own wrongdoing and not to fight over the issue of the accuracy of the reading in this particular case,” Pollack said. “The fact of the matter is, he had something to drink.”
Fossella entered a guilty plea today in Alexandria District Court. He has four days remaining on the five-day sentence issued in December and will serve them beginning this Friday over two weekends in Alexandria. He was given credit for the day he served when he was arrested.
Fossella was the only Republican member of the New York City congressional delegation before he stepped down at the end of his term, on Jan. 3, 2009. Democrat Michael McMahon won the seat last November against another Republican.
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Citigroup, Goldman Sachs recruit former Congressional aides to gain accessApril 15, 2009 at 12:52pm
In the past year, top bailout recipients including Goldman Sachs and Citigroup have dispatched dozens of former congressional staffers and ex-government officials to lobby their former bosses on the financial rescue package.
Murtha seeks earmarks for PMA clients; Visclosky steers clear
Consider it a tale of two congressmen in the crosshairs.
One, Pennsylvania Democrat John P. Murtha, proudly embraces his ‘King of Earmarks’ nickname, and has requested dozens of new earmarks for 2010, including millions for former clients of the PMA Group, which shut its doors last month in the fallout over a federal probe into campaign finance irregularities. The lobby firm, which was founded by a former Murtha aide, had donated millions to Murtha’s campaigns.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)The other, Indiana Democrat Peter J. Visclosky, another longtime ally of the PMA Group, released his earmark list late last week without a single request for a former PMA client. Visclosky also announced that he is returning donations from the defunct lobby firm – although so far, he has given away $18,000, just a fraction of the $369,750 he collected from the firm and its clients in 2007 and 2008, according to the New York Times.
The names of both lawmakers have repeatedly come up since the FBI raided the PMA Group’s offices last November, apparently on suspicions that founder Paul Magliocchetti had funneled donations to lawmakers through straw donors to circumvent campaign finance laws. The Justice Department has declined comment on its investigation of the firm. which specialized in winning earmarks and government contracts for clients such as Boeing, Lockheed Martin and MTS Technologies.
Murtha, a 76-year-old former Marine, chairman of the House Appropriations Committee and PMA’s best-known ally, insists he is not a target and that he has not hired a lawyer.
“I don’t have a clue what it’s all about,” he told the Pittsburgh Post-Gazette last month.
What Murtha says he does know is that without earmarks, “Johnstown [PA] would have been like Detroit is today. We would have been a ghost town.” At another point, he declared: “If I’m corrupt, it’s because I take care of my district.”
To that end, he has sought new earmarks for several companies once represented by PMA Group and which are located in his district, including Advanced Acoustic Concepts, Argon ST, MTS Technologies and Mobilvox.
“Every request is properly reviewed and vetted through a lengthy and thorough process,” he said in a note accompanying the entire earmark list.
Visclosky, 59, has taken the opposite tack, steering a wide berth around PMA Group clients, although in the past, he had also earmarked millions for them, and maintained a close bond with a former aide, Richard M. Kaelin, who became a PMA lobbyist. Visclosky is also a member of the Appropriations Committee.
After Murtha, Visclosky had been the No. 2 recipient of campaign contributions from the firm, according to the Center for Responsive Politics.
Sources told the Times that Visclosky was taking steps to prepare for legal scrutiny, including retaining lawyers to review his compliance with campaign finance laws.
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This post is tagged with: Advanced Acoustic Concepts, Argon ST, John Murtha, Lobbying, Mobilvox, MTS Technologies, Paul Magliocchetti, Peter J. Visclosky, PMA Group, Recent Stories, Richard M. KaelinRead related stories: Lobbying · Recent Stories0 Comments
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Commerce Secy Gary Locke is longtime advocate of Boeing, MicrosoftApril 10, 2009 at 8:49am
From the outset of his political career, Commerce Secretary Gary Locke was bullish about business.
Sandy Weill pumps $170M into Weill Cornell Medical College
Sandy Weill isn’t finished yet.
