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Entries in Ponzi Scheme (23)

Thursday
Dec202012

Peter Madoff Gets 10-Year Sentence for Role in Ponzi Scheme

Rick Maiman/Bloomberg News(NEW YORK) -- Bernie Madoff's younger brother was sentenced Thursday in New York to 10 years in prison for his role in the biggest-ever Ponzi scheme.

Peter Madoff listened as victims of the fraud spoke in court about the damage it had caused; retirees told the judge of their daily struggle to pay the bills after their savings were lost.  

Peter Madoff, 67, served at Bernard L. Madoff Investment Securities as the senior legal counsel and chief compliance officer, according to DealBook, a financial news site published by the New York Times. Madoff the younger pleaded guilty to falsifying records on this brother's behalf, but denied knowing about the Ponzi scheme.

DealBook reports that in a written letter to the court, Peter Madoff's lawyer wrote, "Peter truly believed that his brother was a brilliant securities trader and as a result he encouraged his own family to invest millions of dollars in accounts managed by his brother."

One woman told the judge Thursday that her anger has subsided but she still believes the Madoff brothers and anyone else involved should rot in jail.

DealBook reports that, according to a Madoff bankruptcy trustee, more than $17 billion was lost by the Madoff fraud victims. Just $9.3 billion has been recovered, and only about $3.7 billion has been distributed to victims of the massive swindle.

Copyright 2012 ABC News Radio

Thursday
Aug162012

Hall of Fame Coach Charged with Ponzi Scheme

Brand X Pictures/Thinkstock(ATLANTA) -- College football Hall of Fame coach Jim Donnan has been hit with fraud charges by federal regulators who allege that he and business partner Gregory Crabtree ran an $80 million Ponzi scheme.

According to a complaint filed by the the Securities and Exchange Commission in Atlanta, the two convinced 100 investors that their GLC limited was a wholesale liquidation business that would earn 50 percent to 380 percent returns by buying “leftover” merchandise from retailers and selling them to discount retailers.

The alleged scheme, which began in August 2007, spent just $12 million of the funds raised to purchase discontinued or leftover merchandise. The remainder of the $80 million was used to dupe early investors by providing “fake returns” or “stolen for other uses,” according to a report released Thursday by the SEC.

An attorney for Crabtree did not immediately return ABC News' request for comment. An attorney for Donnan, a former University of Georgia coach and ESPN commentator, did not immediately return our request for comment.

“Donnan and Crabtree convinced investors to pour millions of dollars into a purportedly unique and profitable business with huge potential and little risk,” William P. Hicks, associate director of the SEC, said in a statement. “But they were merely pulling an old page out of the Ponzi scheme playbook, and the clock eventually ran out.”

The alleged scheme, which collapsed in October 2010, allowed Donnan to funnel $7 million from the business. Individual investor losses ranged from a few thousand dollars to about $4 million, Hicks said.

The suit filed at the Northern District of Atlanta court accuses the former coach at Marshall University and the University of Georgia used his celebrity to lure some of his victims.  In one example, Donnan allegedly told a pro football player, “Your Daddy is going to take care of you” … “if you weren’t my son, I wouldn’t be doing this for you.” The player later invested $800,000.

The SEC’s complaint charged Donnan and Crabtree with violations of the anti-fraud and registration provisions of the federal securities laws.  It also names two of Donnan’s children and his son-in-law as relief defendants for the purpose of recovering illicit funds that Donnan allegedly steered to them.

The SEC did not say whether criminal charges would be filed in the case.

Copyright 2012 ABC News Radio

Friday
Jun292012

Peter Madoff Pleads Guilty in Brother Bernie's Scheme

Rick Maiman/Bloomberg News(NEW YORK) -- Peter Madoff, the younger brother of Bernard Madoff, was has pleaded guilty to securities fraud related to his brother's infamous Ponzi scheme and will serve 10 years in prison.

