A former associate dean from the Massachusetts Institute of Technology school and his son, a Harvard Business School graduate have been caught running a hedge fund scam, say authorities looking at Bernie Madoff’s Ponzi scheme. Gabriel Bitran, a professor and associate dean at MIT’s Sloan School of Management, and his son, Marco, a money manager, have pleaded guilty to charges of conspiracy to commit securities fraud, wire fraud and obstruction of justice in connection with their hedge fund businesses, by Boston prosecutors. The father and son are facing up to five years in prison. More on MarketWatch [...]
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A former Massachusetts Institute of Technology dean and his son have agreed to plead guilty to criminal charges for running an alleged hedge fund scam that lost more than $140 million in investors’ money, according to federal prosecutors in Boston. Investigators said they discovered the scam while they unraveled Bernard Madoff’s infamous Ponzi scheme. Gabriel Bitran, 69, and his son Marco, 39, are accused of conspiracy to commit securities fraud, wire fraud and obstruction of justice in connection with their GMB Capital Management and GMB Capital Partners hedge fund businesses. More in USA Today [...] Forget House of Cards, Game of Thrones, Madmen, and all the other series you can’t wait to restart. There’s a new series out that beats them all. It went live yesterday on this channel. It’s free for the viewing, well, actually for the reading. It’s as shocking and scary as anything you’ll see in The Walking Dead. SIPC’s Brokerage Account ‘Insurance’ Scam: Take It from a Comptroller of the Currency Take It From a Comptroller of the Currency: Congress Needs to Act Now to Protect Investors from SIPC “Insurance” by James E. Smith On September 25, 2000, eight years before the scams of Bernard Madoff and R. Allen Stanford were uncovered, Gretchen Morgenson (financial journalist for the New York Times) wrote a perceptive column of exacting detail describing the Securities Investor Protection Corporation’s pinched and adversarial practices aimed at favoring the SIPC Fund over protecting innocent customers of failed broker dealers. That column was “dead on” concerning SIPC’s regrettable culture, in which litigation rather than protection is too often the order of the day. [...] Investors who managed to withdraw funds in recent years from the Ross Asset Management group of companies, found to be a Ponzi scheme, have been put on notice that the liquidators may try to claw back the cash. PwC’s John Fisk and David Bridgman said they have a valid claim on any funds withdrawn from the investment scheme since December 2010 under the Companies Act on the basis investors would receive more than their entitlement under a liquidation. The liquidators also believe they can make a claim on anyone who drew funds within the past six years under the Property Law Act on the basis they were part of David Ross’s fraud. The managers weren’t able to cut deals with three investors who withdrew some $3.8 million in the lead-up to Ross Asset Management’s collapse in 2012, and expect to “imminently” file proceedings in the High Court, they said in their latest report. More in the New Zealand Herald [...] A convicted con artist formerly of Pittsburgh with a propensity for writing frivolous civil suits is believed to have filed an apparently fake motion in Manhattan federal court to dismiss charges against Bernie Madoff, the jailed and infamous Ponzi scheme mastermind. The bizarre, rambling legal document purportedly filed by “Frederick Banks, The Litigator Legal Assistant,” includes numerous misspellings and handwritten scrawl that alleges the “CIA Office of Science and Technology used bio-electric sensors and subcranial voice to skull technology to influence the court.” U.S. Circuit Judge Denny Chin, who as a U.S. District judge sentenced Madoff to 150 years in prison in 2009, ruled the “defendant’s argument is meritless” in an order made public Wednesday alongside the motion mailed to the court. More on Bloomberg [...] Economist Laurence Kotlikoff is calling on all Americans to close their brokerage accounts immediately because of the risk of a total wipeout — a risk he says stems from a massive Wall Street insurance scam perpetrated by the Securities Investor Protection Corp. (SIPC). “SIPC, a brokerage ‘insurance’ arm of Wall Street, has been and remains today engaged in insurance fraud,” Kotlikoff told ThinkAdvisor in a telephone interview. “SIPC claims to insure brokerage accounts. Nothing could be farther from the truth. What it’s really doing is placing all brokerage account holders at extreme risk.” More on ThinkAdvisor [...] Economist Laurence Kotlikoff is calling on all Americans to close their brokerage accounts immediately because of the risk of a total wipeout — a risk he says stems from a massive Wall Street insurance scam perpetrated by the Securities Investor Protection Corp. (SIPC). “SIPC, a brokerage ‘insurance’ arm of Wall Street, has been and remains today engaged in insurance fraud,” Kotlikoff told ThinkAdvisor in a telephone interview. “SIPC claims to insure brokerage accounts. Nothing could be farther from the truth. What it’s really doing is placing all brokerage account holders at extreme risk.” More on Think Advisor [...] Yesterday marked the five-year anniversary of Bernard Madoff’s sentencing to 150 years in prison. I am reminded yet again how vulnerable investors are at the hands of scam artists. Five years on, I’m afraid the regulatory environment has only emboldened the swindlers. The Securities and Exchange Commission, charged with protecting investors, is woefully underfunded. Whereas in 2006, the SEC could provide 19 examiners for every $1 trillion in investment advisors assets under management, last year there was enough funding for just 10 such examiners. And the investing world has become far more complicated. Guess who’s coming out ahead? In the last five years we’ve learned more about the depths of Madoff deceit and about his victims, many of whom still have not picked up the pieces. Among the hard-working teachers and small business owners, were also owners of sports franchises, a U.S. senator and scores of celebrities, people presumably experienced in the ways of Wall Street. They too didn’t spot the lies and bogus returns until it was too late. More on Forbes [...] Emphasizing the substantial discretion district courts must give to federal agencies, on June 4, 2014, the Second Circuit held that U.S. District Judge Jed Rakoff had “abused [his] discretion” by applying an incorrect legal standard when rejecting a $285 million U.S. Securities and Exchange Commission settlement with Citigroup Global Markets, Inc. because the bank neither admitted nor denied wrongdoing. The appeals court found that Judge Rakoff committed “legal error” by requiring the SEC to establish the truth of the allegations against Citigroup as a condition to approval of the consent decree proposed by the parties. The court also found that the judge’s disagreement with the “SEC’s decisions on discretionary policy” — such as whether to settle complaints without forcing defendants to admit wrongdoing — was not sufficient to find that such a settlement rose to the level of being “against the public interest.” More on Law360 [...] |
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