By the time he is done with the latest chapter of his life, which has been devoted to philanthropy, the ‘House that Sandy Built’ may become shorthand for Cornell Medical College, rather than now-teetering Citigroup, the financial supermarket Weill created in 1998 by merging his company, Travelers, with Citicorp.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)The New York Times reports that the 76-year-old billionaire has pledged $170 million to the Weill Cornell Medical College so that the university can proceed with plans to build a new medical research building by 2013.
The philanthropist, who serves as the chairman of the board, is widely credited with helping to turn the college into a world-class medical school since making his first donation in 1998. (The Cornell Daily Sun estimates that Weill, who graduated from Cornell in 1955, has given the university over $720 million, along with his wife, since 1998.)
Weill had arranged to give $250 million to the medical school upon his death. But Cornell’s president, David J. Skorton, apparently convinced him to produce the money now, even if the sum was smaller, when the university was navigating difficult times. The school’s $5.4 billion endowment has lost more than a third of its value since last June and donations are dramatically down.
“The statement we’re trying to make is that this is a really important time to give money, whatever it’s for,” Weill told the Times.
But as the paper also notes, Weill may be trying to burnish an uncertain legacy after the near-collapse of the company he had built into the largest financial institution in the world. The financial supermarket model that he championed has also been widely discredited.
Weill, who stepped down as Citigroup’s chairman nearly three years ago, said he has been disturbed by Citi’s declining fortunes (and his own, as a result), but was focusing his energies on philanthropy.
Besides their donations to Cornell, he and his wife, Joan, have also given large sums to Carnegie Hall, where he is chairman of the board, the Hebrew Home for the Aged and Alvin Ailey American Dance Theater Foundation. Slate Magazine named him the seventh largest charitable donor in America in 2007.
“Legacies are for other people to decide,” Weill told the Times. “But my activities in the not-for-profit center seem to have a lot more staying power than what I accomplished in the for-profit arena.”
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This post is tagged with: Citigroup, Cornell Medical College, Joan Weill, Philanthropy, Recent Stories, Sandy Weill, Weill Cornell Medical CollegeRead related stories: Philanthropy · Recent Stories0 Comments
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Commerce Secy Gary Locke is longtime advocate of Boeing, MicrosoftApril 10, 2009 at 8:49am
From the outset of his political career, Commerce Secretary Gary Locke was bullish about business.
J. Ezra Merkin sued for civil fraud in Madoff probe
J. Ezra Merkin, who steered more than $2 billion of investors’ money into Bernard Madoff Investment Securities – including millions from prominent institutions like Yeshiva University and New York University – was sued Monday for civil fraud.
In a 54-page complaint, New York Attorney General Andrew Cuomo charged the financier, philanthropist and former GMAC chairman with fraudulent concealment and misrepresentation, saying that Merkin steered money to Madoff without his clients’ knowledge or permission.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)The complaint charges that Merkin was not the “investing guru” he claimed to be, but instead a “master marketer,” pocketing hundreds of millions in fees from his investors and failing to disclose his own conflicts of interest. The complaint said he earned an estimated $470 million in fees from his clients for essentially diverting all their funds to Madoff.
“Merkin profited enormously from Madoff’s scheme, reaping huge commissions while investors lost all their money,” Cuomo said.
Merkin began the Ascot fund in 1992 exclusively as “feeder” fund for Madoff, according to the complaint. Ascot grew to hold $1.7 billion from 300 investors by the end of December, 2008 – earning Merkin about $25.5 million a year in fees, the complaint said.
Over 10 percent of the funds came from non-profits, including New York Law School, Bard College, and charitable trusts set up by Holocaust survivor Elie Wiesel and New York Daily News owner Mort Zuckerman. Several of those investors have separately brought suit against Merkin.
Cuomo alleges that in conversations with investors, and in his quarterly reports, Merkin concealed the role Madoff played. In one presentation to a nonprofit investor, for instance, Merkin said that only 15 percent of Ascot was invested with Madoff, the complaint said. In reality, the entire fund was invested with thim.
“Merkin duped individual investors, non-profits, and charities into believing he was responsibly managing their investments, when in actuality he was dumping them into history’s largest Ponzi scheme.” Cuomo said.
Merkin sat on several prominent boards, including those of Carnegie Hall, the UJA-Federation, Yeshiva University and the Fifth Avenue Synagogue. Besides being a chairman of GMAC, the auto lender, he was a director of Cerberus, the private equity company.
