Nearly $600 million worth of settlements to benefit victims of Bernard Madoff ’s massive Ponzi scheme on Wednesday won the blessing of a bankruptcy judge. The settlements, approved by Judge Stuart Bernstein at a hearing in the U.S. Bankruptcy Court in Manhattan, include a $95 million deal struck with Senator Fund SPC and a $497 million deal to collect money from Herald Fund SPC and Primeo Fund. All of the funds had invested with Mr. Madoff, who is currently serving a 150-year prison sentence. Irving Picard , the official tasked with paying back Mr. Madoff’s victims, has to date collected or reached deals to collect approximately $10.5 billion of the $17.3 billion in principal that investors lost upon the 2008 collapse of the Ponzi scheme. Of the recovered funds, more than $5 billion has been returned to investors. More in the Wall Street Journal here.
Joann Crupi, who managed investment advisory accounts for Ponzi scheme mastermind Bernard Madoff, got a six-year term for aiding his $17.5 billion fraud, the last of five sentences stemming from the only criminal trial over the massive swindle. Crupi’s punishment, like those of her co-defendants, was less than what U.S. probation officials recommended, 14 years, and the even longer term the government had sought. U.S. District Judge Laura Taylor Swain in Manhattan, who presided over the case, has cited the fundamental responsibility of Madoff, rather than his aides, as a key reason for leniency, saying he manipulated loyal employees like Crupi, who lacked any financial training. Swain said Crupi, 53, appeared to be “an intelligent person who is capable of questioning established practices,” yet did not do so while working for Madoff. She started working at the firm as a keypunch, entering what was probably fraudulent trading information provided by her superiors, rose through the ranks and “was compliant in everything and questioned little,” the judge said. More on Bloomberg here.
A series of settlements to benefit victims of Bernard Madoff’s massive Ponzi scheme will go before a bankruptcy judge Wednesday in Manhattan for final approval. The settlements include a $95 million deal struck with Senator Fund SPC, an investment fund that parked all of its money with Mr. Madoff, and a $497 million deal to collect money from Herald Fund SPC and Primeo Fund. Irving Picard, the official tasked with paying back Mr. Madoff’s victims, has to date collected or reached deals to collect approximately $10.5 billion of the $17.3 billion in principal that investors lost upon the collapse of the Ponzi scheme. Of the recovered funds, nearly $6 billion has been returned to investors. More in the Wall Street Journal here.
Starting with the Enron scandal and continuing through several other high-profile cases, prosecutors and judges were making reasonable strides in countering the public’s long-held belief that white-collar crimes go unpunished. Heavy sentences have been handed down in various cases, including for executives at WorldCom Inc., and Adelphia Communications Corp., mostly for fraud. Financial swindler Bernard Madoff also was found guilty and sentenced to 150 years in prison for masterminding a massive Ponzi scheme in which investors were swindled out of tens of billions of dollars. But that momentum has seemingly hit a wall. In fact, a prosecutor has just correctly lashed out at a judge for a rather lenient sentence meted out to one Madoff’s former employees. More in the Poughkeepsie Journal here.
Mutual funds are intended to be mom-and-pop financial products whose investments can be sold off quickly. The funds were never meant to pile into markets where trades take weeks to complete. Some mutual funds, however, have lately been making bets that might be hard to get out of, especially in difficult market conditions. The stampede into investments that can be difficult to exit has regulators increasingly concerned. On Thursday, Mary Jo White, the chairwoman of the Securities and Exchange Commission, told a conference organized by The New York Times/DealBook that the agency was undertaking a comprehensive review of the mutual fund sector. One of the review’s major objectives is to assess whether some mutual funds are loading up on investments that would take too long to unwind. More in the New York Times here.
The Securities and Exchange Commission is in no rush to finalize equity crowdfunding rules, despite having already missed its Congressionally-mandated deadline by around two years. Following her speech this morning at the Dealbook Conference, SEC chair Mary Jo White told Fortune that her agency does not believe it has any “drop dead date” to complete its rule-making. “We’ve gotten a lot of comments [on proposed equity crowdfunding rules] and our staff is actively working through them,” she added. More in Fortune here.
The future of insider trading is here, and it will probably be harder to prosecute. A federal appeals court decision Wednesday significantly redefined insider trading and may have altered the course of all further enforcement, experts said. The court’s findings, which overturned convictions for former hedge fund managers Todd Newman and Anthony Chiasson, place a much higher burden on prosecutors and could even change how business is done on Wall Street, legal experts said. “The stunning decision … has the potential to rewrite the book on insider trading, while also dealing a body blow” to Justice Department and the Securities and Exchange Commission efforts, former assistant U.S. attorney Patrick Cotter said in a statement to CNBC. More on CNBC here.
The mercy shown by a judge this week to former aides of Ponzi scheme mastermind Bernard Madoff risks hindering justice for victims of his $17.5 billion fraud, and sets a dangerous precedent for white-collar prosecutions, a government lawyer said at a sentencing hearing. The four defendants sentenced so far this week by U.S. District Judge Laura Taylor Swain in Manhattan have received a combined 21 years behind bars compared with a total of 56 years recommended by the court’s probation office for their crimes. Prosecutors had argued for even longer terms. “You have been extraordinarily merciful here,” but “we ask for justice on behalf of victims,” Assistant U.S. Attorney Matthew Schwartz said yesterday to Swain. More on Bloomberg here.
Annette Bongiorno, who joined Bernard Madoff’s investment firm straight out of high school and spent four decades in his employment, much of it as his office manager, was sentenced to six years in prison on Tuesday. U.S. District Judge Laura Taylor Swain, showing leniency and handing out a sentence much shorter than federal guidelines allowed and what prosecutors had sought, said Bongiorno was clearly not “evil” like Madoff, but that she “consciously avoided” the truth about Madoff’s fraud. Bongiorno, 67, “willfully blinded herself,” Taylor said, and “chose Madoff’s blessing” over “her own moral compass.” More on Fox News here.
NEW YORK — The physical voices of the thousands of victims of Bernard Madoff’s fraud weren’t heard in court Monday when the first of five of his former staffers was sentenced for his role in the massive scam. But their concerns took the spotlight, nonetheless, as Daniel Bonventre, Madoff’s former operations manager, was sentenced to a 10-year prison term. More in USA Today here.