"The Madoff investment empire, built on a foundation of deceit, was a house of cards that grew to skyscraper proportions. As Peter Madoff has admitted today, he was one of the chief architects," FBI Assistant Director Janice Fedarcyk said. "Peter Madoff played an essential enabling role in the largest investment fraud in U.S. history. He made a pretense of compliance; he was really about complicity."

A former Bernard L. Madoff Securities LLC chief compliance officer, the 66-year-old agreed to forfeit $143.1 billion, which represents every penny prosecutors believe passed through the firm during the time of the conspiracy. He helped run the firm for nearly 40 years, since 1965. His older brother Bernie is already serving 150 years in prison for a laundry list of financial crimes.

The younger Madoff told the court he was in "total shock" when he learned of his brother's fraud.

"I was shocked and devastated but nevertheless I did as my brother had said, as I had consistently done for decades," he said, apparently reading from a prepared statement. "I knew that the conduct was wrong and I am deeply ashamed."

Peter Madoff is the eighth person to plead guilty in connection with the four-year probe into the fraud scheme, in which $20 billion vanished, costing many investors their life savings.

"Peter Madoff enabled the largest fraud in human history. He will now be jailed well into old age, and he will forfeit virtually every penny he has," Manhattan U.S. Attorney Preet Bharara said. "We are not yet finished calling to account everyone responsible for the epic fraud of Bernard Madoff and the epic pain of his many victims."

Copyright 2012 ABC News Radio

Wednesday
Jun272012

Bernie Madoff's Brother to Plead Guilty

Rick Maiman/Bloomberg News(NEW YORK) -- The brother of con man Bernie Madoff will plead guilty Friday morning to conspiracy to commit securities fraud and falsifying records for his alleged role in his brother's multibillion-dollar Ponzi scheme, prosecutors said Wednesday, and will serve 10 years in federal prison.

Peter Madoff, once the chief compliance officer of Bernie Madoff's investment firm, will be the first member of the Madoff family other than Bernie to be charged in connection with the case. As part of his plea deal, he will agree to forfeit $143.1 billion dollars, "including all of his real and personal property," and not to seek a sentence other than 10 years in federal prison, the maximum allowed for both offenses.

Peter Madoff worked with his older brother for more than 40 years and was in charge of day-to-day operations for the final two decades of the firm's existence. Bernie's wife Ruth and sons Mark and Andrew also worked in the Madoff investment business, but all have denied any knowledge of wrongdoing.

A lawyer involved in the case says the government uses the $143 billion dollar figure so that Peter Madoff will have no claim to any cash or property he earned at any point in his career. It is unclear if the government will allow his wife to retain his New York home, an expansive Park Avenue co-op apartment. The government filing makes no mention of any possible action against Madoff's daughter Shana, who also worked for her uncle's investment operation.

Also still unresolved is whether the government will take any action against Bernie Madoff's son Andrew. In December 2010, Bernie's son Mark was found dead in his New York apartment after committing suicide on the second anniversary of his father's arrest.

Bernie Madoff, now 74, is currently serving 150 years in federal prison for fraud. In December 2008 he revealed to his sons that his investment business was a massive pyramid scheme. The resulting federal criminal complaint alleged that he had defrauded clients of $65 billion over 20 years.

Bernie Madoff was ordered to forfeit $170 billion, believed to be the total amount that had passed through all Madoff accounts. A court-appointed trustee has so far reached agreements to recover more than $9 billion for Madoff investors.

Copyright 2012 ABC News Radio

Friday
Jun152012

Ponzi Schemer R. Allen Stanford Sentenced to 110 Years in Prison

Aaron M. Sprecher/Bloomberg via Getty Images(HOUSTON) -- Disgraced financier R. Allen Stanford didn't get everything his victims said was coming to him.

The government had been seeking a 230-year prison term for the former Chairman and CEO of the Stanford Financial Group, who was found guilty of bilking $7 billion from customers in an elaborate Ponzi scheme.

On Thursday, a judge in Houston, said the 62-year-old businessman must spend 110 years behind bars, half of what prosecutors wanted. Stanford's lawyers were asking for 10 years, with time off for good behavior.

In addition, Stanford must compensate his victims to the tune of $5.9 billion.