The complaint contends that Merkin was aware of red-flags related to Madoff going back at least a decade, but persisted in investing with him nonetheless.
In the early 1990s, Victor Teicher, a money manager who had worked for Merkin, told him not to invest with Madoff because his steady returns were impossible, according to the complaint.
Merkin also allegedly knew of the tiny suburban New York accounting firm, Friehling & Horowitz, with one active accountant, that Madoff used – a red flag to many investors.
In his files, Merkin kept two 2001 news articles questioning Madoff’s returns – one published in Barron’s and one by a hedge fund newsletter called MARHedge, according to the complaint.
Merkin’s lawyer, Andrew Levander, released a prepared statement late yesterday, saying he was disappointed that Cuomo had filed what he called a “hasty and ill-conceived civil lawsuit, against which we intend to defend vigorously.”
Cuomo’s complaint is the second to charge a so-called Madoff feeder fund with fraud. Massachusetts regulators last week charged Fairfield Greenwich Group.
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Murtha seeks earmarks for PMA clients; Visclosky steers clearApril 8, 2009 at 1:41pm
Consider it a tale of two congressmen in the crosshairs.
Holder to drop case against former Alaska Sen. Ted Stevens
The slate will be wiped clean for former Alaska Sen. Ted Stevens.
In the eyes of the law, at least, the man who narrowly lost re-election last fall after he was convicted of failing to report more than $250,000 worth of gifts from a contractor seeking political favors, will be considered innocent.
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MAP HINTS: Boxes with + signs can be expanded by doubleclicking. Solid lines are current relations. Dotted lines are former relations. For more options, right-click on a box or click on the map tools to the left. (Requires Flash)The decision to ask the judge to void the conviction was made by U.S. Attorney General Eric Holder, after a new prosecution team discovered a previously undocumented interview with the star witness, William Allen, which sharply contradicted his most dramatic testimony in the four-week trial. The information had never been turned over to the defense, the Justice Department said in its motion to void the conviction.
“After careful review, I have concluded that certain information should have been provided to the defense for use at trial,” Holder said in a statement this morning. “In light of this conclusion, and in consideration of the totality of the circumstances of this particular case, I have determined that it is in the interest of justice to dismiss the indictment and not proceed with a new trial.”
The government is seeking dismissal of the charges “with prejudice,” meaning that they cannot be filed again.
The case against Stevens had been plagued by allegations of prosecutorial misconduct. Following his October conviction, an FBI special agent in Anchorage alleged that the lead female agent had had an “inappropriate relationship” with Allen, the chairman of defunct oil-field services company, Veco Corp., who was also the star witness against Stevens. The whistleblower also contended that prosecutors had withheld important information from the defense.
In February, U.S. District Court Judge Emmet G. Sullivan held four prosecutors in contempt, including DOJ Public Integrity Section Chief William Welch, for failing to produce documents relating to the agent’s claims.
At that point, the government appointed a new team, led by Paul O’Brien, chief of the Narcotics an Dangerous Drugs Section, whose group substantiated several of the allegations.
Stevens, who is 85, said in a prepared statement that he felt vindicated, but complained it had come too late to save his political career.
“I am grateful that the new team of responsible prosecutors at the Department of Justice has acknowledged that I did not receive a fair trial and has dismissed all the charges against me,” he said.
But he added: “It is unfortunate that an election was affected by proceedings now recognized as unfair. It was my great honor to serve the State of Alaska in the United States Senate for 40 years.”
Stevens lost his re-election bid to the former Anchorage mayor, Democrat Mark Begich a little more than a week after his conviction. Since then, his lawyers have filed several motions to dismiss the original indictment or to have a judge grant him a new trial.
While the attorney general’s decision doesn’t exactly exonerate Stevens, it shifts the focus to government misconduct.
“When you think of Ted Stevens, there will always be a little asterisk,” Sarah Binder, an expert on Congress at the Brookings Institution told NPR. “But this gives you a little pause to think that, in the end, there were allegations that the government couldn’t get it together to prove.”
