irondoor91

Madoff Investors Deserve Sympathy, Not a Bailout

There is a prior Ponzi case named Maricopa (Naples, FL) that ran from the mid-1990's to March 2000. It scammed around $150 million, so it was relatively small potatoes compared to Madoff. The issues, however, were similar: A "black box" secret trading strategy, no big-name auditor, family members involved in administration, offshore holdings, hard to get into but "maybe we'll open up for you this month", a tax-dodge scheme, victims were Floridians who had sold successful businesses and thought they were joining the "in crowd", etc. There was also some local government corruption included. The manager was not registered, he was never investigated by federal or state and he was connected to several charitable organization which were ultimately subject to "claw-backs". Pictures of him with the first President Bush and other luminaries helped polish his image. He was formerly an assembly line worker from Kentucky before declaring bankruptcy and moving to Florida, where every loser goes to get a fresh start.

The money was custodied at Bear Stearns (remember Ralph Ciofi who was indicted in the Bear Stearns hedge fund problems? He was also involved in the Maricopa deal and testified in the case) and Morgan Stanley. The Morgan broker was also an investor in the partnership and sat idly by as the manager used funds in the partnership account to purchase a $1 million house in Aspen. He thought it was for the "western headquarters" of the partnership. He was told by the manager (who is currently serving a 17 year prison sentence) that the trading account was at Bear Stearns. He told Bear that the trading was done at Morgan.

The guy ultimately confessed when withdrawal requests exceeded the assets. Sound like Madoff?