JPMorgan Chase’s roughly $2 billion deal to settle allegations the bank turned a blind eye to Bernard Madoff’s massive Ponzi scheme was harshly criticized Tuesday by investor advocates. Much of the criticism targeted the government’s decision to allow JPMorgan, the largest U.S. bank by assets, to settle the allegations without either the firm or any individuals employed by the bank facing prosecution. “I’m deeply disappointed,” said Ron Stein, president the Network for Investor Action & Protection, an investor advocacy group formed in the wake of the Madoff scandal. “The fact that no one is actually being prosecuted is an embarrassment to the Department of Justice.” More on Fox Business here.
The 11,000 or so investors in feeder funds used by Ponzi schemer Bernard L. Madoff to commit the biggest fraud in history finally have a chance to get some of their money back. A $2.35 billion fund will distribute monies collected from various legal proceedings to an expanded pool of victims. Given that the total amount of money lost in the fraud is about $17 billion, there isn’t nearly enough money to go around. Still, the fund is likely many victim’s best shot at recouping some of their losses. More on CBS News here.
Almost five years after Bernie Madoff was arrested for fraud, some of his former employees are about to go on trial in New York. The case is expected to focus on how much the employees knew about Madoff’s Ponzi scheme.
RENEE MONTAGNE, HOST:
Nearly five years after Bernie Madoff was arrested for fraud, some of his former employees are about to go on trial in New York. The trial is expected to focus on how much the employees knew about Madoff’s multibillion dollar Ponzi scheme. Jury selections gets under way today.
STEVE INSKEEP, HOST:
NPR’s Jim Zarroli reports.
JIM ZARROLI, BYLINE: The five former Madoff employees all had lucrative jobs at Madoff’s firm. For instance, Daniel Bonventre was director of operations in the back office, while Joanne Crupi and Annette Bongiorno managed client accounts. All five have pleaded not guilty and maintain they didn’t know about the fraud taking place at the firm. And Madoff himself has backed them up in interviews from the federal prison in North Carolina where he now lives. But a lot of people are skeptical about that.
Ron Stein is president of the Network for Investor Action and Protection, which represents Madoff victims. He says many of them have trouble understanding how Madoff could have pulled off such a complex scheme by himself.
More on NPR here.
David Iselin’s experience as an investor with, and later as a victim of, Bernard Madoff’s massive financial fraud can be summed up in a few words: nothing is as it seems. Prior to Madoff’s arrest in December 2008 the phrase made perfect sense. It is, after all, a con man’s job to create illusions. For over two decades, Madoff was a master at creating illusions. More on Fox Business here.
It’s been almost three years since NBC News reported the Port Washington, NY meeting of 150 of Madoff’s Long Island and most vocal victims, was held to bring attention to a critical deadline for victims to claim their losses. July 2, 2009 marked the end of a 6 month narrow window for the sea of Madoff victims to claim the estimated $65 billion in fraud related losses to the regulatory agency, Securities Investor Protection Corporation (SIPC). SIPC is the administration overseeing those claims under the supervision of the appointed Trustee Irving H Picard, whose legal embattlement in attempts to recover losses related to the largest ever securities fraud enterprise in US history has been widely publicized. Read more on Examiner.com here.
The Securities Investor Protection Corp., or SIPC, would have brokerage customers believe that they are protected from securities theft and fraud. The SIPC logo, always posted on brokerage walls and stamped on brokerage statements, is supposed to be a reassuring reminder to customers that they are covered in the event of brokerage theft. But SIPC’s history and recent behavior suggests that SIPC isn’t particularly concerned about investors. If brokerage customers think they are covered, they are sadly mistaken.
Read Ron Stein’s MarketWatch commentary here.
Ron Stein, who heads an advocacy group that opposes Mr. Picard’s formula, is placing hope in Congress. Last February, Representative Scott Garrett, Republican of New Jersey, introduced a bill that would require a trustee in a brokerage-firm bankruptcy to accept claims from innocent investors based on their final account statements, not on the net cash they lost. That bill would also bar a trustee from suing to recover fictional profits from those investors even if the brokerage firm’s bankruptcy was a result of a Ponzi scheme, where the “profits” were actually the cash the con artist stole from someone else. Read New York Times report here.
Victims of Bernard Madoff’s Ponzi scheme have reacted angrily to the Securities and Exchange Commission’s decision not to fire any employee over the agency’s failure to stop the massive fraud. “That Mary Schapiro would have a greater sense of obligation to the personnel in her agency than the investors in this country she is charged to protect is beyond my understanding,” Ron Stein, president of an advocacy and support group for Madoff victims, said in a statement. Read more in the Washington Post here.
It is the trustee who is perverting investor protection law by suing thousands of innocent investors, Ron Stein, president of the group, said in an e-mailed statement. “It is absurd that the trustee is complaining about the targets of his lawsuits exercising their right to defend themselves,” he said. “And it should be noted that despite his ‘three years of hard work,’ he has barely begun to return lost money to these innocent investors — not exactly a swift return of funds that investor protection laws clearly require.” Read Bloomberg Businessweek report here.