Others noted the irony of a Democratic attorney general effectively voiding the conviction of a longtime Republican lawmaker.
Sen. Sheldon Whitehouse (D-R.I.), a fierce critic of the Bush Justice Department and a former U.S. attorney, noted that if Republicans wanted to complain that the Justice Department had wrongly cost them a Senate seat, they should recall that it was Bush’s Justice Department which brought the case.
Holder’s decision comes as a big blow to the Public Integrity Section of the Justice Department, which is responsible for conducting investigations into corrupt lawmakers. Stevens’ conviction was the unit’s biggest win in more than decade. Now that conviction will be tossed out, and prosecutors and FBI agents involved in the case are being investigated themselves.
Holder, himself a former prosecutor and judge, noted that the department’s Office of Professional Responsibility was conducting a review of the first etam’s conduct, raising the possibility that the prosecutors themselves could now face ethics charges.
Judge Sullivan ordered a hearing for April 7 on the government’s motion.
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We are all Keynesians now – but especially Paul KrugmanApril 3, 2009 at 11:20am
Economist Paul Krugman, who describes John Maynard Keynes as his “economic idol,” may be the right man at the right time. But supporters of Barack Obama certainly hope not.
Is the noose tightening around Peter Madoff?
Peter B. Madoff, the younger brother and business partner of convicted felon Bernard Madoff, is under increasing scrutiny from investigators, as well as victims of the $65 billion investor fraud.
The latest indication of the younger Madoff’s possible exposure comes from the report of one investor, who said that he withdrew a small sum entrusted to Bernard Madoff in July 1985, and received a $10,000 check drawn on the older Madoff’s bank account – but signed by Peter Madoff.
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The timing could prove crucial. In his guilty plea, Bernard Madoff stated that he had begun the fraud in the early 1990s “to the best of my recollection.” Authorities, however, date the scheme to the early 1980s, although they have not publicly revealed any evidence.
John R. Wing, a lawyer for Peter Madoff, 63, has said his client, who was the firm’s senior managing partner and chief compliance officer, had no knowledge of the fraud and has not been charged with any wrongdoing.
But yesterday, a New York State Supreme Court Justice Stephen A. Bucaria, sitting in Nassau County, imposed a temporary asset freeze on Peter Madoff’s accounts at the request of a law student from Dix Hills, NY. The law student, Andrew Ross Samuels, had been the beneficiary of a college trust fund, which was entirely lost to Madoff’s Ponzi scheme.
The freeze prohibits Peter Madoff from moving money from any bank, brokerage firm or other financial institution or from selling or borrowing against his physical assets. It also requires him to disclose the location of any assets he has “secreted” so far, and directs any financial institution to take “reasonable precautions” to ensure that he complies with the order.
Steven R. Schlesinger, a lawyer for Samuels, said that his client was the beneficiary of a $478,000 fund set up in 1997 by Samuel’s grandfather, Martin J. Joel Jr. and Peter Madoff as the trustees.
When Joel died in 2003, Peter Madoff became the sole trustee, and the entire fund was invested with Bernard L. Madoff Investment Securities, according to Schlesinger.
Besides investing the trust fund in what turned out to be a Ponzi scheme, Peter Madoff also did not notify Samuels that he could have terminated the trust in 2007, when he turned 21, the complaint says.
The lawsuit is at least the second brought against Peter Madoff since his brother’s arrest.
Last month, two children of N.J. Senator Frank Lautenberg filed an action against the younger Madoff, saying that as the firm’s senior managing partner and chief compliance officer, he either failed to spot “obvious, material red flags” of fraud, or covered them up.
The Lautenbergs, who had invested a family philanthropy as well as individual savings with Madoff’s firm, say they lost $7 million as a result of the scheme.
Peter Madoff joined his brother’s firm in 1970 after completing law school, and together they helped pioneer the computer-driven trading methods that culminated in the development of the electronic trading network known as the Nasdaq market.