He was found guilty earlier this year of taking money from customers who bought certificates of deposit so that he could enjoy a lavish lifestyle that included mansions and yachts.

Assistant U.S. Attorney William Stellmach described the widespread contempt felt for Stanford, saying, "From beginning to end, he's treated his victims like road kill."

Stanford told the court before sentencing that the prosecution and his former customers got it all wrong, claiming, "I've been called a lot of things -- arrogant, abrasive, a son of a gun, difficult, very opinionated and strong-willed.  But I am not a thief."

Despite the long sentence, it's not a record for a Ponzi scheme perpetrator.  That distinction still belongs to Bernie Madoff, who is in the midst of serving a 150-year sentence for his crimes.

Copyright 2012 ABC News Radio

Monday
Mar192012

Mets Owners Agree to Pay $162 Million to Madoff Victims

Mario Tama/Getty Images(NEW YORK) -- The owners of the New York Mets agreed Monday to pay $162 million to settle claims that they willfully ignored the Ponzi scheme orchestrated by Bernie Madoff.

"We believe that this is a fair and just settlement," said David Sheehan, chief counsel to Irving Picard, the court-appointed trustee recovering money on behalf of Madoff's defrauded clients.

The trustees had demanded six years of "fictitious profits" that team owners Saul Katz and Fred Wilpon allegedly earned from their Madoff investments. The amount is about half of what Picard had hoped to recover from them. Katz and Wilpon did not admit any wrongdoing and are released from further claims or litigation. They agreed to pay out the $162 million over five years.

"This settlement represents the best possible outcome," Sheehan said.

The agreement, negotiated with the help of former New York Governor Mario Cuomo, was announced Monday morning, moments before the trial of Katz and Wilpon was to begin in federal court in Manhattan. The list of potential witnesses included Hall of Fame pitcher Sandy Koufax, a friend of Wilpon's who took his advice and invested with Madoff.

"This entire trial would have turned on the question of whether the Mets owners, who had dealt with Madoff for many years, knew or should have known the returns they were getting on their investments were simply too good to be true," said Robert Mintz, a former federal prosecutor now in private practice at McCarter and English LLP in Newark.

Picard had argued Katz and Wilpon were willfully blind to Madoff's Ponzi scheme. The Mets owners have said they knew of no red flags. They now have three years to begin making payments, which the agreement says must be completed in five years.

"For the Mets owners I think the key here was putting to an end a high-risk gambit," said Mintz, the former prosecutor. "The unpredictability of placing this case before a jury was a risk that in the end they thought was too high to take."

Copyright 2012 ABC News Radio

Tuesday
Mar062012

Sir Allen Stanford Guilty in $7 Billion Ponzi Scheme

F. Carter Smith/Bloomberg via Getty Images(NEW YORK) -- Allen Stanford once told ABC News he would "die and go to hell" if his $7 billion investment empire was a Ponzi scheme.

On Tuesday, a federal jury in Houston convicted the 61-year-old financier of all but one of 14 charges of fraud and obstruction. Each fraud count carries a sentence of up to 20 years. The same jury is now deliberating how much money Stanford must forfeit.

The Texas-bred Stanford built an offshore financial empire in the Caribbean during the 1980s and 1990s, and won a knighthood – and the right to call himself Sir Allen Stanford – from the government of Antigua. By early 2009, the SEC and the FBI, among others, were investigating Stanford Financial Group because of its above-market rate of returns. On February 17, 2009, the feds raided Stanford's office in Texas, but did not arrest him until June.

In April 2009, Stanford told Ross in a tearful interview that he was innocent of any wrongdoing, calling accusations that he was running a Ponzi scheme "baloney," and threatened to punch Ross in the mouth. He said that investigators were after him because he was a "maverick rich Texan" and they wanted a "moosehead on the wall."

"I'm fighting for my survival and for my integrity," said Stanford.

After pleading not guilty in 2009, Stanford was assaulted by another prisoner while in federal custody and received head injuries. He spent nearly a year in a federal medical facility, and his attorneys tried to postpone his prosecution.

