Entries in Ponzi Scheme (8)


Stephanie Madoff Fires Back at Ruth Madoff's Suicide Claims

Courtesy Stephanie Madoff Mack(NEW YORK) -- Stephanie Madoff, the widow of convicted Ponzi schemer Bernard Madoff's son Mark, has fired back at claims mother-in-law Ruth Madoff made on TV about her own alleged suicide attempt, as well as those brother-in-law Andrew Madoff made in a new book about the family.

Stephanie Madoff said on Anderson Cooper's daytime talk show Anderson Wednesday that she was offended by Ruth Madoff's revelations on CBS' 60 Minutes that she and her husband attempted suicide on Christmas Eve 2008 by swallowing prescription pills.

"I have no idea what went on in that penthouse that night, but for Ruth to talk about trying to kill herself so flippantly like that is so offensive to me, because that's how my husband died," she said.

Stephanie's husband, Mark Madoff, took his life on the second anniversary of his father's arrest in December 2011.  Mark Madoff hanged himself in the couple's New York loft.

"Ruth says she was happy that she woke up.  I'm happy for Ruth that she woke up, but I just wish that my husband had, and he didn't," she said.

Stephanie Madoff, 37, said she was also upset by Ruth's confession in Truth and Consequences: Life Inside the Madoff Family that her husband's infidelity was "the most hurtful thing" that ever happened to her -- more so than the suicide of her son.

"To say that the affair was doesn't make sense to me.  She doesn't make sense to me," she said.

She also took the opportunity to hit back at Andrew Madoff's claims in Truth and Consequences, a book that Andrew Madoff's financee, Catherine Hooper, helped bring about, that Stephanie and Mark had a rocky relationship, and that Stephanie was days away from leaving Mark when he was found hanged.

Though Stephanie said she's shocked and offended by Ruth's comments, Stephanie still believes that her mother-in-law had no knowledge of Bernard Madoff's crimes, and remains undecided as to whether she will allow her young children to have a relationship with their grandmother.

Copyright 2011 ABC News Radio


Exclusive: Madoff 'Can Live with' Fraud Victims' Anger, but Not Family's

Mario Tama/Getty Images(BUTNER, N.C.) -- Convicted Ponzi schemer Bernard Madoff was forced to "let...go" of his wife almost a year ago and is plagued by "horrible nightmares" as he sits in a North Carolina prison, he told ABC News' Barbara Walters in an exclusive interview.

Though he said he "can live with" the anger of people he defrauded out of billions of dollars, and he is adjusting to the rhythms of life in prison, even at 73 years old, he is troubled by anger and turmoil within his own family.

"Not seeing my family and knowing they hate me" is the worst thing about being in prison, he said. "I betrayed them."

Asked what he'd like to say to his grandchildren, he said, without apparent emotion, "I am sorry to have caused them pain."

As he sat across from Walters during a two-hour conversation at the Federal Correction Complex at Butner, N.C., on Oct. 14, Madoff often seemed to be trying as much as possible to feel no pain himself.

Madoff said he passes the time by reading, recently finishing a book about Wall Street robber barons.

The man who ran a Ponzi scheme of more than $60 billion has held six or seven different jobs in prison, he said, and he makes $170 a month.

He said he is relieved to be free from years of fear he'd be discovered as a fraud and finally has overcome thoughts of suicide.  

Repeatedly throughout the interview he told Walters that he was guilty of the crimes that put him in prison, saying "I deserved to be punished. I deserved to go to jail."

"I feel safer here than outside," Madoff said. "Days go by.  I have people to talk to and no decisions to make...I know that I will die in prison.  I lived the last 20 years of my life in fear.  Now I have no fear -- nothing to think about because I'm no longer in control of my own life."

Though Madoff has people to talk to in prison, his family situation is far more complicated.  He has not spoken to his wife, Ruth Madoff, since after the suicide of their son, Mark Madoff, on Dec. 11, 2010.  And Mark Madoff's widow, Stephanie Madoff Mack, has told ABC News she holds Bernie Madoff responsible for her son's death and, "I'd spit in his face," if she ever saw him again.

Madoff told Walters that his wife used to visit him at the prison weekly and they spoke on the phone daily.  In order to visit Butner, N.C., Ruth Madoff would drive 12 hours alone, stay at a motel overnight and drive 12 hours back to Florida, which was hard on her.

But after their son's suicide, the couple had an emotional final meeting at the prison at which Ruth Madoff "asked me to let her go, which I understood," Madoff said.

Madoff told Walters he has not reached out to his wife since that final meeting.

Copyright 2011 ABC News Radio


Poker Site Defends Business, Not a Ponzi Scheme

Ryan McVay/Photodisc/Thinkstock(NEW YORK) -- The operators of online gambling site Full Tilt Poker, charged with running a $440-million Ponzi scheme by federal authorities, say what happened to them was simply mismanagement, not a scam.