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The common thread amongst Madoff, Standford and Charles Ponzi is (i) they all offered returns to investors that was higher than the competition’s and was seemingly too good to be true, (ii) they had outsized reputations for business acument and (iii) they “looked the part”. Corporate swindlers succeed within Corporate America because they have what is known as “executive presence” and they prey on corporations’ penchant for looking only at the surface of things. If a group of innercity kids can figure this out then I know adults can. To learn more go to http://www.newyorkshockexchange.com/content/view/85/37/
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Ruth Madoff got $2M from husband’s UK officeMarch 27, 2009 at 2:05pm
British investigators said Friday that Ruth Madoff got a $2 million payment from the London division of her husband’s securities firm just weeks before he was arrested for securities fraud.
Feds to go after Ruth Madoff’s money too
Ruth Madoff will not get any breaks: Federal authorities plan to go after more than $100 million in real estate, cash, art, autos, boats and other property owned by her and her husband Bernard Madoff, who pleaded guilty last week to running the largest Ponzi scheme in history.
The government said in a court filing Sunday that it intends to seize all the assets, including the Madoffs’ Upper East Side penthouse, which is in Ruth Madoff’s name, as well as their homes in Montauk, New York, Palm Beach, Florida, and France, whose combined worth has been put at $22 million.
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Madoff, 70, pleaded guilty March 12 to defrauding investors of as much as $65 billion and faces 150 years in prison. His attorneys filed a request with the U.S. Court of Appeals in New York that he be freed until his sentencing June 16.
The government’s “notice of intent to seek forfeiture” is not a seizure, but rather, alerts U.S. District Judge Denny Chin and the Madoffs that prosecutors intend to go after the possessions.
Lawyers for the Madoffs have previously argued that Ruth Madoff is the rightful owner of $69 million worth of cash and bonds, in addition to the Manhattan apartment, which they say are “unrelated” to her husband’s fraud.
To date, she has not been accused of any wrongdoing. However, her withdrawal of $15 million from a brokerage account a short time before her husband was arrested has increased the suspicion that she knew something of her husband’s crimes.
According to court documents filed Friday, the Madoffs had nearly a billion dollars in personal wealth at the end of last year which is now being eyed by defrauded investors trying to recoup the money they lost in Madoff’s scam.
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The Judicial system is missing the boat on this one. There is a deal that should be made with Madoff.
http://pacificgatepost.blogspot.com/2009/03/deal-to-make-with-madoff.html
The objective is NOT revenge, but Restitution and Reconstruction.
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Henry Kravis is at the door, knocking politelyMarch 18, 2009 at 9:17am
Buyout king Henry Kravis has been humbled, if only slightly.
Charges against Madoff leave many unanswered questions
Barring a change of heart, Bernard L. Madoff will plead guilty tomorrow to running a massive Ponzi scheme for at least a quarter century that defrauded thousands of people in virtually every corner of the globe.
Based on 11 charges unveiled for the first time last night, the disgraced financier would face a maximum sentence of 150 years in jail, and required restitution and fines of as much as $170 billion. That is the amount prosecutors believe moved through his accounts during the years he conducted the fraud, although there is no indication that Madoff has anywhere close to that sum.
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Lev L. Dassin, the acting United States attorney in Manhattan, said Tuesday that his staff was still unraveling the fraud to determine who besides Madoff might have helped.
“The filing of these charges does not end the matter,” Dassin said in a statement.
Dassin said he has made no agreement to seek leniency in return for Madoff’s guilty plea or his cooperation in the investigation.
The prosecutor’s release of charges offered some fresh information about how they believe Madoff conducted his scam. For starters, they up the total pricetag from his $50-billion estimate to nearly $65 billion – the amount that thousands of customers believed they had in their accounts at the time of his arrest.
And they date the fraud to as far back as the early 1980s, when they allege that Madoff assembled an ill-trained and inexperienced clerical staff, directed them to “generate false and fraudulent documents,” told lies and supplied phony records to regulators and shuffled hundreds of millions of dollars from bank to bank to create the illusion of active trading, according to the criminal information.
For the first time, they disclose that some investors were treated differently – a select group were offered returns as high as 45 percent, according to the criminal information
And they raise questions about the supposed separation between Madoff’s 17th-floor investment operation and the supposedly legitimate wholesale stock trading operation that his sons ran. Prosecutors charge that from at least 2002 through 2008, more than $250 million from investors in the Ponzi scheme was transferred into the operations of those other businesses.