Instead, Stanford went on trial beginning in January, and prosecutors detailed how he had taken money from investors for fraudulent certificates of deposit and frittered it away on a lavish lifestyle and failed investments. While billions had passed through the Stanford Financial Group, prosecutors are asking for $300 million in assets. Defense attorneys intimated in opening statements that Stanford would testify, but he did not.

Sir Allen has already lost his knighthood. Antigua took it away in late 2009 not long after his arrest.

Copyright 2012 ABC News Radio

Monday
Oct312011

Madoff Family Book's Profits Spark Anger from Victims

Mario Tama/Getty Images(NEW YORK) -- Andrew and Ruth Madoff, the son and wife of convicted Ponzi schemer Bernie Madoff, will not receive any money from a new book about the Madoff family in which they participated. But Catherine Hooper, the woman who's been engaged to Andrew and living with him for the past three years, will profit from the project, which angers some of the victims of Bernie Madoff's multi-billion-dollar investment fraud.

"I personally do not feel that any profits from the new book should in any way go to Ms. Hooper, who is future Madoff family, or should any other member of the Madoff family benefit from this crime," Lynn Sustak, whose retirement savings were wiped out due to Madoff, told ABC News. She and her husband invested with Bernie Madoff starting in 2003.

"All Madoff money should be donated to the real victims -- of course," another victim, Marcia Cohen, wrote in an email to ABC News.

Alexis Neely, the founder of the Family Wealth Planning Institute, told ABC News it was "smart" for Hooper to receive profits, and not Andrew or Ruth Madoff. Andrew Madoff faces a multi-million-dollar lawsuit from the trustee appointed to recover money for victims of the investment fraud.

"It would be a pretty bad idea for her to marry him at this point," said Neely.

"If it wasn't intentional it was a happy accident," added Neely. "But I would imagine it was intentional. It's definitely asset protection I would advise my clients to put in place in a similar situation."

Hooper, reportedly the driving force behind the book within the Madoff camp, is the only person associated with the Madoffs who will receive profits from Truth and Consequences: Life Inside the Madoff Family, written by journalist and author Laurie Sandell and based on interviews with Andrew and Ruth.

Hooper moved in with Andrew and became engaged to him just weeks before December 10, 2008, when Bernie confessed what he'd done to sons Andrew and Mark and they turned him in to the FBI.

After witnessing the backlash against Andrew and Mark, Hooper allegedly conceived the idea for the book. Mark Madoff committed suicide on Dec. 10, 2010, the second anniversary of the collapse of the fraud.

While Bernard Madoff is serving a maximum sentence of 150 years in a federal prison in North Carolina, a number of Madoff family members are being sued by a court-appointed trustee liquidating Madoff's business. The suit, filed in October 2009, seeks at least $198.7 million from Madoff's brother, sons, and niece. Andrew Madoff is named in the suit for allegedly having over $60 million in fraudulent transfers from Bernard L. Madoff Investment Services.

Stephanie Mack Madoff, the wife and widow of Mark Madoff, has been the only other Madoff to write a book and tell her story. She released a book earlier this month, The End of Normal: A Wife's Anguish, A Widow's New Life, released in October by Blue Rider Press.  

Bruce Hector, 68, a victim of the Madoff scheme, said he felt sympathy for the Madoff family and said their claims of innocence and ignorance of Madoff's fraud scheme seemed credible.

"The family has to live with their name the rest of their life," Hector, a physician, said. "The Madoff name is going for the remainder of this century to be associated with scandal. And those kids have got to live with that. I can sympathize with that. If they make a little money on a book, who cares."

Another Madoff victim, Neil Friedman, said he was also more concerned with the "injustice that victims have been subjected to by the trustee, Securities Investor Protection Corporation, and the government."

"I believe that the family, if innocent, has the right to make money telling their story in a book," Friedman wrote in an email to ABC News.