"Banks fail for not having sufficient revenue to cover customer deposits all the time. No one refers to such failures as Ponzi schemes. And there was no Ponzi scheme here," said Jeff Ifrah, an attorney for Full Tilt Poker.

"Players were not investing in any company-run investment vehicle. Players were never promised any type of high-rate return. Players just wanted to play poker and the company offered that service," he said. Ifrah explained that in late 2010, the company suddenly found itself unable to meet the player withdrawal demand.

Full Tilt was shut down in April by federal authorities. "Full Tilt was not a legitimate poker company, but a global Ponzi scheme," Preet Bharara, the U.S. Attorney for the Southern District of New York, said in a statement Wednesday.

The site told players their gambling accounts were secure and available for withdrawal at any time when in fact "Full Tilt Poker did not maintain funds sufficient to repay all players," Bharara said. The operation allegedly used player funds to pay board members and other owners more than $440 million since April 2007.

The complaint named board members Raymond Bitar, Howard Lederer, Christopher Ferguson and Rafael Furst as defendants.

"Full Tilt insiders lined their own pockets with funds picked from the pockets of their most loyal customers while blithely lying to both players and the public alike about the safety and security of the money deposited with the company," according to the DOJ statement.

Ifrah said the individuals added to the civil complaint will "certainly have comments on the allegations against them." If they received distributions at a time when the company was underwater, the individuals will need to defend whether the distributions are subject to seizure as the amended complaint alleges.

On April 15, 2011, the Justice Department filed a complaint for money laundering, fraud, and violating the 2006 Unlawful Internet Gambling Enforcement Act against 11 individuals who ran PokerStars, Full Tilt Poker and Absolute Poker.

Copyright 2011 ABC News Radio


Monroe Beachy, 'Amish Bernie Madoff,' Indicted in $16.8M Fraud Scheme

Richard Ellis/Getty Images(SUGARCREEK, Ohio) -- Monroe Beachy, a 77-year-old Amish man accused of running a Madoff-like Ponzi scheme, was charged with mail fraud Thursday after allegedly defrauding thousands of people out of $16.8 million over two decades.

Beachy allegedly told investors his Ohio business in Sugarcreek, A&M Investments, would invest in mortgage-backed security Ginnie Mae Bond Funds, but he put investors' money in government bond funds, individual stocks and mutual funds instead.

Thursday's grand jury indictment accuses Beachy of mailing "false monthly and quarterly investment statements to A&M investors" in the Northern District of Ohio and elsewhere.

"As a result of Monroe L. Beachy's fraudulent conduct, approximately 2,698 people and entities, including but not limited to the Amish Helping Fund, sustained a combined loss in excess of approximately $16.8 million," the indictment stated.

When reached by phone, Beachy claimed he didn't know anything about the indictment.

"Several people have called but I don't know what's going on," he said.

Beachy also said he doesn't have a lawyer and doesn't know if he will hire one.

Mike Tobin, a spokesman for the U.S. attorney for the Northern District of Ohio, said Beachy "will be allowed to turn himself in."

He may be in court as early as next week and could face up to 20 years in prison.

Media headlines have compared Beachy to Bernie Madoff, the investment advisor who choreographed a $50 billion Ponzi scheme since the early '90s, because of the long period in which they both falsified positive returns to investors.

Beachy raised at least $33 million, according to an S.E.C. complaint filed in February.

As part of the S.E.C. investigation, Beachy filed for Chapter 7 bankruptcy in June 2010 with a court in the Northern District of Ohio. Court documents indicated he has less than $18 million of investors' money left.

In an unusual twist, according to a motion to dismiss the bankruptcy proceedings filed by members of the Amish community, about 2,550, or 94 percent, of creditors were in favor of dismissal.

Daniel Miller, 55, of Sugarcreek, Ohio, was one of 2,600 creditors in 29 states, mostly from the Amish community, who invested money with Beachy.

"I think the Amish can do a lot better job for the creditors than what the government can do," Miller told ABC News in February. "Instead of the bankruptcy attorneys handling everything and dragging into the court system, they will take it and distribute it to the creditors involved. It makes more sense to me."

Beachy also filed a motion to dismiss the bankruptcy proceedings.

Miller said it is common for members of the Amish community to pool their money together, as they did with Beachy, and try to settle disputes among themselves. He said Beachy did not pocket the collected money, and instead lived a simple lifestyle, even with a horse and buggy.

Tim Warren, associate regional director in the Chicago office of the S.E.C., conceded that Beachy was not living an extravagant lifestyle, unlike other fraudulent financial managers.