They also allege that Madoff transferred money from his firm’s London office “to purchase property and services for the personal use and benefit” of himself, his family members and associates.
Madoff has been free on $10 million bail, but confined to his apartment, since his arrest in December. It is not clear whether the government will seek to have his bail revoked if he pleads guilty on Thursday.
The charges against him include securities fraud, investment adviser fraud, mail fraud, wire fraud, three counts of money laundering, false statements, perjury, false filings with the U.S. Securities and Exchange Commission, and theft from an employee benefit plan.
Even if Madoff pleads guilty as expected, the judge said he will not be sentenced for several months.
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Harvard Law ensconced at 1600 Pennsylvania Ave.March 12, 2009 at 11:55am
To save on travel expenses, the Harvard Law School Class of 1991 might as well have its reunion this year at the White House.
Eli Broad still mulls saving newspapers
Is Eli Broad considering another run at the Los Angeles Times?
The billionaire philanthropist told a New York gathering Monday that he’d still like to rescue the paper, owned by the bankrupt Tribune Company.
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Back in 2007, Broad had expressed interest in buying the Los Angeles paper – before real-estate magnate Sam Zell took the entire company private in an $8-billion deal that loaded the company with debt.
“I’ve regained my sanity since then,” Broad joked, but added: “I would like to see our foundation and others join together to own the LA Times.”
Like most American newspapers, the Los Angeles Times has struggled with steep advertising declines and a migration of readers to the Internet. Since its parent company filed for bankruptcy several months ago, the paper has made ever more draconian cuts.
Broad’s background is in home building and insurance. He sold SunAmerica, a provider of retirement products, to AIG in 1999 for $18 billion. In recent years, he and his wife have devoted themselves to philanthropy, including revitalizing downtown Los Angeles, bankrolling modern art collections and improving K-12 public education.
Recently, they pledged $100 million to create a new medical institute dedicated to human genome research, to be run by Harvard and the Massachusetts Institute of Technology.
Still, Broad said he didn’t pretend to know how to make the Times profitable again. “No one has figured out a good business model as of yet,” he said.
Reducing profit expectations might be one solution, he said. “Newspapers ought to be owned by foundations, not look for great financial returns.”
And he suggested that while the Times might not survive as a national newspaper, it could partner with other papers like the Washington Post to produce national stories.
Broad pointed to Britain’s Guardian as one business model. That paper is owned by the Scott Trust Limited, a nonprofit foundation which was created in 1936 to protect the legacy of longstanding editor and former owner, C.P. Scott.
“If several foundations are involved, there is likely to be journalistic freedom,” Broad said.
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Harvard Law ensconced at 1600 Pennsylvania Ave.March 12, 2009 at 11:55am
To save on travel expenses, the Harvard Law School Class of 1991 might as well have its reunion this year at the White House.
Chas Freeman withdraws name for Intel chief
Veteran diplomat Chas W. Freeman Jr. has removed himself from consideration to head the National Intelligence Council as a result of criticism of his remarks about Israel and his entanglements with Saudi Arabia and China.
His withdrawal came hours after National Intelligence Director Dennis Blair had defended his qualifications to a Senate intelligence panel. Lawmakers have no power to reject him, but all seven Republicans on the panel had sent a letter to Blair expressing concerns about Freeman’s experience and objectivity.
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Sen. Chuck Schumer, a New York Democrat, released a statement late Tuesday that also seemed to take credit for getting the White House to “reject” Freeman’s appointment.
“Charles Freeman was the wrong guy for this position,” Schumer said. “His statements against Israel were way over the top and severely out of step with the administration. I repeatedly urged the White House to reject him, and I am glad they did the right thing.”
The chairman of the National Intelligence Council is responsible for producing the National Intelligence Estimate – the classified document given to the president and senior intelligence officials that analyzes threats to U.S. security.
Freeman, 66, would have brought his experience as a former ambassador to Saudi Arabia, a former assistant defense secretary and a China expert who served as principal translator for the late Richard Nixon on his groundbreaking 1972 trip.