Copyright 2011 ABC News Radio

Thursday
Oct202011

Bernie Madoff's Boastful Letter to Angry Daughter-in-Law

Mario Tama/Getty Images(NEW YORK) -- After being convicted in June 2009 of orchestrating the largest Ponzi scheme in American history, disgraced financier Bernie Madoff was sentenced to 150 years in a North Carolina prison.

But his daughter-in-law, Stephanie Madoff Mack, the wife of Madoff's oldest son Mark, felt he hadn't suffered enough. Mack wrote him a letter laying out the life he was missing, with details about the young grandchildren -- Mack's daughter Audrey and son Nicholas -- he would never see again.

The letter focused on "things that he would love to be part of, and now would never be part (of)," Mack said. "So I thought that that would really sting him."

But Mack said her plan backfired. Madoff's response, she said, sickened her. He described his life at Butner Prison -- which is considered a "crown jewel" of the federal prison system and is known for its college campus-like feel -- as one filled with "loads of friends" who respected him.

He wrote, "As you can imagine, I am quite the celebrity, and am treated like a Mafia don. They call me either Uncle Bernie or Mr. Madoff. I can't walk anywhere without someone shouting their greetings and encouragement, to keep my spirit up. It's really quite sweet, how concerned everyone is about my well being, including the staff...It's much safer here than walking the streets of New York."

Mack said she was "smokin' pissed" and didn't show her letter to her husband Mark, who was already tortured by his father's unimaginable duplicity.

On Dec. 11, Mark Madoff committed suicide. His dead body was found hanging from a ceiling beam.

"My husband was in terrible, terrible pain," Mack said. "He was so deeply hurt by it all, that he just, he, he just couldn't move past it."

Mack has written a book on her life as a Madoff, The End of Normal: A Wife's Anguish, A Widow's New Life, published by Blue Rider Press.

Read more about Mark and Stephanie Madoff here and watch the full story on ABC’s 20/20 Friday at 10 p.m. ET.

Copyright 2011 ABC News Radio

Wednesday
Oct192011

Madoff Widow Blames Bernie for Son's Suicide Attempts, Death

ABC News(NEW YORK) -- While many lost their fortunes thanks to Bernie Madoff -- the man who orchestrated the largest financial fraud scam in U.S. history -- Stephanie Madoff Mack lost her husband. Now, the widow of Mark Madoff, Bernie Madoff's oldest son, is the first inside member of the Madoff family to speak out, divulging the story of the death that she says can be traced directly to Bernie Madoff's deception.

In a searing and emotional interview to be broadcast Friday on ABC’s 20/20, Mack details how a privileged life in one of the richest families in America turned into a living nightmare after Madoff's Ponzi scheme was uncovered. Mack says the ordeal led Mark Madoff to commit suicide last December, on the two-year anniversary of his father's arrest. Mark had first attempted suicide in 2009, Stephanie reveals for the first time.

"He couldn't get out, he was so betrayed and so hurt by Bernie," she said.

"I hate Bernie Madoff," Stephanie said. "If I saw Bernie Madoff right now, I would tell him that I hold him fully responsible for killing my husband, and I'd spit in his face."

Mack has written a book on her life as a Madoff, The End of Normal: A Wife's Anguish, A Widow's New Life, scheduled for release this week by Blue Rider Press.

Stephanie, then 30, married Mark Madoff, the handsome and wealthy 40-year-old divorced father of two, in October, 2004. In attendance at their Nantucket Island wedding were many investors in Bernie Madoff's fraudulent hedge fund.

"He stood there in the corner at my wedding watching everyone dance, and he knew that everyone in that room was going to get screwed," said Mack.

The couple went on to have two children: a daughter, Audrey, and a son, Nick.

With Mark's blessing, Stephanie changed her last name to Mack to spare her family the stigma of that now reviled name. Today, her children are healthy and happy and Mack says she intends to keep them that way.

"I will never let it define my two children for the rest of our lives," she said. "The rest of my life is going to be a happy one, and not filled with deceit, and lies, and betrayal, and sorrow, and I hold onto that hope."

Watch the full story on ABC's 20/20 Friday at 10 p.m. ET.

Copyright 2011 ABC News Radio







ABC News Radio