"I think this case is unique because he was not pocketing investor money like other cases," said Warren. "Here, he wasn't."

Miller said he drives a car but still adheres to the principles of the Amish community of simplicity and generosity towards others.

Copyright 2011 ABC News Radio


California 'Ponzi Moms' Allegedly Steal Millions

Adam Gault/Thinkstock(LOS ANGELES) -- Taking a page out of former New York financier Bernard Madoff's playbook, California residents Maricela Barajas, Juliana Celeste Menefee and Eva Perez are accused of running a Ponzi scheme that allegedly took millions of dollars from more than 40 people.

The trio are being called the "Ponzi moms" because they are all former members of the Diamond Bar elementary school PTA.

Investigators in Los Angeles say Barajas, Menefee and Perez convinced people to turn over their life savings or take equity in their homes while working at PTA events.

The suspects allegedly told their "marks" that they could guarantee them 100 percent returns on their investments through a company that distributed products to Disneyland, Disney hotels and small retailers.

They collected about $14 million from 2008 to 2010 while returning only $10,000, according to police.  When pressed by their investors for money, the trio allegedly explained that the delay was due to an internal audit of the phony business.  All but $1.4 million of the money has been recovered.

It was all a Ponzi scheme, according to investigators, and each woman now faces 22 counts of grand theft of personal property and securities fraud, which could mean a maximum of 13 years in state prison.

Copyright 2011 ABC News Radio


Bernard Madoff Says Banks Had to Know He Was a Crook

Photo Courtesy - Mario Tama/Getty Images(NEW YORK) -- Convicted Ponzi scheme swindler Bernard Madoff says some banks and hedge funds he dealt with had to have known he was up to no good, but chose to look the other way as the former money manager swindled billions from unsuspecting clients.

In his first jailhouse interview since being sent to the federal prison in Butner, North Carolina for 150 years, Madoff contends that unnamed financial institutions showed a “willful blindness” to his crimes and were therefore “complicit.”

According to Madoff, the attitude of banks and hedge funds was “if you’re doing something wrong, we don’t want to know.”

In correspondence with The New York Times, Madoff said he was surprised by the number of people who are now saying they suspected him of wrongdoing before he came clean to authorities in December of 2008.

On other matters, Madoff exonerated New York Mets owner Fred Wilpon and his business partner, Saul Katz, who are being sued by a trustee assigned to recover money for Madoff’s thousands of victims.

While Irving Picard claims that Wilpon and Katz profited from Madoff’s scam, the 72-year-old convict insisted, “They knew nothing.”  Picard is suing the men for $1 billion.

Copyright 2011 ABC News Radio


Deadline Looms for Madoff Victims to Recover Money

Photo Courtesy - Mario Tama/Getty Images(NEW YORK) -- The lawyer charged with recovering money for victims of Bernie Madoff's Ponzi scheme filed suit Wednesday against Madoff's brother and sons and the London branch of Madoff's investment firm.

The suit is one of a flurry worth more than $21 billion that Irving Picard has filed in recent weeks as the deadline for recovering Madoff money looms. More claims could be coming.

Saturday marks both the two-year anniversary of Madoff's arrest and also the last day the bankruptcy trustee can file claims against companies and individuals believed to have benefited from Madoff's fraud.

In recent weeks, Picard has filed suits against hundreds of individual investors and big companies like JP Morgan, HSBC and UBS, which bring the total amount sought by Picard in the so-called "clawback" to at least $36.9 billion.

Wednesday's suit against Madoff Securities International Ltd. asks for $80 million, names Peter, Andrew and Mark Madoff, Bernie's brother and sons, as respondents, and claims that officers of MSIL used fraudulently obtained funds to pay for a yacht, the Madoff home in the South of France and an Aston Martin car.

Through the end of September, Picard had filed 19 lawsuits worth $15.5 billion against members of Madoff's immediate family, longtime individual investors like Jeffry Picower, and major feeder funds, including those operated by the Fairfield Greenwich Group and J. Ezra Merkin, a prominent Wall Street investment manager.

Copyright 2010 ABC News Radio


Madoff's West Palm Beach, Fla. Home Sold

Photo Courtesy - Getty Images(NEW YORK) –- The West Palm Beach, Fla., home once held by jailed ponzi-schemer Bernard Madoff sold for $5.65 million this week, according to the U.S. Marshals.

“This sale marks the final disposition of all the properties related to the Bernard L. Madoff case,” said Roland Ubaldo, Supervisory Deputy U.S. Marshal. “We will continue to dispose of the remaining assets with the goal of receiving maximum gain for the victims of this crime”.

The former financier is serving a 150-year prison term for the $65 billion fraud that devastated his many victims.

Copyright 2010 ABC News Radio

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