Opposition to his appointment centered on his outspoken criticisms of Israel’s handling of the Palestinian conflict and his harsh analysis of the Bush administration’s foreign policy. He had also enraged human rights advocates with his defense of the Chinese government’s crackdown on dissidents in Tiananmen Square in 1989.
Freeman has headed the Middle East Policy Council, which critics have called “a mouthpiece for Saudi Arabia” because of its funding from the Saudi royal family. His role on a board for the Chinese National Offshore Oil Corporation, which has a $16-billion agreement to develop a gas field in Iran, also raised questions.
The inspector general for the national intelligence director agreed last week to examine Freeman’s foreign ties. At the time, Blair said the inquiry would put questions about him to rest.
Blair’s office said he had not sought White House approval for the appointment, which did not require Senate approval.
Freeman put out his own statement last night, saying he made the decision to withdraw after concluding “the barrage of libelous distortions of my record would not cease upon my entry into office.”
He also took a swipe at the Israel lobby which he blamed for the campaign against him.
“The libels on me and their easily traceable email trails show conclusively that there is a powerful lobby determined to prevent any view other than its own from being aired, still less to factor in American understanding of trends and events in the Middle East,” he said. “The tactics of the Israel Lobby plumb the depths of dishonor and indecency and include character assassination, selective misquotation, the willful distortion of the record, the fabrication of falsehoods, and an utter disregard for the truth.”
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Harvard Law ensconced at 1600 Pennsylvania Ave.March 12, 2009 at 11:55am
To save on travel expenses, the Harvard Law School Class of 1991 might as well have its reunion this year at the White House.
Madoff aide said to have ordered up fake trading tickets
Fresh details about the alleged billion-dollar Ponzi scheme run by Bernard L. Madoff are emerging as the accused swindler prepares for a possible guilty plea in federal court Thursday.
Annette Bongiorno, a longtime aide to Madoff, allegedly instructed two assistants to create trading tickets, now believed to be bogus, using research of daily share prices for blue-chip stocks, the Wall Street Journal reported today.
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The information comes from two assistants who were interviewed by federal authorities last month through so-called proffer agreements, in which prosecutors agree not to use their statements against them as long as they tell the truth, according to the Journal.
Such fact-gathering doesn’t mean that prosecutors will determine there was any criminal liability. To date, no one save for Madoff has been charged with a crime. The Journal report notes that large-scale fraud investigations often begin with lower-level employees to find out what they knew about the work of their supervisor or other managers, then continue to climb up the ladder
Bongiorno, 60, was once Madoff’s personal secretary and later oversaw some of the firm’s oldest accounts.
The role of another Madoff employee, chief financial officer Frank DiPascali, is also being examined as part of the ongoing probe, the Journal reports.
Bongiorno and DiPascali were longtime neighbors in the Howard Beach neighborhood of Queens, and she is said to have introduced him to Madoff, according to a Bloomberg News report.
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Harvard Law ensconced at 1600 Pennsylvania Ave.March 12, 2009 at 11:55am
To save on travel expenses, the Harvard Law School Class of 1991 might as well have its reunion this year at the White House.
David Simon returns to police beat
He may have left the Baltimore Sun many years ago, but Emmy-Award winning writer David Simon still burns with righteous indignation over the injustices of urban life.
So after learning that an unarmed, 61-year-old man in East Baltimore had been shot to death by a cop Feb. 17, the author of Homicide and The Wire was first stunned, and then outraged to find so little information about it in the local newspaper. Not the name of the cop who used lethal force, not the circumstances under which it happened.
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It didn’t take Simon long to run headlong into a brick wall, though – a new policy by the Baltimore police commissioner to withhold the identities of officers who shoot and kill people.
Needless to say, he was not going to accept that, especially since the policy violated state sunshine laws.
Simon unravels the story himself and finds that the 29-year-old police officer, Traci McKissick, had had a similar episode involving a struggle over her gun in the past. That the officer, who is described as physically diminutive, had drawn her weapon in the passenger seat of a suspect’s car in 2005, and the suspect grabbed for it. In the ensuing struggle, a shot was fired into the rear seat, and eventually the suspect got the weapon and threw it out of the car window.
