Before Prison – Future Inmates Get in Their Vacation

Madoff’s accountant, or guy who posed as his accountant, David Friehling, had his sentencing postponed from last Friday (March 23) to October 26, 2012. Friehling was arrested in March 2009, pled guilty in November of that year and was then scheduled to be sentenced on February 26, 2010. Since then, his sentencing has been postponed 5 times, each time moving it out six more months. So while Madoff has been in prison serving his 150 years, what has Friehling been up to? He’s been traveling like many other white-collar felons awaiting prison.
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Live Blogging the Hearing on MF Global’s Collapse

MF Global is back on Capitol Hill. A hearing that had been scheduled to start at 2 p.m. ET in front of a subcommittee of the House’s Financial Services committee will feature two panels, one with four MF Global executives, another with a J.P. Morgan lawyer. The committee is headed by Rep. Randy Neugebauer (R., Texas). It is expected that Edith O’Brien, the assistant treasurer at the center of what happened to the missing $1.6 billion after Jon Corzine earlier testimony, will plead the fifth, but still be questioned in the first panel. The Wall Street Journal has reported she’s told people she disagrees with what her former boss said. Click here for more. [...]

Madoff Biographer Describes Beguiling “Wizard of Lies”

Diana Henriques, author of The Wizard of Lies, describes notorious ponzi schemer Bernie Madoff as a quiet man who minded his business until people approached. He would then use what Henriques called his gift for seduction. “He didn’t try to impress you by telling you he was the smartest guy in the room,” Henriques said. “He made you feel like you were the smartest guy in the room.” This gift helped him build the largest ponzi scheme in history, one that cost its victims $65 billion. More on the Hoboken Patch [...]

Analysis: Hedge funds register, wait for SEC to visit

Hedge fund managers are increasingly nervous about getting a knock on the door from U.S. securities regulators now that a new rule requires them to register as investment advisers and provide lots of data about their inner workings as a result. Hundreds of large managers, which already employ sizable legal teams, took the mechanics of meeting the March 30 deadline in stride, industry consultants say. Read Reuters report [...]

California’s Harris Seen as Doing Better Than Madoff Creditors

California Attorney General Kamala Harris may have a better chance of winning the right to pursue her lawsuit to recoup illegal profit from Bernard Madoff’s fraud than creditors who were overridden by a bankruptcy trustee, lawyers said. Irving Picard, the bankruptcy trustee liquidating Madoff’s assets to recover funds for the con man’s investors, won a court ruling in another case giving his lawsuit priority over one by Madoff creditors. Picard is now trying to block Harris’s $270 million state enforcement action against investment adviser Stanley Chais’s estate, saying that under U.S. bankruptcy law he alone can take money stolen from Madoff customers. More on Bloomberg [...]

Helen Chaitman Doesn’t Know When to Quit

Last week, in writing about the settlement between Irving Picard, the Madoff trustee, and Fred Wilpon and Saul Katz, the owners of the New York Mets, I mentioned the ongoing litigation brought against the trustee by a lawyer named Helen Davis Chaitman, who claims to represent some 800 Madoff victims, both net losers and net winners (who, I should point out, have very divergent interests). Inevitably, I received some emails from Chaitman clients who chastised me for daring to criticize, as one of them put it, “a woman who has been a champion to so many elderly victims, logging many pro bono hours, fighting for victims whose gains would mean her own loss, and giving those victims a voice in the courts.” Et cetera. Read New York Times report [...]

MF Global Treasurer Goes From Back Office to Hot Seat

Edith O’Brien, the Chicago-based treasurer of MF Global Holdings Ltd.’s (MF) broker-dealer, was pulled from back-office obscurity onto center stage last year in testimony to Congress by former chief executive Jon S. Corzine. Today, having become a key figure in the brokerage’s messy denouement, she faces lawmakers directly for the first time. See Bloomberg report [...]

MF Global Bonuses: Senators Look to Shame Plan With Resolution

If a letter won’t do, get an act of Congress. Two weeks after sending a harshly-worded letter to a bankruptcy trustee about possible bonuses at MF Global, the Senate’s agriculture committee is upping its game with a proposed resolution against the bonus plan. Sen. Debbie Stabenow (D., Mich.), the committee’s chairwoman, and Sen. Pat Roberts (R., Kan.), the committee’s ranking Republican, are planning to present the resolution against the bonuses today for a Senate vote, Deal Journal colleague Mike Spector is reporting. More in the Wall Street Journal [...]

Warning Flags Were Raised in MF Global Transfers

Some MF Global employees were aware of a shortfall in the firm’s customer accounts days before filing for bankruptcy on Oct. 31, according to people involved in the case, a revelation that raises questions about why the firm failed to safeguard client money and whether it withheld information from authorities. One such indication came from an internal document suggesting that the firm was putting customer funds at risk on Oct. 27, an MF Global executive, Christine Serwinski, is expected to tell a Congressional panel on Wednesday. Specifically, the firm had burned through a buffer of its own money and was using the cash of customers who were trading overseas, according to one of the people involved in the case. Read New York Times report [...]

New City auditor in Bernard Madoff scandal gets new sentencing date

New City auditor David Friehling’s tentative sentencing for his role in the Bernard Madoff investment scandal has been rescheduled for Oct. 26. Friehling’s sentencing has been adjourned four times based on his cooperation with federal investigators after he pleaded guilty in November 2009 to nine federal charges in relation to helping financier Madoff conceal a $65 billion fraud for nearly two decades, according to court documents filed by the U.S. Attorney’s Office in Manhattan. Read more [...]