“And so on Feb. 17, the same officer may have again drawn her weapon only to find herself again at risk of losing the gun. The shooting may be good and legally justified, and perhaps McKissick has sufficient training and is a capable street officer. But in the new world of Baltimore, where officers who take life are no longer named or subject to public scrutiny, who can know?” he wrote.
Simon uses the case – a response to a domestic call gone bad – as a sort of morality tale to explain what it means that cities like Baltimore no longer have vigorous daily news papers.
There is a lot of talk nowadays about what will replace the dinosaur that is the daily newspaper. So-called citizen journalists and bloggers and media pundits have lined up to tell us that newspapers are dying but that the news business will endure, that this moment is less tragic than it is transformational.
Well, sorry, but I didn’t trip over any blogger trying to find out McKissick’s identity and performance history. . . .
I didn’t trip over a herd of hungry Sun reporters either, but that’s the point. In an American city, a police officer with the authority to take human life can now do so in the shadows, while his higher-ups can claim that this is necessary not to avoid public accountability, but to mitigate against a nonexistent wave of threats. And the last remaining daily newspaper in town no longer has the manpower, the expertise or the institutional memory to challenge any of it.
It is a story to make you weep.
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Bailed-out banks are still big political donorsMarch 6, 2009 at 12:16pm
Companies that have been awarded billions of dollars in taxpayers’ money continue to donate large sums to political campaigns.
Ruth Madoff seeks to keep NY penthouse, $62M in assets
The wife of accused swindler Bernard Madoff is arguing that their $7 million Manhattan penthouse and an additional $62 million in assets belong to her.
In court papers filed Monday in U.S. District Court in Manhattan, Ruth Madoff and her lawyer claim that the Upper East Side apartment, $45 million in municipal bonds and $17 million more in a separate account, all belong to her, rather than to her husband, who was charged with a $50 billion scheme to defraud investors.
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The papers were filed in connection with a U.S. District Court judge’s order Monday to partially lift a freeze on Madoff’s assets so that he could cooperate with a court-appointed trustee overseeing the liquidation of his firm to recover money for bilked investors.
To date, the trustee has said the Manhattan penthouse apartment and other properties in Montauk, N.Y. and Palm Beach, FL, which were used to secure Bernard Madoff’s bail, were off limits. But if there’s a conviction, those assets might be seized to help pay victims’ claims.
“We are looking at every member of the Madoff family,” David Sheen, an attorney representing the trustee said regarding the personal property.
Cohmad Securities, where Ruth Madoff says her account holds municipal bonds, had an office in Madoff’s headquarters in midtown Manhattan. The firm was part-owned by Bernard Madoff and has been alleged by the Massachusetts Securities Division to be a “feeder fund” to his investment firm.
Last month, Massachusetts regulators said Ruth Madoff withdrew $15.5 million from Cohmad Securities in November and December, including $10 million on the eve of her husband’s arrest for securities fraud.
She has not been charged with any wrongdoing, however, and is represented by the same attorney as her husband.
Bernard Madoff was arrested Dec. 11 and charged with securities fraud after authorities said that he confessed to his sons that he had carried out a Ponzi scheme for years, using new money from investors to pay off early investors, while issuing bogus statements claiming investment gains. He has been under house arrest in their Manhattan apartment.
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She does not deserve ANY of the money or properties unless she can prove beyond a shadow of doubt that it belongs to her and did not come from her husband or one of his numerous companies, which she probably can’t. of course she is one of the rich so normal rules do not apply.
If I had stolen lets say about $100,000.00 from my bosses and clients, would I be allowed to stay home? no my butt would be in jail so fast..
on the TV today, it was mentioned that Barack Obama is trying to get rid of prosperity… let me tell you prosperity is not 2% of the population making more money than they can EVER spend and the rest of us watching them complain about their lot in life. I am hopeful that his efforts will be successful but even if he fails, at least he tried to do something!! remember the last guy?!? seemed to spend most of his time with his head up his butt, telling everyone that thing were going well….
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FCC pick Genachowski is longtime Obama friend, adviserMarch 4, 2009 at 6:04pm
He is a law school friend of Obama’s and a successful, high-tech entrepreneur who looks to expand broadband service to rural and underserved areas, and to promote an open Internet and diverse media ownership.
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